FTSE 100 is muted
The FTSE 100 is muted this morning and trading marginally higher in early trade.
The OECD said yesterday that the UK will have the highest inflation of any major economy in 2023 as it predicted global economic growth will only experience a moderate uptick this year as central banks keep raising interest rates.
With that in mind, a surprise lift in interest rates by the Bank of Canada yesterday (soon after the unexpected rate rise we saw in Australia) has raised the chances that other central banks could push ahead with further tightening as markets brace for the Federal Reserve and the European Central Bank meetings next week, with the Bank of England to follow the week after. For now, markets remain convinced the Fed will press pause and that the ECB will raise rates.
The economic calendar remains quiet but markets are on the lookout for eurozone GDP data out this morning and US jobless claims data that will be released early this afternoon.
FTSE 100 analysis: Where next for the UK 100?
The UK 100, which tracks the FTSE 100, continues to find some support at 7,622 and some resistance at 7,650.
A slip below this level of support could see the index unravel back toward the June-lows of 7,452 while a break above the level of resistance could allow it to climb toward 7,710, marking the supportive floor that held throughout most of May.
Top UK stock news
Wizz Air is up 3.1% said it has reached a turning point and will return to profit in the new financial year for the first time since the pandemic decimated demand for travel, marking the start of a decade of profitable growth. The airline missed expectations in the recently-ended financial year. Revenue more than doubled to EUR3.89 billion as the recovery in travel continued but this fell short of the EUR3.91 billion forecast, while Ebitda turned positive to EUR134.3 million but also came in way below the EUR185.9 million estimate. It remained in the red at the bottom-line with EUR535.1 million loss, but said it is aiming to generate EUR350 million to EUR450 million in profit in the new year. That will be welcome considering analysts had only pencilled-in EUR343 million profit this year. ‘We are now well placed to continue to drive profitable growth through the rest of the decade and beyond,’ said Wizz Air.
Firstgroup is up over 10% after it said attributable profit more than doubled to £82.1 million in the year to March 25, which was ahead of management’s expectations. Revenue declined because of disposals and the loss of some government support provided during Covid-19 but came in just above forecasts at £4.76 billion. Still, pretax profit at the bottom-line dropped over 80% to £128.7 million. The dividend was hiked to 3.8p from 1.1p last year. It also proposed a new £115 million buyback after receiving proceeds from its disposals in North America. It said economic conditions and relations with unions remains ‘challenging’ but said trading has been in-line with expectations in the new financial year.
M&G is down 0.4% this morning after it said assets under management rose to £344 billion at the end of March from £342 billion at the end of 2022. That increase was driven by £1 billion of net client inflows from its wholesale division and smaller inflows into M&G Wealth, with PruFund UK growing faster than the wider unit. It said it remains confident as it focuses on maintaining financial strength, simplifying the business and delivering profitable growth.
Mitie Group is up 0.3% after it said it delivered record revenue in the year to the end of March as pretax profit surged 42% higher to £151 million. Revenue rose just 1.5% but hit new highs of £4.06 billion thanks to new contract wins and renewals, a boost from acquisitions and higher prices driven by inflation. Mitie is paying a total dividend for the year to 2.9p, up 61% from the year before as its payout ratio improved to 30% from 20%. Mitie said it has made a positive start to the new year, having renewed more contracts and sought after more acquisitions.
Crest Nicholson is down 3.9% after it said revenue fell over 22% in the six months to the end of April as higher interest rates and an uncertain economic outlook weighed on the housing market, leading to fewer completions and a slower pace of sales. Adjusted pretax profit more than halved to £20.9 million as a result. It kept its interim dividend flat at 5.5p. The homebuilder said it remains on course to see a better second half and deliver an annual adjusted pretax profit of £73.7 million. It called on the UK government to introduce more support for first time buyers
Standard Chartered up 0.2% on news it is laying off employees in Singapore, London and Hong Kong as part of its ongoing effort to cut costs by around $1.3 billion through to 2024, according to Bloomberg. Over 100 staff could be impacted, the report said, citing unnamed sources.
Capita is up 0.5% after agreeing to sell its non-core software businesses including CIBS, CHKS, Retain, WFM and Synaptic for an enterprise value of £33 million on a cash-free, debt-free basis. When cash and debt are included, Capita will book gross proceeds of £44 million. That is part of Capita’s plan to focus on its Public Service and Experience divisions. The businesses being sold generated around £35 million in sales and £3 million in pretax profits in 2022. It said it hopes to sell the remaining non-core businesses that have been put up for sale in the first half of 2023.
Rio Tinto has been upgraded to Buy from Neutral by Citigroup, which has a price target of 6,000p on the iron ore miner. The stock is up 1.5% at 5,180p today.
Clarkson has been raised to Overweight from Neutral by JPMorgan, which has a price target of 3,840p on the shipping giant. The stock is up 3.2% at 3,070p.
Ithaca Energy has been downgraded to Equal Weight from Overweight by Morgan Stanley, which said it sees better opportunities at Harbour Energy and Var Energi. Ithaca is down 3.3% at 146p today.