- FTSE 100 up 126 points at 7,465
- Shop price inflation eases in August
- Bunzl climbs after raising guidance
4:40pm: FTSE 100 boosted as China acts to boost flagging economy
The FTSE 100 has ended a buoyant day close to best levels for the session as moves by Chinese authorities to boost its flagging economy gave investors a lift.
At the close, London's lead index was up 126.41 points, 1.7%, at 7,464.99 while the FTSE 250 jumped 337.57 points, 1.9%, to 18,468.59.
“The market may have been underwhelmed by China’s initial efforts to restore confidence, but that doesn’t seem to be the case with the latest measures, which have given Chinese and global stocks a real boost,” says AJ Bell investment director Russ Mould.
“Whether the medicine Beijing is doling out will deal with the causes rather than just the symptoms of its economic challenges is debatable, but for the time being it is at least doing enough to restore sentiment.
Property stocks were in demand following news the Government was relaxing rules surrounding environmental commitments builders are required to meet, boosting hopes that more houses can be built.
Elsewhere, airlines seemed unperturbed by the disruption caused by air traffic control issues while Britvic fizzed on an upgrade by Barclays.
Bunzl enjoyed a good day, rising 4.1%, as it raised guidance alongside solid interim results.
3:51pm: Pub bosses confident but staff shortages keep a lid on sales
UK pubs enjoyed a strong bank holiday but industry bosses said staff shortages saw them miss out on a further £22 million in sales.
The British Beer and Pub Association (BBPA) said about 57 million pints were poured over the long bank holiday weekend.
However, the industry body said it believes about five million more would have been sold but for a shortage of workers.
Emma McClarkin, chief executive of BBPA called on the Government to help ease staffing pressures by widening the UK’s current shortage occupation list.
A recent survey by the BBPA, British Institute of Innkeeping, Hospitality Ulster and UKHospitality, showed 61% of hospitality businesses are experiencing staff shortages.
The call came as a survey showed optimism among Britain’s hospitality leaders has risen for the third quarter in a row.
The new business confidence survey from CGA by NIQ showed 62% of leaders currently feel optimistic about prospects for their business over the next 12 months, an increase of eight percentage points from the last survey in May.
The proportion of leaders feeling confident about the hospitality market in general has climbed by five percentage points quarter-on-quarter, to 45%.
Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “Leaders’ optimism levels are impressively high at such a difficult time for UK businesses and consumers.”
“However, ongoing high inflation and staffing issues mean trading conditions will remain challenging until at least the end of the year.”
3:12pm: Campaigners attack plans to ease building rules
Shares in the housebuilders continue to push higher but environmental groups have attacked the Government's plans to ease rules that require housebuilders to mitigate the impact new developments have on river health.
The Government said the plans would provide an additional 100,000 new homes in England by 2030 and provide an £18 billion boost to the economy.
It pointed out housing developments contribute only a small fraction of nutrient pollution and that new funding is being provided to mitigate any associated increase.
But the chief executive of The Wildlife Trusts branded it a “disgraceful move” and environmental groups suggested the change would allow developers to cut corners.
“Now instead of the polluter paying, the costs have been dumped on the environment and the taxpayer,” Craig Bennett, the chief executive of the Wildlife Trusts said. “Time and again the costs go on the environment and the taxpayer as a result of lobbying by industries and what we have seen here is another example of very effective lobbying from the construction industry."
2:45pm: Wall Street flat at the open
A subdued start across the pond hasn't dulled the mood in London where the FTSE 100 is close to its best levels for the day, up 124 points at 7,462.
Shortly after the opening bell, the Dow Jones Industrial Average was up 12.51 points at 34,572.49, the S&P 500 was 2.39 points higher at 4,435.70 and the Nasdaq Composite was down 15.51 points at 13,689.62.
Investors are awaiting JOLTS job vacancy figures and consumer confidence data today, ahead of inflation and non-farm payrolls figures later in the week.
Stocks on the move include 3M Co which backed up Monday's strong gains, adding a further 1.3% after agreeing a $6bn settlement with almost 300,000 military veterans who claim combat earplugs it supplied to the US army failed to protect them from hearing loss.
The company said it would contribute $5bn in cash and $1bn in stock over a five-year period, as part of a settlement, which will result in a pre-tax charge of approximately $4.2 billion in the third quarter of 2023.
JM Smucker rose 3.2% after it raised guidance after reporting net income nearly doubled in the financial first quarter.
2:10pm: Watches of Switzerland rallies after Rolex falls
Watches of Switzerland Group (WOSG) PLC has rallied 5.2% after heavy falls on Friday after the surprise acquisition by Rolex of Bucherer.
Shore Capital analyst Eleonara Dani explained the foundation of WOSG's investment case has long rested upon the assumption that Rolex, a non-profit organisation deeply committed to preserving its legacy, would never transition towards a direct-to-consumer model.
However, the acquisition of Bucherer has shaken the foundations of this belief, raising numerous questions about the future dynamics of the market and WOSG's strategic position within it, she said.
Dani said the motivation behind this deal has been the subject of extensive speculation, with differing viewpoints prevailing within the industry.
Some observers perceive it as a defensive manoeuvre to prevent Bucherer from falling into foreign groups or private equity hands and see it as a strategic play by Rolex to venture into the DTC space, she noted.
“The consensus remains elusive, and this uncertainty further muddies the waters for investors seeking a clear understanding of the rationale behind the acquisition,” Dani added.
The ShoreCap analyst said the deal leaves WOSG “in a unique position requiring strategic adaptation.”
Dani thinks this mean a share buy-back programme in the short-run while in the medium-term it will need to consider the implications of the deal for expansion plans in Europe.
“The dynamics of the high-end watch market in the US might also experience significant changes due to this acquisition,” she added.
Despite this, the analyst left forecasts unchanged noting WOSG has limited geographical overlap with Bucherer.
“This recent development does not fundamentally alter the need for consolidation in the US and European markets, where substantial opportunities remain,” she explained.
1.33pm: Here’s a recap of the top risers on the market today
Shares in housebuilders are firmly on the front foot after the government announced it is scrapping UK environmental rules that developers say have prevented tens of thousands of homes from being built in recent years.
Persimmon PLC (LSE:PSN) rose 3.4%, Barratt Developments PLC (LSE:BDEV) climbed 2.7%, Taylor Wimpey advanced 2.5% and Vistry Group gained 4.5%.
Pantheon Resources PLC (AIM:PANR, OTCQX:PTHRF) rallied as the Alaska-focused oil explorer hailed a report by independent consultant NSAI as validation of the huge amounts of oil it has often suggested lie under its licences.
Shares rose 2.18p or 18% to 15.78p.
Quadrise PLC (AIM:QED) recovered ground as it confirmed its partner Valkor will carry on with a pilot programme to drill for heavy oil in Utah even though a much wider and larger drill programme was rejected last week by the local authorities.
Shares were up 16% at 1.02p.
Polarean Imaging PLC (AIM:POLX, OTC:PLLWF) rose 8% as the US granted it a crucial reimbursement code, meaning its technology can be used in private and public healthcare programmes.
12:53pm: IG chief executive leaves due to ill health
Back to company news and IG Group Holdings PLC has announced chief executive June Felix is stepping down after a short period of medical leave.
Felix will leave the business on September 29 and headhunter, Russell Reynolds, has been appointed to search for a replacement.
In the meantime, Charlie Rozes will continue in his current role as acting CEO and chief financial officer.
Mike McTighe, chair of IG Group, said during Felix's tenure "the company has successfully pursued a strategy to diversify the business while at the same time strengthening its core OTC business resulting in a doubling of the group's revenue and profit over the period."
The online trading firm is due to update on trading on September 14 and investors will be looking to see if the subdued markets reported by CMC Markets last week are replicated by IG.
Shares are holding just in the green, up 0.6% at 670.70p.
12:13am: Government delays post-Brexit border controls for food (again)
The government has confirmed a fifth delay to the implementation of its post-Brexit border controls on food and fresh products, as ministers admitted the new regime on EU imports will push up prices.
The Cabinet Office said that the government’s plans were likely to have an impact on headline inflation, although it insisted the effect was “expected to be minor”, estimating it would increase the rate by less than 0.2% across three years.
The UK’s Cabinet Office said that “remaining sanitary and phytosanitary controls, as well as full customs controls for non-qualifying Northern Ireland goods, […] will now be introduced from January 2024.
The government had said in April that new checks would come into force on Halloween, 31 October.
11:46am: Modest gains seen in the US
US stocks look set to creep higher, consolidating recent gains, as investors look ahead to key data on inflation and employment later this week.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.1% higher, while those for the S&P 500 rose 0.1%, and contracts for the Nasdaq 100 futures were up 0.1%.
The jobs market will be in focus all week starting with JOLTS vacancy figures Tuesday, as investors look for evidence that interest rate rises are beginning to slow down a so far resilient employment market.
Data from the US Bureau of Labor Statistics is expected to show job openings edged down to about 9.46 million in July from 9.58 million the previous month.
Later this week, ADP private sector payroll figures and weekly jobless claims data will be released ahead of the main event, non-farm payrolls on Friday.
Elsewhere today, US consumer confidence figures will be released.
Morgan Stanley (NYSE:MS) expects the Conference Board Consumer Confidence Index to come in at 116.6 in August, a tick down from 117.0 in July.
In corporate news, results are due from electronics retailer Best Buy, food and beverage maker JM Smucker and discount retailer Big Lots.
While after the closing bell it is the turn of information technology company HP and cloud storage company Box to update investors on their financial performance.
11:14am: Britvic boosted by Barclays upgrade
It remains a sea of green on trading screens as equity markets return from the long weekend with a spring in their step.
Britvic PLC (LSE:BVIC) has joined the party, with shares up 3.1% aided in part by an upgrade by Barclays.
The brojer has moved its rating to overweight from neutral with an increased price target of 1,100p, up from 1,000p before.
"In the wake of Covid and inflation disruption to the implementation of Britvic's new growth strategy, we now see headwinds clearing and identify multiple top-line and margin drivers that can deliver accelerated growth," the bank said.
"Our updated forecasts are 4%+ ahead of consensus from FY24E onwards," it added.
10:45am: Housebuilders jump as Gove scraps environmental rules
Shares in housebuilders are firmly on the front foot after the government announced it was scrapping UK environmental rules that developers say have prevented tens of thousands of homes from being built in recent years.
Persimmon PLC (LSE:PSN) rose 3.4%, Barratt Developments PLC (LSE:BDEV) climbed 2.7%, Taylor Wimpey PLC (LSE:TW.) advanced 2.5% and Vistry Group PLC (LSE:VTY) gained 4.5%.
The property industry has complained that Natural England, a government agency, has blocked the building of large numbers of new developments by enforcing so-called “nutrient neutrality” regulations designed to protect the country’s waterways.
The rules were introduced under an EU directive on habitats and reinforced by a 2018 European Court of Justice ruling that said adding nutrients to soil that was already in poor condition would be unlawful.
Housing secretary Michael Gove said: "We are committed to building the homes this country needs and to enhancing our environment."
"The way EU rules have been applied has held us back. These changes will provide a multibillion-pound boost for the UK economy and see us build more than 100,000 new homes."
"Protecting the environment is paramount which is why the measures we’re announcing today will allow us to go further to protect and restore our precious waterways whilst still building the much-needed homes this country needs," he added.
9:57am: Bunzl shares jump after well received results
Bunzl's results continue to be well received with shares up 3.2% while the FTSE 100 has eased a touch fron earlier highs.
Analysts at Stifel viewed it "as a good update from Bunzl and see the group as well positioned to continue to consolidate its fragmented end-markets with further opportunity to expand margins."
The broker noted adjusted operating profit was £438.3 million, an increase of 2.5%, and margins increased to 7.4% from 7.3% in the prior period, supported by successful margin management initiatives, including the increase in own brand penetration.
Regional performance was mixed, Stifel pointed out, with North America weakness continuing, with underlying revenue down 3.1%, driven by volume weakness in the foodservice sector.
Inflation continues to drive good underlying revenue growth in Continental Europe with underlying revenue +3.7%, while similarly, the UK & Ireland saw strong revenue growth driven by inflation, with underlying revenue up 11.6%.
Stifel noted the impact of operating cost inflation reduced and was moderate over the period.
Retaining a hold rating, the broker said in the near term, "we see scope for the softer macroeconomic backdrop, potential price moderation and an FX translational headwind to put some downward pressure on revenue and EPS progression."
Shore Capital analyst Robin Speakman reiterated a buy rating.
"We observe at Bunzl that a conservative management team continues to deliver good performance, the Group remains a resilient steady cash generative business model, underlying growth is set to continue," he said.
Speakman believes M&A remains central to the business case, and with leverage of 1.1x this provides "significant headroom."
"Should leverage remain well below target with the group unable to deploy cash on M&A well ahead of strong FCF, then we see scope for buybacks," he said.
"Given substantial firepower in the balance sheet, we expect the acquisition pipeline to continue to convert through the remainder of H2," he added. into FY24F.
9:30am: Airlines in the green despite air traffic problems
Shares in airlines have shrugged aside a system-wide failure of the UK’s air traffic system on Monday which left thousands of passengers stranded.
Mark Harper, transport secretary, said the problems are “going to take some days” to resolve.
While the glitch with the flight planning system was fixed within hours, the disruption is likely to last for some time as airlines work to restore services.
“I accept it’s disrupted thousands of people and it is going to take some days to get people back to where they should be,” Harper told BBC Radio 4.
Nonethless, International Consolidated Airlns Grp SA was up 1.3%, easyJet PLC rose 1.6% and Wizz Air Holdings PLC (AIM:WIZZ) jumped 2.7%.
The cause of the failure will be investigated by the Civil Aviation Authority, Harper added, but he said the government was “clear it wasn’t a cyber attack”.
8:53am: FTSE surges, Britvic boosted by Barclays upgrade
The strong start continues with the FTSE 100 up 126 points at 7.465 with B&M European Value Retail having the dubious honour of being the only faller in the lead index for now.
Bunzl continues to go well, topping the risers, up 3.9% after raising guidance alongside its interim results.
"Bunzl offers strong value and investment credentials in our view, in an environment which remains positive overall for underlying organic and acquisitive growth," said Shore Capital analyst Robin Speakman.
"Fundamentals remain strong backed by excellent cash flow credentials and a strong balance sheet with growing firepower for shareholder value creation," he said.
Otherwise, gains are broad-based with insurer Prudential up 3.7%, housebuilder Persimmon up 3.1%, miner Anglo American up 2.9% and lender Barclays up 2.8%.
Britvic PLC (LSE:BVIC) is another share on the rise boosted by an upgrade by Barclays to overweight with an 1,100p price target, up from 1,000p.
8:35am: Shop price inflation decelerates in August
A bit more on news that UK shop price inflation hit its lowest level in almost a year in August, driven by an easing in the rise in food prices.
The British Retail Consortium (BRC) said the annual rate decelerated to 6.9% in August, down from 8.4% in July and the lowest level since October 2022.
Helen Dickinson, chief executive of the BRC, said the fall in shop prices was driven by the cost of food, “particularly for products such as meat, potatoes and some cooking oils”.
Today at @the_brc we published the latest Shop Price Inflation report, covering the month of August
Inflation continues to fall ???? pic.twitter.com/KpPnaCcYFT
— Harvir Dhillon (@HarvirDhillon) August 29, 2023
The figures showed food inflation cooled to 11.5% in August, down from 13.4% the previous month and the lowest level since September last year.
The biggest change came in fresh food, where inflation fell to 11.6% this month, down from 14.3% in July, the lowest level in a year.
8:17am: Buoyant start in London, Bunzl jumps
The FTSE 100 has made a buoyant start on Tuesday, reflecting gains in Asia and the US while markets in the UK were closed Monday.
At 8:15am, London’s lead index was up 98.32 points, 1.3%, at 7,436.90 while the FTSE 250 jumped 267.65 points, 1.5%, to 18,398.67.
Stimulus measures in China and a positive reaction to Federal Reserve chair Jerome Powell’s speech in Jackson Hole have given equities some momentum while a fall in shop price inflation in the UK has added to the brighter mood.
In China, authorities halved stock trading stamp duty, loosened margin loan rules, put the brakes on new listings and approved new retail funds in attempts to support the faltering economy.
Markets reacted positively in Asia on Monday, and again today, while US markets closed in the green as well.
Back in the UK, and shop price inflation fell in August to its lowest level in almost a year, driven by an easing in food cost pressures, according to sector data.
The British Retail Consortium published figures on Tuesday that showed the annual rate decelerated to 6.9% in August, down from 8.4% in July and the lowest level since October 2022.
In company news, Bunzl jumped 3.6% to 2,823p, after raising guidance alongside a rise in interim profit and revenue.
“We view this as a good update from Bunzl and see the group as well positioned to continue to consolidate its fragmented end-markets with further opportunity to expand margins,” said analysts at Stifel.
7:58am: Bunzl raises guidance as profit rises
A slightly slow start in London this Tuesday but it looks like good news from Bunzl which has raised annual guidance as it reported a rise in interim profit alongside a modest increase in revenue.
The distribution specialist said in the six months to June 30, pre-tax profit climbed 6.9% to £317.1 million from £296.6 million the year before with revenue up 4.5% to £5.91 billion from £5.65 billion.
“As a result of our successes over the period, we are upgrading our 2023 adjusted operating profit guidance, supported by a meaningful increase in our operating margin expectations,” said Frank van Zanten, chief executive officer.
Bunzl now expects adjusted operating profit to be moderately higher than in 2022 at constant exchange rates, with operating margin remaining strong and moderately higher than that achieved in the prior year.
At constant exchange rates revenue in 2023 is expected to be slightly higher than in 2022, driven by announced acquisitions, partially offset by a slight organic decline.
Revenue in the first half was supported by a strong performance in continental Europe, up 12.4%, and the Rest of the World, up 7.6%, offset by declines in North America, down 2.9%, and UK & Ireland, down 3.7%.
First half operating margin growth to 7.4% from 7.3% was supported by margin management initiatives, including increasing penetration of own brand, Bunzl said.
The dividend was raised 5.2% to 18.2p.
Bunzl also announced it had signed an agreement to buy a business in Poland, and one in the Netherlands for an undisclosed sum.
7:00am: Strong start seen in London
The FTSE 100 is expected to advance after the extended weekend after gains in the US and news UK shop price inflation decelerated further in August.
Spread betting companies are calling London’s lead index up by 90 points after closing up 0.1% at 7,338.58 on Friday.
UK shop price inflation decelerated further in August, data showed on Tuesday, presenting some "better news for consumers".
According to the latest British Retail Consortium-NielsenIQ tracker, the annual shop price inflation rate cooled to 6.9% in August from 8.4% in July.
Chinese stocks extended Monday's gains after China's regulators decided to slash the tax paid on stock trades for the first time since 2008, while in the US, stocks ended higher, with the Dow and the S&P 500 both up 0.6%, and the Nasdaq Composite up 0.8%.
Back in London, and the early focus will be an update from Bunzl.