The prospect of a DIY revival drove Kingfisher towards the top of the FTSE 100 risers’ board. The owner of B&Q and Screwfix has been one of many retailers hit by a fall in people’s spending under pressure from the soaring cost of living and high inflation. However, analysts at HSBC argued that home improvements, which account for about 20 per cent of the retailer’s total sales, will benefit as the property market picks up when interest rates start coming down from the middle of this year.
“We expect this to have a further positive impact on housing market activity in the UK via a further reduction in mortgage rates,” Paul Rossington, the head of European consumer retail research at HSBC, said, adding that an improving outlook for real wage growth should help to drive an improvement in repairs and maintenance spending.
Rossington added that Kingfisher’s cut to this year’s financial guidance — it is forecasting adjusted pre-tax profit of between £490 million and £550 million — “should mark the low point of the current earnings cycle”. With things looking up for the retailer, Rossington advised his clients to buy the stock, sending its shares 6p, or 2.4 per cent, higher to 248p.
Kingfisher defied an underperforming FTSE 100, as did Smiths Group, after a busy HSBC argued that “the worst is behind” the engineering conglomerate and suggested that it may yield higher growth in the second half of its financial year. Smith’s shares ended the day 43p, or 2.7 per cent, higher at £16.47.
Joining the pair among the Footsie’s happier players was Centrica, the British Gas owner, which rose 4¼p, or 3.4 per cent, to 130¼p after it sealed a ten-year deal with STMicroelectronics, a Swiss chip producer, for the supply of renewable energy to its operations in Italy. AstraZeneca advanced 230p, or 2.1 per cent, to £109.62 as investors cheered the drugs company’s decision to increase its dividend this year.
Advertisement
The FTSE 100 generally struggled, though, closing down 37.41 points, or 0.5 per cent, at 7,923.80 amid concerns about a toxic combination of weak global economic growth, higher-for-longer interest rates and rising worldwide political tensions. The FTSE 250 fell 14.88 points, or 0.1 per cent, to 19,786.87.
Limiting gains on both indices were companies trading ex-dividend. These included Aviva (down 31p, or 6.4 per cent, at 458¾p), Phoenix Group (dropping 31½p, or 5.8 per cent, to 511p) and ITV (falling 2½p, or 3.4 per cent, to 70¾p).
Another stock in the red was Jupiter Fund Management, shares of which were marked down 2¾p, or 3.1 per cent, to 87¾p. Investors heeded advice from Barclays, which cut its rating to “underweight” — a “sell” in old money — as analysts expect the present weak momentum to continue after the departure of Ben Whitmore, a star fund manager, and for Jupiter to lag the wider sector’s performance.
A dark cloud hung over London’s listed airlines as investors were on high alert after Lufthansa, the German carrier, extended a suspension of its flights to Tehran amid escalating tensions in the Middle East. Nervous investors chose to offload their shares in airlines including Tui (falling 31p, or 4.6 per cent, to 646p), Wizz Air (down 74p, or 3.1 per cent, at £22.80) and International Consolidated Airlines Group, the British Airways owner (dropping 6½p, or 3.7 per cent, to 169p).
There were some noteworthy moves on Aim. Shares in Alpha Financial Markets rose 8p, or 2.6 per cent, to 320p, after the financial services consultancy said there had been some improvement in market conditions in recent months. XPS Pensions fared even better, jumping 25p, or 10.7 per cent, to close at a record high of 259p after it said in a surprise trading update that it was on track to top its previously upgraded expectations after revenues had grown across all its business units last year.
Political clouds loom over listings market
Advertisement
Elections in Britain and the United States could force companies to reassess their plans of pursuing initial public offerings this year, EY has warned, after barely a handful of businesses chose to float on London’s main and junior markets in the first quarter.
Between January and March only three companies, including Air Astana, the Kazakh airline, went public in London, raising £283.8 million, the accountancy group revealed. However, the proceeds generated in the period were more than triple the amount of money raised in the same quarter in 2023, when five companies were listed raising a total of £81 million. In the final quarter of last year no flotations took place.
Scott McCubbin, EY’s UK and Ireland IPO leader, noted that forthcoming elections would “create an unprecedented level of regulatory and policy uncertainty” and that companies looking to float could re-evaluate timings “to avoid further economic and geopolitical headwinds”.
London has suffered a sharp decline in listings since a boom in 2021, when 59 companies made their debuts and raised £13.5 billion, amid worries about the global economy, higher interest rates and the war in Ukraine.
Wall Street report
Indices were helped by strong gains for technology stocks. The Nasdaq hit a new high with a gain of 271.84 points, or 1.7 per cent, to 16,442.20, while the Dow Jones industrial average dipped 2.43 points, or 0.01 per cent, to 38,459.08.
