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Hardware stores fall, commodity stocks boost FTSE 100
A warning from Wickes that the DIY market has been softening in recent weeks sent shares of B&Q owner Kingfisher down 6% today. Howden Joinery was also down 4% and Travis Perkins was down 7%, while all-share Wickes slipped 17% on its trading update.
Other retailers including Tesco and Sainsbury’s were also under pressure, falling around 2% after US giant Walmart’s profit warning last night.
Stronger commodity-focused stocks and a 3% rise for Unilever meant the FTSE 100 index was up 35.87 points to 7342.17. The FTSE 250 fell 100.42 points to 19,702.57, with major falls in retail including Marks & Spencer after a 5% drop.
EasyJet’s shares were close to their opening mark at 375p after the airline’s first-quarter trading update, while Bridgepoint, Hobbycraft’s private equity backer, rose 5% on interim results.
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OneWeb agrees £2.8bn merger with Eutelsat
British satellite company OneWeb has agreed a £2.8 billion merger with French company Eutelsat as the two seek to take on rival Elon Musk to provide global internet connections from space.
Under the terms of the deal, OneWeb would be 100% owned by Eutelsat, with OneWeb shareholders exchanging their stakes for Eutelsat shares.
Partly owned by the UK government, OneWeb would retain its UK headquarters, while Eutelsat, which is listed on the Paris Stock Exchange, would seek an additional London listing.
The move means the companies would share a total of 464 satellites, giving them the muscle power to take on Elon Musk’s SpaceX Starlink or Amazon’s Project Kuiper satellite program.
OneWeb was bailed out by the UK government for £400m in 2020 after filing for bankruptcy.
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Unilever “walks a fine line” on rising sales
Unilever shares are 2% higher after the consumer goods giant said underlying sales growth for 2022 will be higher than its previous forecast of a range of 4.5% to 6.5%.
The rise comes after reporting an 8.1% reading for the first half, beating expectations of 7% growth. This contrasted with price increases of 9.8% and a volume decline of 1.6%.
Sales progress was offset by the impact of cost inflation on operating margin, which fell 180 basis points to 17% in the first half. Operating profit rose 4.1% to 5 billion euros (£4.24 billion).
Richard Hunter, Head of Markets at Interactive Investor, said: “Unilever is walking a fine line between growth and the pricing of some of its customers, but for now the strategy is holding.”
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Rolls-Royce appoints new CEO
Engine giant Rolls-Royce has named former BP executive Tufan Erginbilgic as its next chief executive.
He will take up the position on January 1, succeeding Warren East, who announced his intention to step down in February.
Erginbilgic is currently a partner at Global Infrastructure Partners, a private equity firm focused on large scale infrastructure investments.
He previously ran BP’s downstream business, having spent 20 years at the oil giant before leaving in 2020.
Anita Frew, Chair of Rolls-Royce, said: “He is a proven leader of successful teams in complex multinational organizations with the ability to drive a high-performance culture and deliver results for investors.”
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Walmart warning hits US stocks, FTSE 100 stable
Shares in US retailers fell sharply in extended trading on Wall Street last night after grocery giant Walmart downgraded its annual earnings guidance.
The chain blamed the impact of rising prices on consumer spending in its general merchandise business for cutting quarterly and full-year estimates.
Walmart shares fell nearly 10%, dragging other retailers down, including Macy’s and Target. US futures markets are pointing to a weak open later after the Dow Jones Industrial Average and S&P 500 closed modestly higher on Monday.
In an otherwise robust earnings season so far, earnings results from Microsoft, Google-owner Alphabet and Coca-Cola, which are due later, will provide another test of sentiment.
This week’s other focus is the Federal Reserve’s latest interest rate meeting, which is set to announce another 75 basis point rate hike tomorrow.
In Europe, concerns about the economic impact of reduced gas flows through the Nord Stream 1 pipeline continue to hang over markets. Germany’s July IFO business survey slipped to a two-year low yesterday, stoking fears that the German economy is on the brink of recession.
CMC Markets expects the FTSE 100 index to open five points higher at 7311 but slightly lower with indices in Frankfurt and Paris.
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