FTSE 100 Fluctuates Amid Mixed Earnings and Global Economic Factors

FTSE 100 falls as tech earnings weigh on New York

(Alliance News) - London's FTSE 100 nursed modest losses at the close on Wednesday, despite heavy falls in US markets, as figures showed UK business activity remained strong in July. Underwhelming earnings from tech heavyweights Tesla and Alphabet knocked Wall Street, while lacklustre results from the likes of LVMH and Deutsche Bank sent European indices into the red. The FTSE 100 index closed down 13.68 points, 0.2%, at 8,153.69. The FTSE 250 ended down 140.65 points, 0.7%, at 20,950.84, and the AIM All-Share closed down 3.53 points, 0.5%, at 776.64. The Cboe UK 100 ended down 0.1% at 813.58, the Cboe UK 250 closed down 0.2% at 18,353.32, and the Cboe Small Companies ended down 0.1% at 17,225.05. Kathleen Brooks, research director at XTB said the "slip in corporate earnings from the likes of Tesla and Google, which failed to set the market alight with its AI investments, suggests that the fundamental basis for a rally is slipping away as we reach the peak summer months." On Wednesday, Google owner Alphabet fell 4.6%, while electric carmaker Tesla slid 11%. Tesla missed Wall Street profit estimates in the second quarter as it repeated guidance that vehicle growth in 2024 would be "notably lower" than 2023. Alphabet highlighted "ongoing strength" in its Search segment, as well as "momentum" in Cloud, after seeing both revenue and net income climb in the second quarter. However, the YouTube division's advertising revenue fell short of estimates. Steve Clayton at Hargreaves Lansdown explained: "AI has been such a driver of expectations and has led to an extraordinary surge in revenues for Nvidia as the hyperscalers like Google, Amazon and Microsoft's cloud units race to build capacity. But at some point, that scale has to start delivering returns on capital and, so far, the jury is out. Tesla, for its part, is simply struggling to turn rising output into earnings." Stocks in New York were down sharply at the time of the London equities close, with the DJIA down 0.9%, the S&P 500 index down 1.6%, and the Nasdaq Composite down 2.6%. There was better news on economic activity in the US which hit a 27-month high figures from S&P Global on Wednesday showed. The headline S&P Global flash US purchasing managers' index composite output index rose to 55.0 points in July from 54.8 in June, its highest since April 2022. Output has now risen continually over the past one-and-a-half-years, with the pace of expansion having improved markedly in recent months after slowing in April. The service sector outperformed manufacturing for a fourth straight month, with the sectoral divergence widening to the greatest since June of last year. In Europe, the CAC 40 in Paris ended down 1.1%, while the DAX 40 in Frankfurt ended down 1.0%. Shares in French luxury conglomerate LVMH, which owns Christian Dior and Tiffany, fell 4.7% after it disclosed a slowing in comparable sales growth. The uninspiring update dragged Burberry down by 2.1% in London. Weighing on the Dax, Deutsche Bank fell 8.3% after it swung to a loss on litigation costs amid a Postbank lawsuit provision. Adding to pressure on European stock markets, figures showed the eurozone private sector fell perilously close to a standstill this month, with the manufacturing economy sinking deeper into decline. The Hamburg Commercial Bank composite purchasing managers' index fell to 50.1 points in July, fractionally above the 50-point neutral mark, from 50.9 in June. The data "signalled a near-stagnation of the eurozone private sector", survey publisher S&P Global said. Abbas Khan at Barclays said the data paints a "weak growth picture" at the beginning of the third quarter. "Activity indicators point to a clear slowdown in the recovery momentum, particularly in Germany," he added. The figures were in marked contrast to the UK, where the private sector picked up speed this month, as new business growth surged to a 15-month-high. The latest S&P Global flash UK composite purchasing managers' index rose to 52.7 points in July, from June's final tally of 52.3, a two-month-high. S&P Global said the expansion was aided by the "sharpest upturn in new business for 15 months". The flash services PMI expanded to 52.4 points in July, from 52.1 in June. The manufacturing PMI climbed to 51.8 points, from 50.9. The services reading was a two-month-high, while the manufacturing PMI spiked to its best level in two years. The pound was quoted at USD1.2926 at the London equities close Wednesday, higher compared to USD1.2915 at the close on Tuesday. The euro stood at USD1.0857 at the European equities close Wednesday, up slightly against USD1.0855 at the same time on Tuesday. Against the yen, the dollar was trading at JPY153.44, lower compared to JPY155.98 late Tuesday. In the FTSE 100, easyJet, up 3.0%, and Informa, up 2.2%, were two of the best performers. Budget airline easyJet bucked a trend set by budget airline peer Ryanair Holdings and reported decent trading, helped by an impressive performance from its holidays arm. The Luton, England-based budget airline said pretax profit increased by 16% to GBP236 million in the quarter that ended June 30 from GBP203 million a year before. It also expects easyJet holidays to deliver profit growth of 48% to over GBP180 million for the year. Broker, Davy noted easyJet had previously predicted profit above GBP170 million for the unit. RBC Brewin Dolphin analyst John Moore commented: "Ryanair's results earlier in the week cast a shadow over airlines, but easyJet's performance should provide a level of assurance that conditions aren't necessarily gloomy across the entire sector." Informa climbed after announcing the GBP1.2 billion acquisition of Ascential and raising full-year sales guidance. Informa, the London-based business information publisher and events organiser, expects significant revenue opportunities to arise from the combination, alongside cost savings and efficiency improvements. Ascential, which revealed the approach from Informa after Tuesday's close in London, jumped 26%. Reporting half-year numbers, Informa said it now expects revenue for 2024 to be above its previously stated guidance range of GBP3.45 billion to GBP3.50 billion. Revenue in 2023 totalled GBP3.19 billion Reckitt Benckiser rose 1.9% as a strategic overhaul offset an earnings guidance cut. The firm plans to focus on a portfolio of 'powerbrands', such as Strepsils, Gaviscon, Nurofen, Lysol, Dettol, which it defined as high-growth, high-margin businesses that it thinks have the potential for long-term growth. It plans to sell non-core home care brands including Air Wick, Mortein, Calgon and Cillit Bang, and consider "all options" for Mead Johnson Nutrition, the business behind Enfamil infant nutrition. Reckitt also unveiled half-year numbers and said short-term disruption to its Nutrition business, due to the tornado that hit its Mount Vernon, Indiana distribution centre last week, has led to a reduction in its net revenue growth outlook for the year to 1% to 3% from 2% to 4% before. Analysts at Barclays commented: "Put together, Reckitt is reviewing GBP4 billion of revenue, or just over a quarter of the company. We think this strategic review is likely to be well received, and offset any disappointment over a modest guidance downgrade." On the FTSE 250, Aston Martin motored 6.5% to the good, after predicting a "strong second half performance", despite a widened first half loss. It also confirmed Adrian Hallmark will take over as chief executive officer from September 1, with Amedeo Felisa stepping down on the same date. The firm expects its third-quarter volume performance to "materially improve sequentially" compared with the second. The provider of business information, training and specialist consultancy services reported weaker half-year earnings. Revenue declined 7.7% to GBP16.5 million in the first half of 2024, from GBP17.9 million a year prior. Pretax profit fell 6.3% to GBP1.5 million from GBP1.6 million. On AIM, LBG Media, climbed 8.2%, hitting a one-year high. The Lad Bible entertainment website operator expects revenue growth of 55% to GBP42.3 million in the first half of 2024. Adjusted earnings before interest, tax, depreciation and amortisation are expected to jump to GBP10.2 million from GBP3.0 million. "The UEFA Euro 2024 [football] tournament has given the group a number of opportunities to work with brands seeking to access our young adult audience, with notable campaigns including Euros-themed editions of the hugely popular original series of 'Snack Wars' sponsored by Uber Eats," the company said. Brent oil was quoted at USD81.75 a barrel at the London equities close Wednesday, down from USD82.15 late Tuesday. Gold was quoted at USD2,426.06 an ounce at the London equities close Wednesday, higher against USD2,406.10 at the close on Tuesday. In Thursday's UK corporate calendar, there are half-year results from Anglo American, AstraZeneca, British American Tobacco, Lloyds Banking Group, Relx, Rentokil Initial and Vodafone. Trading updates are expected from BT and Vodafone. Comments and questions to [email protected] Copyright 2024 Alliance News Ltd. All Rights Reserved.

London pulls off lows as private sector perks up

(Alliance News) - Stocks in London remained in the red at midday, but outperformed their European peers, as a pick up in UK private sector growth helped offset underwhelming earnings. Disappointing tech earnings in the US, were followed by lacklustre numbers from LVMH and Deutsche Bank, amongst others, prompting investors to cash in some recent gains. The FTSE 100 index traded 13.83 points lower, or 0.2%, at 8,154.04. The FTSE 250 was down 58.02 points, 0.3%, at 21,033.47, while the AIM All-Share was down 1.34 points, 0.2%, at 788.83. The Cboe UK 100 was down 0.1% at 814.04, the Cboe UK 250 was little changed at 18387.51, and the Cboe Small Companies was also flat at 17,244.12. Kathleen Brooks, research director at XTB, said it is "hard to see how the rally in markets can continue for now after several weaker than expected earnings reports including Tesla, LVMH and [UPS], have led to concerns that stocks will fail to deliver the boost to earnings that would spur the next leg of the rally." "The slip in corporate earnings from the likes of Tesla and Google, which failed to set the market alight with its AI investments, suggests that the fundamental basis for a rally is slipping away as we reach the peak summer months." After hours in New York, Google owner Alphabet fell 3.4%, while electric carmaker Tesla slid 7.8%. Tesla missed Wall Street profit estimates in the second quarter as it repeated guidance that vehicle growth in 2024 would be "notably lower" than 2023. Alphabet highlighted "ongoing strength" in its Search segment, as well as "momentum" in Cloud, after seeing both revenue and net income climb in the second quarter. However, the YouTube division's advertising revenue fell short of estimates. On Tuesday, shares in United Parcel Service, often viewed as economic bellwether for the US economy slumped 12% after it lowered guidance. Stocks in New York are set to open lower on Wednesday. The Dow Jones Industrial Average is called down by 0.4%, the S&P 500 by 0.7% and the Nasdaq Composite by 1.0%. In Europe, the CAC 40 in Paris fell 1.0%, while Frankfurt's DAX 40 traded 0.7% lower. Shares in French luxury conglomerate LVMH, which owns Christian Dior and Tiffany, fell 3.9% after it disclosed a slowing in comparable sales growth. The uninspiring update dragged Burberry down by 1.1% in London. Weighing on the Dax, Deutsche Bank fell 5.3% after it swung to a loss on litigation costs amid a Postbank lawsuit provision. Adding to pressure on European stock markets, figures showed the eurozone private sector fell perilously close to a standstill this month, with the manufacturing economy sinking deeper into decline. The Hamburg Commercial Bank composite purchasing managers' index fell to 50.1 points in July, fractionally above the 50-point neutral mark, from 50.9 in June. The data "signalled a near-stagnation of the eurozone private sector", survey publisher S&P Global said. Franziska Palmas at Capital Economics said the data suggests that the eurozone's recovery may be "fizzling out". The figures were in marked contrast to the UK, where the private sector picked up speed this month, as new business growth surged to a 15-month-high. The latest S&P Global flash UK composite purchasing managers' index rose to 52.7 points in July, from June's final tally of 52.3, a two-month-high. S&P Global said the expansion was aided by the "sharpest upturn in new business for 15 months". The flash services PMI expanded to 52.4 points in July, from 52.1 in June. The manufacturing PMI climbed to 51.8 points, from 50.9. The services reading was a two-month-high, while the manufacturing PMI spiked to its best level in two years. Matthew Ryan at Ebury said the figures were consistent "with a UK economy that is growing at a solid, albeit far from spectacular, pace". "Today's data supports our generally optimistic view on the UK economy, which we think appears primed for an outperformance relative to the rather subdued expectations in 2024. Business and consumer confidence should be propped up by the normalisation in rates of inflation, and the high likelihood of lower Bank of England interest rates, which we expect to start cutting in August. We also see a mild boost to demand from the removal of the election uncertainty and the possibility of closer UK-EU ties under the new Labour government." The pound traded at USD1.2905 early Wednesday afternoon, down from USD1.2915 at the time of the London equities close on Tuesday. Against the dollar, the euro faded to USD1.0843 from USD1.0855. Versus the yen, the dollar eased to JPY154.70 from JPY155.98. In London's FTSE 100, easyJet flew to the top of the charts, rising 5.2%. The Luton, England-based budget airline said it is on track to deliver another "record-breaking summer" following a strong third quarter. The update was a welcome boost after the warning from RyanAir on Monday which sent airline shares into a tailspin. British Airways owner, IAG rose 1.2% in response, while Wizz Air edged 0.7% to the good. Informa climbed 2.2% after announcing the GBP1.2 billion acquisition of Ascential and raising full-year sales guidance. Informa, the London-based business information publisher and events organiser, expects significant revenue opportunities to arise from the combination, alongside cost savings and efficiency improvements. Ascential, which revealed the approach from Informa after Tuesday's close in London, jumped 26%. Reporting half-year numbers, Informa said it now expects revenue for 2024 to be above its previously stated guidance range of GBP3.45 billion to GBP3.50 billion. Revenue in 2023 totalled GBP3.19 billion. Reckitt Benckiser nudged up 0.7% after announcing a wide-ranging revamp of its business, including the likely sale of a number of well-known brands. The firm plans to focus on a portfolio of 'powerbrands', such as Strepsils, Gaviscon, Nurofen, Lysol, Dettol, which it defined as high-growth, high-margin businesses that it thinks have the potential for long-term growth. It plans to sell non-core home care brands including Air Wick, Mortein, Calgon and Cillit Bang, and consider "all options" for Mead Johnson Nutrition, the business behind Enfamil infant nutrition. Analysts at Citi commented: "While we think the "shrink to grow" story should lead to multiple expansion given the stock valuation anomaly, especially with the Nutrition unit finally put under review, we would flag that this should not be a straight line, as monetizing Mead may require more visibility on the actual potential litigation liability." In the FTSE 250, Aston Martin shares motored 7.3% higher after it said it is set for a "strong second half performance", despite a widened first half loss. The Gaydon, England-based luxury sports car maker also confirmed Adrian Hallmark will take over as chief executive officer from September 1, with Amedeo Felisa stepping down on the same date. Greencore was another share on the rise, up 2.8%, after it raised annual profit guidance, after reporting an improvement in profit conversion in its third quarter. But Breedon fell 4.0% as half-year profit fell despite higher sales. The construction materials company said pretax profit dropped 18% to GBP46.5 million from GBP56.5 million. Among London's small caps, Marston's rose 3.3% as investors cheered news that sales picked up in recent months, with England's run to football's Euro 2024 final lessening the hit from a wet start to the UK summer. "We have seen considerable uplift from Euro 2024, with like-for-like sales for the week of the semi-final and final matches rising by 8.0%," the pub operator said. On AIM, Vimto drinks owner Nichols shot up 8.4% after reporting a profit improvement, raised guidance, and a special dividend. Brent oil was quoted at USD81.58 a barrel, down from USD82.15 at the time of the London equities close on Tuesday. Gold was quoted at USD2,415.35 an ounce, up against USD2,406.10. Comments and questions to [email protected] Copyright 2024 Alliance News Ltd. All Rights Reserved.

FTSE 100 perks up despite miners falling

(Alliance News) - London's FTSE 100 climbed into the green by Tuesday afternoon, growing in confidence as the morning wore on, despite China slowdown worries keeping a lid on metal prices, hurting miners. Over in New York, corporate earnings were back in focus, with tech taking centre-stage later. The FTSE 100 index traded 27.12 points higher, or 0.3%, at 8,225.90. The FTSE 250 was down 17.71 points, 0.1%, at 21,120.97, while the AIM All-Share was down 1.33 points, 0.2%, at 781.91. The Cboe UK 100 was up 0.3% at 821.39, the Cboe UK 250 was 0.2% lower at 18,444.32, and the Cboe Small Companies was up 0.1% at 17,336.13. The CAC 40 in Paris rose 0.4%, while Frankfurt's DAX 40 traded 1.1% higher. A share price rise of 6.8% for software firm SAP helped lift the DAX. SAP raised 2025 guidance overnight. For the FTSE 100, however, the story of the morning was a "poor showing from the mining sector", AJ Bell analyst Dan Coatsworth commented. "Copper futures have fallen by nearly 7% over the past five days amid concerns about sluggish demand from China as it struggles with a slowdown in economic growth. The market has taken the view that China isn't digging deep enough with stimulus measures to fire up the economy and therefore commodities demand is at risk," the analyst said. Glencore fell 1.3%, Anglo American lost 1.2%, Rio Tinto gave back 0.9% and Antofagasta was down 0.7%. They were among the worst FTSE 100 listed performers. Elsewhere in London, BHP fell 1.6%. Rising in London, however, Compass added 5.0%. It said "industry trends remain strong" as it reported an increase in revenue and raised growth guidance. In the third quarter ended June 30, organic revenue rose 10%. "As expected, net new business growth accelerated in Q3, whilst pricing moderated in line with inflation. Volumes continued to benefit from the quality of our offer and the value gap compared to the high street," Compass said. Compass added: "We are pleased with our third quarter performance. The group delivered good growth across all regions and benefited from improved net new business in line with our expectations. For the full year we now expect underlying operating profit growth to be above 15% on a constant-currency basis with organic revenue growth above 10%." It had previously expected underlying operating profit growth "towards 15%" and an organic revenue rise "towards 10%". Beazley rose 2.0%. It soothed some investor worry after a global IT glitch had prompted concern that the insurer could have been caught in the cross-hairs. The FTSE 100 listing left its guidance for underwriting performance unchanged on Tuesday. This followed the global IT crash on Friday last week, caused by a faulty software update by cybersecurity firm CrowdStrike Holdings. Beazley, noting that it is a leading cyber insurer, said that "based on what is known at this point", the event will not change its guidance for an undiscounted combined ratio in the low-80s for 2024. A combined ratio below 100 means a profit on underwriting, so the lower, the better. Beazley said it will profit an update with its first-half results on August 8. Elsewhere in London, Fuller, Smith & Turner added 1.0%. The pub chain said inflation pressure is abating and its margins "are recovering". Like-for-like sales grew 5.3% in the 16 weeks to July 20. This is the first 16 weeks of its financial year. Fuller's said trading momentum has continued, "with inflationary pressures easing, our margins are recovering". Chief Executive Simon Emeny said: "I am delighted to see our sales growth momentum continue, particularly against the backdrop of easing inflation, which will help us to grow margins and profit, as well as revenue. You can feel the positivity across the business, with our team members working energetically to drive our continued success. We have had a strong start to the financial year, and we look forward to the opportunities the future will bring. We have a new UK government in place, and I urge Sir Keir Starmer to stand by his commitment to overhaul our archaic business rates system. The Labour Party has a clearly stated objective to grow the economy and the hospitality sector can be an excellent engine to help deliver that growth." Stocks in New York are set for a mixed open. The Dow Jones Industrial Average and S&P 500 are called up 0.1%, and the Nasdaq Composite down 0.1%. XTB analyst Kathleen Brooks commented: "The political race has become much closer due to the resignation of Joe Biden. However, both candidates are known quantities, so whoever wins the race for the White House, the market, in some ways, knows what to expect. For example, Kamala Harris may continue the policies of Joe Biden, and everyone expects President Trump to cut taxes and to implement trade barriers. This could be beneficial if it means more semiconductors are made on American shores, but it could be negative if it stops other goods being sold abroad. Thus, politics could be less of a driver for markets for the rest of the summer now that the Democrats are back in the race." On the corporate front, the analyst noted earnings from Alphabet are due after the closing bell in New York. "The main concern is AI. Will this earnings season show that AI is generating profits and boosting corporate bottom lines, instead of being a constant drag on investment spend? Alphabet's results later tonight are worth watching closely," Brooks added. The pound traded at USD1.2893 early Tuesday afternoon, down from USD1.2913 at the time of the London equities close on Monday. Against the dollar, the euro faded to USD1.0861 from USD1.0881. Versus the yen, the dollar faded to JPY156.07 from JPY156.88. Brent oil was quoted at USD82.13 a barrel, down slightly from USD82.15 at the time of the London equities close on Monday. Gold was quoted at USD2,407.35 an ounce, up against USD2,397.10. Comments and questions to [email protected] Copyright 2024 Alliance News Ltd. All Rights Reserved.

Compass ups outlook; Beazley says no IT mayhem hit

(Alliance News) - London's FTSE 100 is set for a tepid start on Tuesday, despite stocks in New York ending higher, with tech shares shining ahead of another batch of earnings. Google owner Alphabet and electric carmaker Tesla report after the closing bell in New York on Tuesday. "Their results - or the reaction to their results - could shift the wind in either direction. Despite almost doubling its stock price between April and July, Tesla sees appetite for its cars and its market share under pressure, and the company's operating profit is expected to shrink in the Q2 for the 6th straight quarter. "What keeps optimism alive for Tesla is the robotaxi plan. But robotaxis will cost to the company before it can generate profit," Swissquote analyst Ipek Ozkardeskaya commented. "For Google, investors will be closely watching the cloud revenue and whether the AI spending is making a difference for the ad revenue." Political developments in the US are also in focus, with Kamala Harris closing in on the Democratic presidential nomination, after Joe Biden pulled his re-election bid over the weekend. In early UK corporate news, Compass raised its guidance, while Beazley announced no change to its outlook due to feeling no hit from Friday's global IT glitch. Here is what you need to know at the London market open: US Vice President Kamala Harris appeared poised to clinch her party's presidential nomination after receiving support from more than enough Democratic delegates Monday, as she launched a blistering campaign against Donald Trump. The formal nomination process for a US presidential candidate occurs when delegates from across the US gather to officially anoint a nominee chosen by voters during the primaries. But when President Joe Biden dropped out of the race on Sunday, the fate of those delegates, who had been slated to vote for him, came into question. With the support of a slew of Democratic heavyweights, including Biden himself, and massive voter donations, Harris quickly closed in as the Democratic party's heir apparent, and delegates began falling in line to pledge their support. "Tonight, I am proud to have secured the broad support needed to become our party's nominee," Harris wrote in a statement, after US media reported she had sailed past the number of delegates needed - 1,976 out of nearly 4,000 - in order to decisively secure the Democratic presidential nomination during voting in the coming weeks. Early on Tuesday, Reuters reported that her majority had grown to 2,214 delegates, well beyond a simple majority. ---------- The UK opposition Conservative Party will appoint a new leader on November 2 to replace Rishi Sunak. The 1922 Committee of backbenchers has agreed the rules and timeline for the leadership contest. Nominations will kick off on Wednesday evening and close in the afternoon on July 29. Each candidate will need a proposer, seconder and eight nominations to qualify. The parliamentary party will then narrow the field down to four, who will make their case at the Conservative Party Conference, which runs from September 29 to October 2. The final two, picked by the parliamentary party, will then be voted on by Conservative Party members in an online ballot that will close on October 31. After the general election saw the Tories reduced to just 121 MPs, the party faces a battle to see off the threat from Reform UK on the right and the loss of traditional Conservative heartlands to the Liberal Democrats. Potential leadership contenders include former work & pensions secretary Mel Stride, former home secretaries Suella Braverman and Priti Patel, shadow home secretary James Cleverly, shadow security minister Tom Tugendhat, shadow communities secretary Kemi Badenoch and former immigration minister Robert Jenrick. TD Cowen starts Unilever with 'buy' - price target 5,200 pence Contract caterer Compass Group said "industry trends remain strong" as it reported an increase in revenue and raised growth guidance. In the third quarter ended June 30, organic revenue rose 10%. "As expected, net new business growth accelerated in Q3, whilst pricing moderated in line with inflation. Volumes continued to benefit from the quality of our offer and the value gap compared to the high street," Compass said. In North America, organic revenue rose 9.9%, while in Europe, it increased 12%. In the Rest of the World segment, organic revenue climbed 8.5%. Compass added: "We are pleased with our third quarter performance. The group delivered good growth across all regions and benefited from improved net new business in line with our expectations. For the full year we now expect underlying operating profit growth to be above 15% on a constant-currency basis with organic revenue growth above 10%." It had previously expected underlying operating profit growth "towards 15%" and an organic revenue rise "towards 10%". ---------- Beazley said its guidance has not changed, as it the insurer updated the market following an IT outage which affected millions of devices worldwide. "Given the unprecedented nature of this event and Beazley's position as a leading cyber insurer, the company has elected to provide an update on its position in relation to the outage. Based on what is known at this point, the event will not change the current undiscounted combined ratio guidance of low-80s for the full year," it said. The firm will update on its first half performance on August 8. SThree expects annual results in line with market expectations, though it cautioned that industry "conditions have remained challenging for longer than anticipated". The recruiter, focused on the science, technology, engineering, and mathematics fields, said revenue in the half-year to May 31 declined 7.5% annually to GBP763.4 million from GBP825.2 million. However, pretax profit increased 1.3% to GBP39.0 million from GBP38.5 million. Its bottom line was helped by "lower average headcount for the half, tight cost control and the benefit of higher interest income". SThree upped its interim dividend slightly to 5.1 pence from 5.0p. Chief Executive Officer Timo Lehne said: "Given the challenges faced across the sector, our resilient performance in the first six months of the financial year has been pleasing. Strong contract extensions have continued to underpin performance despite subdued new business activity. Our unique business model focused on specialist STEM skills and flexible talent solutions, continues to power our performance, supported by global megatrends driving long-term demand for the skills we place." SThree expects annual profit in line with consensus of GBP69.2 million. However, it added that "market conditions have remained challenging for longer than anticipated". ---------- Facilities management provider Mitie said revenue grew in its first-quarter, boosted by acquisitions as well as work and pricing. Revenue in the three months to June 30 increased 11% to GBP1.16 billion from GBP1.05 billion a year prior. "The good trading momentum from last year has continued into the first quarter of FY25, with double digit revenue growth from our Projects business, including the benefit from the previous year's acquisitions. Contract wins and renewals also remained high, following a record final quarter in FY24, reinforcing the strength of our market leading, technology and data-rich capabilities," CEO Phil Bentley said. "We have made a good start to our new programme of margin enhancement initiatives which will raise the operating margin over the medium-term, and we remain on track to deliver our high-single digit revenue growth expectations for the year." Fuller, Smith & Turner said inflation pressure is abating and its margins "are recovering". The pub company said like-for-like sales grew 5.3% in the 16 weeks to July 20. It was the first 16 weeks of its financial year. Fuller's said trading momentum has continued, "with inflationary pressures easing, our margins are recovering". Chief Executive Simon Emeny said: "I am delighted to see our sales growth momentum continue, particularly against the backdrop of easing inflation, which will help us to grow margins and profit, as well as revenue. You can feel the positivity across the business, with our team members working energetically to drive our continued success. We have had a strong start to the financial year, and we look forward to the opportunities the future will bring. We have a new UK government in place, and I urge Sir Keir Starmer to stand by his commitment to overhaul our archaic business rates system. The Labour Party has a clearly stated objective to grow the economy and the hospitality sector can be an excellent engine to help deliver that growth." ---------- Arbuthnot Banking Group predicted a fall in interest rates will continue to hurt profit in the "short-term". The firm, which is the holding company behind private banking, commercial banking and wealth management services provider Arbuthnot Latham, expects to report pretax profit of GBP20.8 million for the six months to June 30. It would represent a 21% decline on-year from GBP26.4 million. Arbuthnot said the profit outcome was "expected, as existing fixed rate deposits have continued to reprice onto higher terms as they are renewed". Funds under management and administration totalled GBP1.96 billion at June 30, a 15% increase from GBP1.71 billion in December. Chair and CEO Henry Angest said: "The group made good progress in the first half of the year, again delivering strong profits in an evolving interest rate environment. The balance sheet evolution and growth achieved in the period demonstrates the ongoing success of our 'future state 2' strategic plan, with its focus on diversifying the loan book whilst continuing to enhance our value proposition to relationship clients. While an expected fall in interest rates in the second half will have a short-term impact on profit growth, the group is well positioned to take advantage of the market opportunities we anticipate over the near, medium and long term." Comments and questions to [email protected] Copyright 2024 Alliance News Ltd. All Rights Reserved.

London stocks shaky on mixed earnings, but easyJet and Reckitt impress By Proactive Investors

The UK flash PMI may help to reassure the Bank of England that it can cut interest rates, says economist Ashley Webb at Capital Economics, but likely not til September. Some of the recent rebound in economic activity "may have been due to catch-up growth following the weakness of activity last year", he says, with GDP growth "easing towards a more normal rate". The small rise in the composite PMI is consistent with GDP growth slowing to around 0.2% quarter-on-quarter at the start of Q3 after what is looking like a solid rise of around 0.6% or 0.7% in Q2, Webb says. The manufacturing output balance points to actual manufacturing output growth picking up from what was a negative period in May to around around 0.6% growth in July, while services PMI is consistent with actual non-retail services output growth easing from 1.0% in May to 0.4%. "Given the lingering concerns around the persistence of services inflation, the fall in the services prices balance will give the Bank of England some reassurance that services inflation will continue to ease in the coming months," Webb says. With the BoE focusing on services inflation, he notes the decline in the PMI services output prices balance to its lowest level since February 2021, is consistent with services inflation easing from 5.7% in June to around 4.0%. "Admittedly, the recent rise in shipping costs meant that the manufacturing input prices balance rose from 56.3 to an 18-month high of 57.9. But overall today's data release may help to reassure the Bank that it can cut interest rates from 5.25% to 5.00% in September." ECB rate cut in September 'remains likely' The earlier eurozone PMI survey, where activity was particularly weak in manufacturing and fell sharply in Germany, "offers little further clarity on the ECB's move in September" says Franziska Palmas at Capital Economics. Indicators of price pressures were mixed, with the euro-zone input price index rose significantly, while output price pressures in services, which the ECB has been paying particular attention to, also edged down but the prices charged index remained above its long run average. "Overall, the survey offers little further clarity on the ECB's move in September, with the combination of a weakening economy and still high price pressures offering some support for both the hawks and the doves on the ECB's Governing Council. "On balance though, we still think a cut in September is more likely," she says. "The flash PMI survey data for July signal an encouraging start to the second half of the year, with output, order books and employment all growing at faster rates amid rebounding business confidence, while price pressures moderated," says Chris Williamson, chief business economist at S&P Global. As the first post-election business survey, collected between 11 and 22 July, the PMI data "paints a welcoming picture for the new government", he adds, as manufacturing and services companies expressed improved optimism about the future, reporting a improved surge in demand and taking on more staff. With prices rising at their lowest rate for three and a half years, he suggests this may add to confidence of a summer rate cut from the Bank of England. "However, policymakers will likely take a cautious approach to loosening policy amid signs of inflationary pressures pivoting away from services towards manufacturing, where Red Sea shipping delays and higher freight prices are adding to costs again. "The renewed hiring trend could also add to pay pressures, sustaining some stickiness of inflation in the coming months," Williamson says. The UK flash purchasing managers' index (PMI) composite index inched up to 52.7 for July from 52.3 in June, says S&P Global, above the average forecast of 52.6. UK manufacturing again outdid services, with the flash UK manufacturing output index rising to a 29-month high of 54.4 from June's 53.3, higher than forecast. The service PMI activity index rose to 52.4 from 52.1, less than expected. This preliminary PMI survey indicates the ninth monthly expansion in economic putout in a row, with the full July report due at the start of next month. Inflation slowed to its lowest in three and a half years, based on average prices charged, but S&P Global said the pace "remained steep due to elevated costs", as manufacturing firms faced the strongest rise in costs in one-and-a-half years due to freight challenges linked to the Red Sea attacks. Earlier, the euro-zone composite PMI dropped for the second consecutive month, to 50.1 in July from 50.9 in June, was weaker than the consensus forecast of 51.1. Both the manufacturing output PMI and the services PMI fell, with activity particularly weak in manufacturing. The composite PMI fell sharply in Germany, returning to contractionary sub-50 levels, below France and the rest of the euro area. With results season getting into its stride on both sides of the Atlantic, "so far, investors are underwhelmed by what they have seen", sums up Steve Clayton, head of equity funds at Hargreaves Lansdown (LON:HRGV). He says investors gave the thumbs-down to figures from Alphabet (NASDAQ:GOOGL), Tesla and Visa (NYSE:V), while the pound eased back to $1.289 "in the face of a dollar that is making gains against all major currencies presently as investors reassess the US political outlook". London's oil supermajors are little changed as the Middle East situation seems not any closer to change, meaning Brent oil futures are holding steady around $81.44, having slipped back from $87 at the start of the month. "If last night's news was any guide, 2024 could be the year when markets start to talk about the So-So Seven" instead of the Magnificant Seven, says Clayton, "because what we saw from Tesla and Alphabet was just not enough to keep momentum in their stocks. "AI has been such a driver of expectations and has led to an extraordinary surge in revenues for Nvidia (NASDAQ:NVDA) as the hyperscalers like Google, Amazon (NASDAQ:AMZN) and Microsoft's cloud units race to build capacity. "But at some point, that scale has to start delivering returns on capital and, so far, the jury is out." As for Tesla, Clayton says it is "simply struggling to turn rising output into earnings".

FTSE 100 live: London stocks trim losses on easyJet and Informa, Wall Street heading lower By Proactive Investors

The US Federal Trade Commission has started a probe into the possible misuse of personal data to set prices for different customers. Mastercard (NYSE:MA), JPMorgan Chase (NYSE:JPM), IT services provider Accenture (NYSE:ACN), consulting firm McKinsey and software providers Pros, Revionics, Bloomreach, and Task Software all have been asked for information by the FTC. In particular, the FTC said it wants to assess how AI and consumer data might be utilised to target specific customers, though it added none of the companies asked to participate have been accused of wrongdoing. Whilst the Spanish outclassed England's 'galacticos' in the Euros, Gareth Southgate's boys provided an "assist" for the British supermarkets and public houses, says analyst Clive Black at Shore Capital. This is based on the NIQ (NielsenIQ) four-week grocery sales data, showing growth of 3.6% in June, compared to growth of 1.1% in last month's report. Volumes were up by 1.5%. Branded promotions were also notably ahead year-on-year, with overall level of promotional spending maintained at 25%, but 38% of branded fast moving consumer goods (FMCG) sales were on promotion, compared with 33% a year ago. "We are encouraged by this momentum ahead of a Q3 when comparatives ease," says Black, noting that Ocado gained market share in a slightly stronger online channel with Marks & Spencer going well too, Sainsbury and Tesco (LON:TSCO) also remaining winners in UK grocery, "auguring well for earnings momentum" as Aldi, Asda and Co-op saw falling value sales. The analysts noted further evidence of the beginnings of a reversal of one of the key features of the pandemic and subsequent inflationary period was around a 5% shift out of brands into private label, "which in a circa £200 billion retail value market is important". With UK food inflation easing, Black and his team have been anticipating that brand owners would start investing a little in promotions to seek to recoup some of that lost share, a process that he says was evident in the recent trading update from Premier Foods (LON:PFD). Looking at some small and mid-cap movers, Shield Therapeutics (LON:STXS) is a standout, up 47% on the back of strong second-quarter sales of its iron deficiency product ACCURUFeR. The update, which was accompanied by the news of CEO Greg Madison's departure, revealed net sales of ACCURUFeR jumped 69% quarter on quarter at $6.9 million and were up 259% year on year. Anders Lundstrom, a non-executive director, has been appointed interim CEO, bringing extensive international experience from AstraZeneca (NASDAQ:AZN), Biogen (NASDAQ:BIIB) and Orexo. Braveheart Investment Group PLCis up 37% after announcing that 86% owned subsidiary Kirkstall has appointed Beijing Kilby Biotechnology (BKB) as exclusive China distributor for its 3D cell culture and organ-on-chip related products products. These products are "currently in high demand in the Chinese market", BKB said. AIM-listed Nexteq is down 34% after warning on profits as the industrial technology provider says business has "continued to see persistent softer customer demand" in line with with wider industry destocking it flagged in March. Tortilla Mexican Grill PLC (LON:MEX) is down 25% after also serving up a spicy profit update, warning that changes to boost profits are taking longer than expected to show a benefit. Revenues at the Tex-Mex food chain dropped 5.9% like-for-like to £31.5 million in the half year to June 2024, with a switch to a dual-delivery platform was blamed.