- Blue-chip at 8,050 after hitting new record
- Primark owner’s profits soar
- JD Sports to expand US exposure
10.45am: Government borrowing higher than forecast
Government borrowing was higher than forecast over the last financial year, official figures showed on Tuesday.
At £120.7 billion, the figure was £7.6 billion less than in 2022-23, but £6.6 billion more than forecast, according to figures from the Office for National Statistics.
“Increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs,” ONS’ Jessica Barnaby commented.
This came as borrowing fell from £16.6 billion to £11.9 billion year on year in March, against expectations for £10 billion.
EY ITEM Club analysts noted the higher-than-anticipated figures left chancellor Jeremy Hunt with minimal room ahead of the UK’s looming general election.
Batting off speculation of further cuts to national insurance, analysts said Hunt had been left with “a very narrow margin for error” after giveaways in the Spring Budget.
“EY ITEM Club calculates that more than half of that already-small leeway has been lost to higher debt servicing costs.”
Future fiscal policy is likely to be managed tightly as a result, analysts continued, including through higher tax revenues and reduced spending.
9.54am: UK’s recovery from recession continues – S&P
Britain continues to bounce back from a technical recession seen late last year, according to S&P Global.
Unveiling its Global Flash UK PMI Composite Output Index for April, S&P said business output had expanded at the fastest pace in 11 months.
“Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum,” S&P economist Chris Williamson commented.
The index hit 54.0 in April, against March’s reading of 52.8, according to S&P, fuelled by an increase in services activity.
“Respondents typically commented on rising business and consumer spending” within the service sector, S&P said, “supported by a recovery in broader economic conditions”.
Manufacturing production declined over the period however, having notched up increases previously, with S&P attributing the fall to market conditions and destocking… Read more
9.34am: FTSE 100 touches new highs
The FTSE 100 held onto gains and remained within record territory come mid-morning.
Having hit an all-time intraday high of 8,073 early on, the index sat 22 points higher at 8,046 by mid-morning, in line with its previous record.
Primark owner Associated British Foods PLC (LSE:ABF) led risers in the morning, gaining 8.9% after reporting bumper half-year results earlier in the day.
JD Sports Fashion PLC (LSE:JD.) followed behind, climbing 6.3% following news it was to delve further into the US market through a US$1.11 billion (£899 million) takeover of sports retailer Hibbett Inc.
Ocado Group PLC (LSE:OCDO) built on Monday’s gains with a 4.7% rise after shareholder pressure over the weekend to move its listing to the US.
Also among risers was St James’s Place PLC, British Airways owner International Consolidated Airlines Group SA (LSE:IAG) and Barclays PLC (LSE:BARC).
Miners dominated the day’s fallers in the meantime, led by Anglo American PLC (LSE:AAL) and Fresnillo PLC (LSE:FRES).
The former had been hit on Monday after a class action lawsuit relating to lead poisoning in South Africa was allowed to go ahead by the country’s high court.
Precious metal-focussed Fresnillo moved lower as gold prices continued downward on Tuesday, having temporarily soared late last week after Israel launched a strike on Iran.
9.21am: Trump in line for $1.25bn Truth Social bonus
Donald Trump is set to receive another US$1.25 billion worth of Trump Media & Technology Group Corp (NASDAQ:DJT), Truth Social’s parent, stock as part of an earnout bonus.
In order to qualify for the payout, the shares must remain above a minimum benchmark price of US$17.50 each for 20 trading days within a 30-day period.
This period began on March 25, with Tuesday marking the 20th day the shares have remained above this.
Trump Media shares had closed at US$35.50 on Monday, more than double the benchmark price, meaning the former president would be eligible for the bonus given no major shocks through Tuesday… Read more
8.58am: The morning so far
Blue chips had a stellar morning as the FTSE 100 index soared to a new all-time high of 8.073.
Though the index has come back slightly after the first hour of trades, it’s still sitting a healthy 35 points higher at 8.058, thanks to a rebound in market sentiment as Middle East tensions appear to have chilled for the moment.
Primark owner AB Foods was the star of the morning. First-half pre-tax profits surged 37% to £881 million thanks to strong margin recovery and operational improvements, causing shares to bounce over 9% higher in opening trades.
JD Sports was also top of the movers list, rallying 5.3% after announcing the proposed acquisition of Nasdaq-listed sporting goods retailer Hibbett.
In a Tuesday statement, JD’s management positioned the proposed acquisition as another step forward in enhancing its US retail exposure.
Elsewhere in company news, Taylor Wimpey maintained annual guidance, with chief executive Jennie Daly highlighting “continued market stability supported by good mortgage availability and sustained customer confidence”.
Shares added half a percentage point and Aarin Chiekrie, equity analyst at Hargreaves Lansdown, called the group “one of the better-placed UK housebuilders”.
In the mid-cap space, online retailer THG reported accelerated revenue growth over the first quarter as sales continued to improve after sweeping changes made last year. Shares were up 2.8%.
8.44am: Tesla faces pivotal questions
Tesla Inc (NASDAQ:TSLA)’s hotly anticipated earnings today come amid disappointing delivery numbers, ever-encroaching Chinese EV competition, a reported of a pivot away from its lower-cost Model 2 project and more focus on Elon Musk’s robotaxi ambitions.
Ahead of the results, analysts at Barclays cut their target price 20% to $180, seeing the earnings as a likely “negative catalyst” for the stock, with potential for new guidance to include higher investment spend.
8.28am: FTSE smashes new record
The FTSE 100 is up another 50 points in the first 30 minutes of the day’s session, meaning the index is currently at an all-time high of 8.073.
A rebound in market sentiment amid a cooling of Middle East Tensions is driving the rally. Primark owner AB Foods is top of the table after delivering a top set of interim results, Ocado Group, JD Sports and Marks & Spencer also rallying.
8.22am: Taylor Wimpey one of the ‘better placed’ builders
UK housebuilder Taylor Wimpey PLC (LSE:TW.)’s shares were 0.8% higher in opening exchanges following a quarterly trading update.
The group maintained annual guidance, with chief executive Jennie Daly highlighting “continued market stability supported by good mortgage availability and sustained customer confidence”.
As of 21 April, Taylor Wimpey’s total order book value stood at £2.09 billion, representing 7,686 homes.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown, said: “Despite the trends of a modestly improving market, buyers are likely to remain sensitive to price going forward, so it was unsurprising to see management remain cautious and hold full-year guidance firm in today’s update.
“Full-year performance will be second-half weighted as improved pricing and lower build cost inflation feed through and improve profitability.
“All in, Taylor Wimpey looks to be one of the better-placed UK housebuilders, and the current valuation could be an attractive entry point for investors willing to ride out near-term uncertainty in the housing market.”
8.10am: THG’s beauty division drives revenue growth
THG boss Matt Moulding could be feeling vindicated today after guiding the online retailer through a turbulent couple of years.
The group reported accelerated revenue growth over the first quarter as sales continued to improve after sweeping changes made last year.
Continuing revenue was up 2.1% at £455.4 million, or by 4.5% on a constant currency basis, fuelled by an 11.1% uptick within its beauty division.
This was partially offset by a dip in sales from THG’s nutrition and commerce solutions businesses.
“With this major capex program behind us, these investments will continue delivering meaningful savings, which accelerate further as new Ingenuity partners are onboarded,” Moulding added.
THG said it continued to monitor the situation in the Middle East, adding Israel accounts for around 1% of the group’s sales.
Guidance for adjusted pre-tax earnings margins to hit 9% over the year was held, with revenue growth expected to reach the high single digits in the second half.
Shares added 1.8% in opening exchanges.
7.47am: JD Sports proposes $1bn splash out on Nasdaq-listed Hibbett
JD Sports has proposed one of its biggest US acquisitions yet with the purchase of Nasdaq-listed sporting goods retailer Hibbett.
JD has entered into a binding agreement to pay $87.50 per share for 100% of the group’s capital at a 21% premium to yesterday’s closing price.
It implies a $1.08 billion (£878 million) valuation on the Birmingham, Alabama-headquartered company.
In a Tuesday statement, JD’s management positioned the proposed acquisition as another step forward in enhancing its US retail exposure.
Régis Schultz, chief executive of JD Sports, said: “This acquisition is in line with our strategic priorities and is a very important transaction for our strategic and financial development.
“Strategically, it enhances our presence within North America and achieves our objective of strengthening our Complementary Concepts division.
“Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the US.
Some of JD’s previous US-based acquisitions included Finish Line (NASDAQ:FINL) in 2018 for $558 million and Shoe Palace in 2020 for $325 million.
7.30am: Primark owner AB Foods’ profits surge
Primark owner Associated British Foods PLC (LSE:ABF) benefitted from strong margin recovery and operational improvements in the first half to deliver a bumper set of interim results.
Though group revenue only ticked 2% higher to £9.7 billion, adjusted operating profit ran up 39% to £951 million, with adjusted earnings per share (EPS) increasing 46% to 90.4p.
Profit before tax added 37% to £881 million.
Strong cash generation resulted in a 46% hike to AB Foods’ interim dividend. Shareholders can expect a 20.7p cash return payable on 5 July.
Chief executive George Weston called them “a very strong set of financial results”.
“We are now benefitting from the restoration of some normality in our markets and in our supply chains…
“Looking ahead, we continue to invest with discipline to build further sustainable growth. Geopolitical risks remain, of course, and the consumer has yet to fully emerge from cost of living pressures.
“But the group is well positioned to deliver good returns to shareholders.”
7.11am: Blue chips to surge another 40 points
The FTSE 100 is tipped to rally to another all-time high today after smashing records on Monday.
Blue chips rallied 128 points – over 1.6% – throughout the day to close at a record 8,023, thanks to a relief rally as Middle East tensions appeared to have simmered down for the time being.
Futures contracts have the footsie adding another 40 points to 8,073 when markets open at 8am.
On today’s company earnings calendar, Primark owner Associated British Foods PLC (LSE:ABF) will shortly have its interims out, while Jupiter Fund Management PLC (LSE:JUP), Taylor Wimpey PLC (LSE:TW.) will be presenting their trading updates.
Big Tech earnings in the US will get underway later, with Tesla Inc (NASDAQ:TSLA) reporting in the midst of encroaching Chinese competition and a mounting pricing war.
Spotify, General Electric, Visa, PepsiCo and Philip Morris will also be reporting.
