- FTSE 100 flat in early exchanges
- JD Sports rises as announces European expansion
- Direct Line tumbles as warns of increased motor claims
8.15am: FTSE little changed at the open
The FTSE 100 made a subdued start after the long weekend as investors look ahead to US inflation figures on Wednesday and the UK interest rate decision on Thursday.
At 8.15am, London’s blue chip index stood at 7,782.15, up 3.77 points, or 0.048% while the FTSE 250 was down 17.11 points to 19,435.39.
JD Sports Fashion PLC (LSE:JD.) made a bright start to the day with shares rising 3.5% after the sports retailer unveiled the planned acquisition of Groupe Courir in France for an enterprise value of €520mln.
Based in France, Courir is a leading player in the European sports footwear and clothing sector with 313 stores bannered across six countries.
Analysts at Peel Hunt said, “We expect further M&A to follow – JD is keen to continue its expansion into most of its current territories and Courir fits the bill.”
The group said the deal will need EU approval and completion is not expected before the second half of 2023.
Régis Schultz said: “We are delighted to announce the proposed acquisition of Courir, a business that is held in high regard in the European sportswear community.”
Heading the other way was Marshalls with shares tumbling 12% after it warned that trading in the year to date has been weaker than originally anticipated.
In a trading update covering the first four months of the year, the building materials company said that on a like-for-like basis, group revenue contracted by 14% reflecting the uncertain macro-economic climate, a reduction in new house building and continued weakness in private housing RMI activity.
Direct Line Insurance Group PLC (LSE:DLG) was another stock on the wane.
The share price of the online insurer fell 5% after it warned of a further adverse claims in its motor business.
““We have experienced further adverse claims development in respect of late 2022 and early 2023 in Motor (including Commercial Motor) particularly in relation to damage. This is expected to put pressure on earnings in 2023 including from prior-year reserve releases,” the online insurer said in a statement.”
8.00am: JD Sports in European expansion
JD Sports Fashion PLC (LSE:JD.) is looking to expand its European operations through a planned €520mln acquisition of Groupe Courir in France.
Based in France, Courir is a leading player in the European sports footwear and clothing sector with 313 stores bannered across six countries.
The deal will need EU approval and completion is not expected before the second half of 2023.
The €520mln enterprise value includes €195mln of debt. Excluding this the amount payable at completion would be €325mln which would be funded through available cash resources.
Régis Schultz said: “We are delighted to announce the proposed acquisition of Courir, a business that is held in high regard in the European sportswear community.”
7.51am: Marshalls cuts guidance
Marshalls PLC (LSE:MSLH) has warned that the tough macro-economic climate which remains “challenging” has meant trading performance in the year to date has been weaker than originally anticipated.
In a trading update covering the first four months of the year, Marshalls said that on a like-for-like basis, group revenue contracted by 14% reflecting the uncertain macro-economic climate, a reduction in new house building and continued weakness in private housing RMI activity.
Marshalls highlighted a recent cut in a forecast for construction output by the Construction Products Association.
Taking these factors together, the Board now expects to deliver a result that is lower than its original expectations.
7.46am: UK house prices fall in April – Halifax
UK house prices fell back after three months of growth and were unchanged from a year ago as inflation and increased borrowing costs hit incomes, according to new figures.
High street lender, Halifax said prices declined 0.3% between March and April, which partially offset 0.8% increase in the previous month.
Instant Info – Halifax UK House Price Index pic.twitter.com/EKMjb0DAtM
— BuiltPlace (@BuiltPlace) May 9, 2023
A decline at the end of 2022 preceded “a rebound in the first quarter”, Kim Kinnaird, director at Halifax Mortgages, said.
A typical property costs £286,896, about £7,000 below last summer’s peak but £28,000 higher than two years ago.
Kinnaird said: “Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment.”
“However, cost of living concerns remain real for many households, which will likely continue weigh on sentiment and activity.”
“Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over course of this year,” he said.
The Halifax figures contrast with those from a Nationwide survey that showed a 0.5 per cent rise.
7.41am: DCC’s CEO steps back for medical treatment
DCC PLC (LSE:DCC)‘s Chief Executive Donal Murphy is steping back from his day-to-day duties while a medical condition is assessed.
In a statement, the Irish international sales, marketing and support services group said Murphy will remain involved in the business, and his day-to-day responsibilities will be assumed by Kevin Lucey, Chief Financial Officer.
Murphy is expected to make a full return to work before DCC’s AGM in July.
7.31am: Rising prices support Direct Line but more claims in Motor
Direct Line Insurance Group PLC (LSE:DLG) reported an increase in average renewal premiums as higher prices in its Motor division helped boost margins but warned of a further jump in claims in its motor division.
“We have experienced further adverse claims development in respect of late 2022 and early 2023 in Motor (including Commercial Motor) particularly in relation to damage. This is expected to put pressure on earnings in 2023 including from prior-year reserve releases,” the online insurer said in a statement.
Weather claims were modest during the first quarter and well within the 2023 full year assumption of £80mln, the company said.
Direct Line said it continued to expect high single digits inflation across Motor and Home, “albeit there continues to be a range of potential outcomes depending on future economic conditions.”
The company said total group adjusted gross written premium income climbed 8.4% to £771.7mln, with growth of 3.3% in Motor to £358.7mln and in in Home of 2.1% to £129.0mln.
“In Home, we observed significant price increases across the market,” Direct Line said.
In Commercial, the strong premium growth seen in 2022 continued in the first quarter with gross written premium growth of 27.6% driven by both direct own brands and NIG and other.
7.00am: FTSE 100 set for steady progress
Good morning. The FTSE 100 is expected to open higher after the long weekend as investors look ahead to the Bank of England’s interest rate call and US inflation figures on Wednesday.
Spread betting companies are calling London’s lead index up by around 21 points.
In the US on Monday markets were mixed. The Dow Jones Industrial Average closed down 0.2%, the S&P 500 closed flat, and the Nasdaq Composite up 0.2%.
In Tokyo on Tuesday, the Nikkei 225 index was 1.1% higher. In China, the Shanghai Composite rose 0.2%, while the Hang Seng index in Hong Kong slipped 0.6%.
Back in London and the early focus will be a trading update from Direct Line Insurance Group.
