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London open: Stocks flat; Tesco and Crest Nicholson in focus
London stocks were flat in early trade on Friday, with all eyes on the latest results from Tesco and M&A news in the housebuilding sector.
At 0830 BST, the FTSE 100 was steady at 8,164.05.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Ups and downs are likely to continue in the coming weeks as investors digest the ramifications of political manifestos, should they come to pass. At the same time, there are mixed signals coming from elsewhere.
“Global economic conditions are holding up relatively well, but new Citi research suggests the oil price could hit $60 next year, which would affect the commodity-heavy UK market.”
Investors were mulling the latest policy announcement from the Bank of Japan, which left interest rates unchanged earlier but announced plans to “reduce its purchase amount of Japanese Government Bonds thereafter to ensure that long-term interest rates would be formed more freely”.
In equity markets, supermarket chain Tesco ticked higher as it reported a 3.4% jump in group first-quarter sales, driven by strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation.
Retail sales on a like-for-like basis for the 13 weeks to May 25 came in at £15.3bn as the company said UK market share had increased 52 basis points to 27.6% against its main competitors.
Crest Nicholson surged as it confirmed it had rejected two, unsolicited takeover approaches from Bellway, the latest valuing the group at about £650m.
Under the terms of the latest offer, received on 7 May, Crest shareholders would receive 0.093 new ordinary shares in Bellway for each of their shares. This represents an implied value of 253p per Crest Nicholson share, which is a premium of about 18.8% to the closing share price on Thursday.
“The board of Crest Nicholson evaluated the revised proposal with its financial advisers and concluded that it significantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson’s shareholders,” it said. “The board therefore unanimously rejected the revised proposal on 14 May 2024.”
Crest Nicholson said Bellway made an initial approach on 25 April, which would have seen shareholders receive 0.089 new ordinary shares.
Bellway was trading down just over 3%.
News of the takeover proposals came just hours after Crest Nicholson slashed its interim dividend payment, said it swung to a loss in the first half and downgraded its profit guidance for the full year, sending its shares tumbling.
The housebuilder cut its adjusted pre-tax profit guidance for the year to the end of October 2024 to between £22m and £29m, from earlier guidance of £45m to £50m, and £41.4m last year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tesco Plc | +2.35% | +7.10 | 309.60 |
| 2 |  |
Sage Group Plc | +1.84% | +19.00 | 1,050.00 |
| 3 |  |
Bt Group Plc | +1.81% | +2.45 | 137.45 |
| 4 |  |
Smurfit Kappa Group Plc | +1.30% | +46.00 | 3,586.00 |
| 5 |  |
Halma Plc | +1.05% | +28.00 | 2,692.00 |
| 6 |  |
Informa Plc | +1.05% | +8.80 | 850.80 |
| 7 |  |
St. James’s Place Plc | +0.96% | +5.00 | 528.00 |
| 8 |  |
Tui Ag | +0.94% | +5.50 | 593.00 |
| 9 |  |
Intercontinental Hotels Group Plc | +0.92% | +76.00 | 8,302.00 |
| 10 |  |
Astrazeneca Plc | +0.89% | +110.00 | 12,502.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bae Systems Plc | -3.51% | -48.50 | 1,334.50 |
| 2 |  |
Burberry Group Plc | -2.96% | -30.30 | 993.20 |
| 3 |  |
Rolls-royce Holdings Plc | -2.31% | -10.80 | 457.00 |
| 4 |  |
Intertek Group Plc | -2.21% | -108.00 | 4,782.00 |
| 5 |  |
Barclays Plc | -1.54% | -3.15 | 202.00 |
| 6 |  |
Melrose Industries Plc | -1.53% | -9.60 | 617.40 |
| 7 |  |
Antofagasta Plc | -1.41% | -29.00 | 2,034.00 |
| 8 |  |
Severn Trent Plc | -1.31% | -33.00 | 2,487.00 |
| 9 |  |
Kingfisher Plc | -1.17% | -3.00 | 252.80 |
| 10 |  |
Flutter Entertainment Plc | -1.16% | -165.00 | 14,005.00 |
US close: Stocks mixed following FOMC decision
Wall Street stocks delivered a mixed performance on Thursday after the Federal Open Markets Committee’s latest interest rate decision a day earlier.
At the close, the Dow Jones Industrial Average was down 0.17% at 38,647.10, while the S&P 500 advanced 0.23% to 5,433.74 and the Nasdaq Composite saw out the session 0.34% firmer at 17,667.56.
The Dow closed 65.11 points lower on Thursday, off session lows but still extending losses recorded in the previous session as investors digested the Federal Reserve’s interest rate decision.
The US central bank kept its benchmark interest rate unchanged, as expected, but acknowledged that it had seen “modest further progress” towards hitting its 2% target level and stated that just one rate cut was coming before the end of 2024, down from the three it had originally signalled.
On the macro front, the number of people in the States filing for unemployment benefits moved higher during the week ended 8 June, according to the Department of Labor, which said initial unemployment claims increased by 13,000 in seasonally adjusted terms. Meanwhile, the four-week moving average, which aims to strip out week-to-week, jumped by 4,750 to 227,000. Secondary unemployment claims, those not being filed for the first time and referencing the week finishing on 1 June, rose by 30,000 to 1.82m.
Elsewhere, wholesale inflation in the US dipped somewhat unexpectedly last month. According to the Department of Labor, so-called final demand prices fell at a month-on-month pace of 0.2% in May (consensus: 0.1%). In terms of annual rates of change, the producer price index slowed from a 2.3% clip in April to 2.2% for May (consensus: 2.5%).
Goods prices accounted for all of the decline, dropping by 0.8% as energy costs fell back by 4.8% versus April. Food prices on the other hand only dipped by 0.1%, while services prices were flat over the month. Core producer prices were flat over the month (consensus: 0.3%).
In the corporate space, Broadcom shares rallied after the chipmaker topped expectations with its Q2 trading performance and announced a ten-for-one stock split, while Dave & Buster‘s stock headed south after a Q1 revenue miss, Adobe traded higher in extended trading after its quarterly earnings impressed the Street, and Tesla shares shot up after chief executive Elon Musk revealed shareholders looked set to approve his controversial $56.0bn pay package and a resolution to incorporate the electric carmaker in Texas.
Friday newspaper round-up: Insecure work, Stellantis, Nationwide
The UK has seen an “explosion” in insecure, low-paid work in the past 14 years, according to a new report. The TUC said its study had found that the number of people in insecure work had reached a record high of 4.1 million. The analysis of official statistics shows the number of people in “precarious” employment – such as zero-hours contracts, low-paid self-employment and casual or seasonal work – increased by nearly 1 million between 2011 and 2023. – Guardian
The owner of the Jeep, Fiat and Vauxhall brands has said it will not take a defensive stance in the battle for electric car sales, amid signs of an escalating trade war in the market between Europe and China. Stellantis’s chief executive, Carlos Tavares, has criticised the EU tariffs on imported Chinese cars announced on Wednesday and said the world’s fourth biggest carmaker preferred to “fight to stay competitive”. – Guardian
Motorists are poised to benefit from a sharp drop in fuel prices over the next 18 months, as analysts predict the cost of oil could fall to $60 (£47) a barrel. The expectation of lower petrol prices has emerged in response to predictions that there will be a global oversupply of oil by 2030. A glut of supply will force companies to lower prices with experts at Citigroup predicting crude oil will fall to $60 a barrel over the next 18 months, down from $80 today. – Telegraph
Members of Nationwide Building Society are being urged to vote in favour of a new pay package for its chief executive, which will triple Debbie Crosbie’s maximum long-term bonus from £1.14 million to £3.42 million. The potential pay rise was because the remuneration opportunity for Crosbie “currently sits substantially below UK banking peers of a similar size and complexity”, the 16 million members were told in letters sent out this week. – The Times
A reality television influencer has pleaded not guilty to illegally plugging unauthorised investment schemes on social media. Scott Timlin, who appeared on the MTV show Geordie Shore, is one of nine so-called finfluencers, or financial influencers, charged by the Financial Conduct Authority in relation to an unauthorised foreign-exchange trading scheme. – The Times
