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LONDON BRIEFING: AB Foods beats expectations; UK unemployment rises

12th Sep 2023 07:52

(Alliance News) - Stocks in London are called to open higher on Tuesday, while new data shows signs of softening in the UK labour market.

The UK unemployment rate rose to 4.3%, in line with expectations, figures from the Office for National Statistics showed. Wage inflation including bonuses accelerated, but was steady month-on-month excluding bonuses.

"These numbers show some signs the UK labour market could be softening a touch... [However], wage growth remains strong, rising ahead of wider inflation, and government forecasts suggest [the consumer price index] will tick up again in August. We think that means the Bank of England will add a few more turns to the interest rate screw before declaring its job done," commented Nicholas Hyett, investment manager at WealthClub.

All eyes are now on US inflation data and the interest rate decision from the European Central Bank later this week.

In early corporate news, Associated British Foods said it expects higher profit in its current financial year. Meanwhile, Fevertree saw its interim profit plummet 92%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up 0.2% at 7,516.8

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Hang Seng: down 0.2% at 18,061.97

Nikkei 225: closed up 1.0% at 32,776.37

S&P/ASX 200: closed up 0.2% at 7,206.90

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DJIA: closed up 84.13 points, or 0.3%, at 34,663.72

S&P 500: closed up 29.97 points, 0.7%, at 4,487.46

Nasdaq Composite: closed up 156.37 points, 1.1%, at 13,917.90

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EUR: down at USD1.0738 (USD1.0747)

GBP: down at USD1.2503 (USD1.2528)

USD: up at JPY146.79 (JPY146.42)

Gold: down at USD1,921.11 per ounce (USD1,923.84)

(Brent): up at USD90.85 a barrel (USD90.42)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

10:00 CEST EU interest rates statistics

11:00 CEST Germany ZEW indicator of economic aentiment

00:01 EDT US employment outlook survey

16:30 EDT US API weekly statistical bulletin

08:55 EDT US Johnson Redbook retail sales index

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The UK unemployment rate rose to 4.3%, in line with expectations, figures from the Office for National Statistics showed on Tuesday. The UK jobless rate rose to 4.3% in the three months ended July, from 4.2% in the three months to June. The figure came in line with FXStreet-cited market consensus. Also in the three months to July, annual growth in average total pay, including bonuses, accelerated to 8.5%. July's figures were higher than FXStreet-cited consensus, which had expected an unchanged reading from 8.2% in the previous three-month period. This total growth rate is affected by the NHS and civil service one-off payments made in June and July, the ONS said. Excluding bonuses, average earnings rose by 7.8%, both in line with consensus and the previous three-month period.

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BROKER RATING CHANGES

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Morgan Stanley starts Jet2 with 'overweight' - price target 1,800 pence

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UBS raises Computacenter price target to 2,805 (2,580) pence - 'buy'

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Goldman raises WH Smith price target to 1,980 (1,970) pence - 'buy'

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COMPANIES - FTSE 100

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Associated British Foods said that in its financial year, ending September 16, it performed slightly better than previous expectations, with adjusted operating profit to be moderately ahead of last year. The Primark owner said that in its Food arm it continued to see sales growth, particularly in Grocery and Ingredients and a slightly better-than-expected performance in Sugar. It expects Retail sales to be around GBP9.0 billion, 15% ahead of sales last year with like-for-like sales growth of 9%. Looking ahead, ABF said it continues to trade well, managing inflation, recovering cash margin and continuing to drive sales in a challenging macro-economic environment.

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COMPANIES - FTSE 250

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JTC reported that in the six months to June 30 revenue rose by 31% to GBP121.5 million from GBP93.0 million a year earlier. Pretax profit, however, fell by 43% to GBP11.9 million from GBP21.0 million. Adjusting for non-underlying items, the underlying pretax profit before tax increased 16% to GBP19.7 million from GBP16.9 million. On the back of the results, JTC upped its interim dividend by 13% to 3.5p from 3.1p. Looking ahead, it expects to deliver 2023 results ahead of current market expectations. "By the end of 2023, we will have delivered our Galaxy era business plan, resulting in a quadrupling of the size of the group since listing in 2018. The momentum in the business, coupled with the long-term structural drivers in our sector, mean that we remain as ambitious for the group as ever and aim to once again double in size during the Cosmos era, which will commence in 2024 and is expected to run until 2027," said CEO Nigel Le Quesne.

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Dowlais reported that in the first half of 2023 revenue rose by 14% to GBP2.55 billion from GBP2.24 billion a year earlier. Its pretax loss narrowed to GBP55 million from GBP130 million. It said that trading int he first half was ahead of expectations. Looking ahead, Dowlais left full year expectations unchanged, with potential UAW strike action being monitored closely. CEO Liam Butterworth said: "Dowlais had a strong first half of the year, trading ahead of our expectations, with double digit revenue growth, significant margin expansion in a period of high inflation, and better than expected free cash flow generation. We have also secured record new business bookings, the majority of which are related to EVs, at attractive margins."

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OTHER COMPANIES

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Fevertree Drinks said that in the first half of 2023 revenue rose to GBP175.6 million from GBP160.9 million a year ago. Pretax profit plummeted 92% to GBP1.4 million from GBP17.9 million. It noted a GBP3.3 million exceptional item relating to a production issue in the US. "The issue did not impact customer relationships or our ability to supply the market," the company added. Fevertree said it is recommending an interim dividend of 5.74 pence per share, an increase of 2% year-on-year from 5.63p.

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By Sophie Rose, Alliance News reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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