FTSE 100 Live May 20: Retail sales beat expectations, consumer confidence at rock bottom

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FTSE 100 and miners rally, Royal Mail up 5%

The FTSE 100 index is up 1.35% or 95.70 points at 7398.44, meaning the elite have recovered all but 40 points from yesterday’s losses.

The improvement caps another volatile week for global markets after updates from U.S. retailers Target and Walmart stoked recession fears and traders continued to price in the need for much higher interest rates.

Miners including Anglo American and Glencore rose 2% after China’s central bank cut a key rate today, while Royal Mail rebounded 5% after its 12% plunge following annual results of Thursday.

The FTSE 250 index climbed 1% or 210.23 points to 19,899.25, led by a 5% rally for cybersecurity firm Darktrace and a 3% gain for publisher Future.

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THG shares up 24% after bid interest

Shares of Hut Group Business THG rose 24% to 144p after two potential bidders were revealed last night, including property billionaire and former Chelsea bidder Nick Candy.

The other approach comes from a consortium led by Belerion Capital Group, but its proposal valuing the e-commerce company at 170p per share, or just over £2bn, has already been rejected by the board of administration of THG.

Founder and Managing Director Matt Molding launched THG in 2020 and the shares spent their first year trading steadily above 600p. They were at 80p in early March and 116p before last night’s announcements.

Liberum analysts believe the shares are heavily undervalued, based on a 700p price target.

They said today: ‘A bidder could take the business private and consider relisting it later in the US, where these tech companies receive much greater appreciation from investors.

“THG’s three core businesses – Beauty, Nutrition and Ingenuity – combined are expected to generate over £2 billion in sales in 2022 and, if separated, would be highly valued strategic assets in their own right which should underpin valuation. “

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Consumer confidence at rock bottom – GfK

GfK’s consumer confidence score of minus 40 is a record low for the monthly barometer, weaker than on the darkest days of the global banking crisis, the impact of Brexit on the economy or the shutdown of Covid.

Consumer pessimism is most evident in the depressed general economy sub-measures, which are minus 63 for the past year and minus 56 for the year ahead. GfK’s Major Buys Index has also declined in each of the past six months and currently sits at minus 35.

The readings, which are being driven by inflation to a 40-year high amid soaring food and fuel bills, come despite a 50-year low for UK unemployment with job vacancies higher than first-time job seekers.

GfK Client Strategy Director Joe Staton said: “The outlook for consumer confidence is bleak and nothing on the economic horizon shows reason for optimism anytime soon.”

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FTSE 100 higher, S&P 500 near bear market

Traders are expecting a positive session in Europe after Asian markets rallied on fresh support for China’s Covid-hit economy.

The country’s central bank lowered its benchmark mortgage rate for the second time this year, a move that was followed by gains of more than 1% for stock markets across the region.

CMC Markets expects the FTSE 100 to open 78 points higher at 7380, pushing back some of the 135 point loss seen on Thursday after weak updates from retailers including Target and Walmart fueled the global recession fears.

US futures markets are also pointing to a positive start, meaning the S&P 500 could avoid bear market territory after falling 0.6% yesterday on the verge of a 20% decline from its all-time high. of January.

Barring a major improvement today, the S&P 500 will drop for the seventh straight week for the first time since 2001.

Brent crude oil prices, meanwhile, were little changed over the week at just under $112 a barrel and Bitcoin remains near the $30,000 mark after steep falls in cryptocurrency markets. last week.

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