Understated Start Expected Ahead of Autumn Statement at 7:00 AM
As trading begins on Wednesday preceding the Autumn Statement, it is anticipated that the FTSE 100 will open with minimal fluctuations. After closing down 14.37 points, or 0.2%, at 7,481.99 on Tuesday, spread betting companies are predicting a stable start for London’s leading index.
Around 12:30 GMT, Chancellor Jeremy Hunt is set to make his announcement. According to reports, he is likely to reduce national insurance rates and offer a £10 billion annual tax break to businesses investing in new machinery and equipment. Additionally, he is expected to pledge a reduction in business taxes, streamlined regulations, and improved access to the national network.
Investors will also be closely monitoring Nvidia’s earnings report and the minutes from the latest FOMC meeting. The Federal Reserve officials have indicated that interest rates will need to remain elevated for a considerable period to combat persistently high inflation, as per the minutes from the US central bank’s meeting held from October 31 to November 1.
The minutes highlighted the ongoing importance of maintaining a tight monetary policy stance to achieve the Fed’s 2% inflation target over time. Economist Paul Ashworth at Capital Economics noted that the November Fed meeting offers insights that cater to various interests.
Despite another set of results exceeding expectations, Nvidia’s stock saw a 2% decline in other markets. The company had reached an all-time high before reporting its earnings, citing strong growth in most regions that could offset concerns about reduced sales in China due to tightened regulations on semiconductor exports.
Kingfisher’s European Troubles Make for Unpleasant Reading at 8:32 AM
Kingfisher’s recent earnings announcement has led to a 5.7% decline in its stock price. It marks a second consecutive drop in revenue, extinguishing hopes of a recovery. The European operations are the latest source of weakness, according to Richard Hunter, Head of Markets at Interactive Investor.
The combined Castorama and Brico Depot businesses contribute to 32% of total sales, and both experienced declines in sales of 6.9% and 10.6%, respectively. This led to an overall 8.7% decline in France’s performance. Kingfisher faced a series of challenges in the fourth quarter, including unseasonably warm weather delaying the sale of heating and insulation products, along with a weaker European home improvement market that deteriorated more than expected.
FTSE 100 Up 16 Points at 7,497: Business Taxes in Focus Post-Autumn Statement
The FTSE 100 has gained 16 points, reaching 7,497. Following the Chancellor’s Autumn Statement, business taxes have taken center stage.
Chancellor Jeremy Hunt’s announcement is eagerly awaited, expected to unveil 110 unique measures aimed at revitalizing the UK economy. The FTSE 250 has risen by 33.22 points (0.2%) to 18,380.85 at 8:15 AM, while London’s primary index, the FTSE 100, has seen a 0.1% increase, rising by 6.41 points to 7,488.40.
Susannah Streeter, Head of Funds and Markets at Hargreaves Lansdown, anticipates a cautious start for the FTSE 100. Rumors suggest that Chancellor Hunt will inject measures into the UK economy, including tax cuts, with the aim of boosting growth, although these measures could potentially raise concerns about inflation.
Reports indicate that Chancellor Hunt may lower national insurance rates and provide a £10 billion annual tax break for businesses investing in new machinery and equipment. Additionally, plans to reduce business taxes, cut red tape, and improve national infrastructure access are expected.
Furthermore, there are speculations that Chancellor Hunt may announce tax cuts in preparation for an upcoming general election.
Kingfisher’s stock saw a 6.2% decline following news that poor sales in France could result in lower-than-expected profits, despite strong performance in the UK. On the other hand, Sage experienced a 5.8% increase in its stock price after announcing a £350 million share buyback.
Johnson Matthey also started positively, rising by 2.6%. They reported an improved outlook for the year after a challenging second half.
Smith & Nephew Acquires Agili-C Maker CartiHeal at 7:59 AM
Smith+Nephew, a publicly traded company on the FTSE 100, has acquired the maker of Agili-C, an innovative sports medicine system for knee bone regeneration. The initial cash consideration for the acquisition is $180 million, with an additional $150 million contingent on financial performance.
Agili-C offers an off-the-shelf, one-step treatment for osteochondral (bone and cartilage) abnormalities, surpassing currently available therapies. Deepak Nath, CEO of Smith+Nephew, views this technology acquisition as a strategic move to bolster their Sports Medicine business. Agili-C’s superior medical performance aligns well with Smith+Nephew’s existing knee repair portfolio, complemented by its expertise in high-growth biologics.
CRH Sells European Lime Operations for $1.1 Billion at 7:56 AM
CRH PLC has continued its active year of divestitures, selling its European lime operations to SigmaRoc for approximately $1.1 billion. In 2022, CRH sold 16 operating sites with a strong presence in Poland, Ireland, Germany, the Czech Republic, and the UK. These sales generated around $610 million in revenue and an EBITDA of about $137 million.
The divestment is divided into three phases, with the operations in Germany, the Czech Republic, and Ireland comprising the second phase, scheduled for completion in early 2024. The remaining phases, covering operations in Poland and the UK, are expected to conclude in 2024.
CRH expects that the proceeds from this divestment will provide ample capital allocation opportunities for further growth and value creation for its shareholders. This move comes after CRH recently purchased cement and ready-mixed material assets from Martin Marietta Materials for $2.1 billion.
Sage’s In-Line Results and Buyback Boost Stock at 9:17 AM
Sage Group PLC, a provider of accounting software, has reported in-line results and announced a £350 million share repurchase program. The company’s strong performance includes triple-digit revenue growth, with Sage Business Cloud reaching £1.63 billion, contributing to a 12% increase in underlying recurring revenue, now at £2.10 billion. Operating profit also rose by 18% to £456 million, resulting in a margin increase of 140 bps to 20.9%. Underlying total revenue has grown by 10% to £2.18 billion.
Sage has proposed a final dividend of 12.75p, raising the full-year dividend by 5% to 19.3p. The buyback reflects Sage’s confidence in its long-term prospects, underpinned by strong cash flow and financial stability.
Sage anticipates that pure total revenue growth in the upcoming fiscal year 2024 will be largely consistent with the prior year. Additionally, the company expects upward trends in revenue, recurring revenue, and margin.
Investors have reacted positively to the results and the buyback announcement, causing Sage’s stock price to surge by 5.8%.