UK stocks opened higher on Wednesday after free-to-air broadcaster ITV (ITV) and retailer Marks & Spencer (MKS) both reported upbeat earnings results ahead of the release of crucial US inflation data later in the day.
The FTSE 100 traded 0.36% higher at 7,299.87 points early on, while the FTSE 250 firmed 0.35% to 23,448.93.
China continued to offer evidence of mounting inflationary pressures as factory gate prices saw their biggest increase since 1995.
Both the Bank of England and the US Federal Reserve have recently surprised the markets by adopting a softer stance on tightening monetary policy, but if prices continue to rise then the pressure to act more quickly on scaling back financial stimulus and raising rates will build too.
Broadcaster ITV was the biggest riser on the FTSE 100, bid up 8% to 118p as the company touted record advertising revenue for 2021 after reporting a rise in revenue in the first nine months of the year, led by a strong performance from its studios division.
Looking ahead, total advertising revenue for the full year 2021 is expected to be the highest in ITV’s history, up around 24%.
‘This is driven by the re-opening of the economy and the delivery of the commercial strategy to reinforce the power of mass simultaneous reach and build a strong addressable advertising platform,’ said ITV.
‘We have a strong programming slate going into next year as we continue to invest in content and we expect total schedule costs will be around £1.16 billion in 2022. This includes the FIFA World Cup, the FA Cup and a strong schedule of dramas which will drive increased levels of live and streaming viewing.’
M&S SMASHES EXPECTATIONS
Retail bellwether Marks & Spencer surged 15% higher to 223.4p after it swung to a first half profit and delivered a significant full year earnings upgrade amid improved performances across its food and clothing and home businesses.
Pre-tax profit for the half ended 2 October amounted to £187.3 million, versus a prior year loss of £87.6 million and above the £158.8 million profit delivered in the pre-pandemic period two years earlier.
While Marks & Spencer warned cost pressures will become ‘progressively steeper’, assuming there is no further acute pandemic-related disruption, its central case is for adjusted pre-tax profit for the year to come in ‘ahead of expectations and in the region of £500 million’, though it refrained from declaring an interim dividend as it priorities the turnaround of the business.
‘Given the history of M&S we’ve been clear that we won’t overclaim our progress,’ said CEO Steve Rowe.
‘Unpacking the numbers isn’t a linear exercise and we’ve called out the Covid bounce back tailwinds, as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year. But, thanks to the hard work of our colleagues, it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception.’
HALFORDS MOTORS HIGHER
Halfords increased its underlying annual pre-tax guidance to between £80 million and £90 million, up from £75 million previously, citing good sales momentum and the easing of supply chain disruption.
The retailer’s strong first half performance was driven by market share gains in motoring products, garages and its mobile services business. In cycling, Halfords insisted ‘demand levels remain good’ and it is ‘pleased with the current availability of kids bikes and e-bikes as we head into the Christmas trading period’.
Online fashion retailer ASOS (ASC:AIM) edged 0.5% higher to £25.88 on news it is targeting £7 billion of sales during the next three to four years amid plans to bolster the growth of its US and EU businesses.
AROUND THE MARKET
JD Wetherspoon noted that with no music at its branded pubs, a material proportion of its trade comes from older customers, ‘some of whom have visited pubs less frequently in recent times’.
Transport infrastructure and analytics software company Tracsis (TRCS:AIM) improved 3.7% to 970p after booking a 13% rise in annual profit, underpinned by growth at its higher margin rail technology and services division.
The company traded in line with expectations in the first quarter of the current year and is ‘well positioned to deliver further growth in the coming financial year and beyond’, It also said it expects to restore its progressive dividend policy for the year to 31 July 2022.
Alternative fuels group Velocys (VLS:AIM) rocketed 41% higher to 8.66p on announcing that US carrier Southwest Airline has agreed to acquire sustainable aviation fuel from its planned biorefinery project in Mississippi.