UK stocks edged lower on Wednesday after the latest UK inflation reading came in higher than expected, stoking concerns that interest rates might rise, with the FTSE 100 off 0.19% at 7,205.20 early on.
The UK consumer price index rose by 5.1% in November, above expectations for a 4.8% increase and marking the highest annual increase in a decade, putting renewed pressure on the Bank of England to take action.
However, it seems unlikely the Bank will move on rates tomorrow as the UK looks ahead to a potentially substantial wave of Omicron cases, although the inflation read suggests Andrew Bailey and his colleagues don’t have the luxury of too much time to see how the variant affects the economy.
Meanwhile across the pond, the US Federal Reserve is set to meet overnight with a focus on whether it will move now on tapering financial support for the economy.
CURRYS FLAGS SOFTER DEMAND
Electricals retailer Currys (CURY) cheapened 8% to 114.1p after flagging softer demand in the run-up to Christmas and ongoing supply chain issues, although the laptops-to-smart TVs seller insisted it is on track to meet guidance for full year adjusted pre-tax profit of around £160 million.
‘The immediate outlook has become more uncertain, with the omicron Covid-19 variant and associated government restrictions potentially further dampening market demand,’ cautioned Currys.
The unchanged guidance was supported by a strong performance in the first half ended 30 October 2021, with pre-tax profit improving from £45 million to £48 million year-on-year.
CINEWORLD TOLD TO COUGH UP
Cineworld (CINE) slumped 25% to 33.9p after the Ontario Superior Court of Justice awarded Cineplex C$1.23 billion in damages for lost synergies and C$5.5 million for lost transaction costs.
This follows Cineworld’s decision to pull out of buying the Canadian company in June 2020.
Stressing it disagrees with this judgment and will appeal the decision, Cineworld added that it does not expect damages to be payable whilst any appeal is ongoing.
Distribution and services group Bunzl (BNZL) inched up 0.2% to £28.94 on news it expects revenue in 2022 to be ‘slightly’ higher than in 2021 driven by the boost from acquisitions completed this year.
Limiting gains was the comment that operating margins in 2022 are expected to normalise to more historical levels, as the ‘mix of sector and product sales returns to more typical levels for the group’.
Shopping centre owner Hammerson (HMSO) firmed 0.4% to 32p following news it has raised £92 million from the sale of six non-core assets including a shopping centre in Glasgow.
AROUND THE MARKET
Elsewhere, online gambling company 888 Holdings (888) edged up 0.2p to 290.2p after it agreed to sell assets, including a bingo business to Broadway Gaming for up to $54 million, including a $4 million earn-out.
Avon Protection (AVON) plunged 18.4% lower to 880p as the beleaguered protective equipment firm delivered a cautious outlook on growth for 2022 amid supply chain woes and customer order volatility after swinging to a loss in fiscal 2021.
Specialist audio visual distributor Midwich (MIDW:AIM) was marked up 7.2% to 622p after the company forecast a full year profit ‘materially ahead’ of its previous expectations. Adjusted pre-tax profit for the year to December 2021 is now expected to be at least £30 million.
Advertising firm M&C Saatchi (SAA:AIM) skipped 4.7% higher to 157p on news it now expects annual operating profit to be ‘materially ahead’ of previous forecasts.
The company said activity in the final quarter has been strong, ‘particularly in the Performance Media and Global and Social Issues divisions and the UK Agency’.
In The Style (ITS:AIM) softened 8.4% to 92.5p, despite reporting strong growth for the first half to September, as the online womenswear brand warned sales to wholesale partners have been lower than the prior year since the period end due to the timing of orders.
The retailer also cautioned that industry-wide supply chain disruption is expected to continue into the second half.
