- FTSE 100 down 6 points at 7,619
- House prices rise in January - Rightmove
- Crest Nicholson falls after cutting outlook
9:24am: National Grid boosted by Deutsche upgrade
National Grid rose 0.9% after Deutsche Bank upgraded to ‘buy’ from ‘hold’.
The German investment bank noted throughout 2023, and for 20 months in total, it recommended investors position in integrated utilities.
“However, the sharp outperformance of integrated utilities over pure plays, particularly renewable pure plays causes us to reposition,” it said.
As a result, it has made six rating changes, downgrading integrateds and upgrading pure plays.
In the UK, National Grid is the beneficiary.
In Europe, Elia and Orsted have been moved from ‘hold’ to ‘buy’.
Redeia has been upgraded from ‘sell’ to ‘hold,’ Enel has been lowered from ‘buy’ to ‘hold.’
Verbund has been cut from ‘hold’ to ‘sell.’
Back in the UK, and price targets for SSE, United Utilities and Severn Trent have been increased, supporting shares.
8:54am: Gains evaporate after brigher start
The FTSE 100’s early gains have evaporated with the blue-chip index now nursing modest losses.
Richard Hunter at interactive investor noted UK markets were “undecided” in opening trade in the absence of any major news and with the likelihood of a lighter trading day given the closure of Wall Street later.
Lloyds Banking Group PLC (LSE:LLOY) is down 1.6%.
Analysts at Barclays have taken a look at the FCA’s review of Motor Finance commissions which it believes raises the prospects of banks paying compensation to customers.
While uncertainty is “high,” it suggests a potential provision range of £0.5-1.0 billion for Lloyds.
Another bank in the red is HSBC Holdings PLC (LSE:HSBA), down 1.6%, after Exane BNP downgraded the Asia-focused bank to ‘underperform’ from ‘neutral’.
Burberry is down a further 1.7% after Friday’s profit warning - Goldman Sachs (NYSE:GS) has downgraded the luxury good maker to ‘neutral’ from ‘buy’ while UBS, Stiflel, SocGen and Deutsche Bank are among those broker’s lowering price targets.
8:15am: FTSE 100 makes steady progress
The FTSE 100 posted modest gains at the open on Monday although events may be subdued with US financial closed.
At 8:15am, London’s blue-chip index was up 11.25 points, 0.2%, at 7,636.18.
Stephen Innes at SPI Asset Management said: “It's another week marked by US holidays, with Wall Street observing Martin Luther King Day today, so markets are getting off to a rather sluggish start.”
“That said, there is a lot of geopolitical and macro noise in the market, so it's probably not the time to get over complacent, especially with consumer sentiment apt to get held hostage to the gnarly geopolitical scrim as policymakers, companies and investors struggle to operate in today's highly politically charged environment.”
In London, company news was thin on the ground but two stocks on the wane are PageGroup PLC (LSE:PAGE), down 2.8%, and Crest Nicholson PLC (LSE:CRST), down 4.3% after both lowered profit guidance.
On Crest, analysts at Peel Hunt expect to cut its 2023 pretax profit forecast by 9% from £45 million and for the consensus (currently at £45 million) to fall 15%.
7:53am: House prices rise in January - Rightmove
The average house in the UK jumped by around £4,500 month-on-month in January, according to a property website.
Across Britain, the average price of a property coming on the market rose 1.3% or £4,571 month-on-month, to £359,748, Rightmove said.
Despite the increase, average asking prices are still 0.7% lower than a year earlier.
Rightmove said the volume of new properties coming onto the market for sale is 15% higher than a year ago.
7:48am: Crest Nicholson cuts outlook after identifying further 'legacy' charges
A couple of other stocks to watch include Record PLC (LSE:REC) where Steve Cullen is retiring as CFO after 20 years at the business and Crest Nicholson which has updated on trading conditions.
The housebuilder has identified further costs at Brightwells Yard, Farnham, along with other legacy sites, “ which will impact FY23.”
It now expects adjusted pretax profit to be £41 million for financial 2023.
In November, the company had guided pretax profit to be between £45.0 and £50.0 million for the financial year, having guided for £50.0 million in August.
Crest said it will also take an exceptional charge of £13 million in respect of a legal claim that it has recently received relating to a low rise apartment scheme built by the group which was damaged by fire in 2021.
On a more positive note, the company stated: “Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year.”
7:38am: PageGroup warns of "slightly" lower-than-expected profit
It's quieter day for company news but one stock to keep an eye on is PageGroup PLC (LSE:PAGE) which has followed fellow recruiter Hays in warning of lower-than-expected profits.
The international recruiter said full year operating profit is expected to be slightly below previous guidance of £120 million to £125 million.
Chief Executive Nicholas Kirk said while the firm was “still seeing good activity levels,” albeit a “deterioration in job flow through Q4,” these activity levels “are not all converting into gross profit due to ongoing lower levels of candidate and client confidence.”
The firm said gross profit in 2023 was down 8.9% to £237.3 million from the year before.
In the fourth quarter, gross profit slipped 11.1% with perm down 16.9% but temp up 3.9%.
In the UK, gross profit tumbled 19.9% with EMEA (56% of group total) down 6.5%.
7:10am: Steady progress expected at the open in London
The FTSE 100 is expected to start the week on the front foot although the session may be more subdued than normal with US markets closed for Martin Luther King Day.
Spread betting companies are calling London’s blue-chip index up by around 11 points after closing up 48.34 points at 7,624.93 on Friday.
On Friday, US markets ended mixed, while in Asia, equity markets have made steady progress.
“Today the US is off for Martin Luther King Day which means markets in Europe could well be more subdued than normal, and so far this year there hasn’t been that much to get particularly excited about anyway,” said Michael Hewson at CMC Markets.
“This week the focus is set to be very much on the UK economy in the wake of Friday’s better than expected November GDP numbers, which raised the prospect that the economy may have avoided a technical recession at the end of last year, as a rebound in services activity saw the economy expand by 0.3%,” he added.
“This week we get data for wages and unemployment for November, as well as December CPI and retail sales, all of which have the potential to shift the dial on the timing of a first rate cut from the Bank of England.”
The early focus in London will be housing data from Rightmove plus trading statements from RS Group, Ashmore Group (LSE:ASHM) and PageGroup.
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2024-01-15 07:01:00Z
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