UK Retail Sales Drop; DWF Takeover Approved

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Share prices in London were mixed at midday on Friday after a string of strong UK retail figures, helped by fine weather in June, were clouded somewhat by a drop in consumer confidence during July.

DWF shares were up at midday after agreeing to be taken over by Inflexion Private Equity Partners, in a deal that values the company at £342m.

The FTSE 100 index was up 8.07 points, or 0.1%, at 7,654.12. The FTSE 250 fell 32.58 points, or 0.2%, to 7,654.12, and the AIM All-Share gained 1.17 points, or 0.2%, to 765.46.

The Cboe UK 100 was up slightly at 763.58, the Cboe UK 250 was up slightly at 16,945.02, and the Cboe Small Companies was up 0.1% at 13,714.25.

On Friday morning, investors focused on UK retail sales.

The Office for National Statistics said retail sales fell 1.0% in June, compared with a revised drop of 2.3% in May. The market was expecting a decline of 1.5%, according to the consensus quoted by FXStreet.

Compared to the previous month, sales rose 0.7% in June, accelerating after a downwardly revised increase of 0.1% in May. The June reading topped the market consensus, which called for a 0.2% rise.

“There’s nothing like a long spell of good weather to lift the mood of the British public and that’s exactly what we had at the start of June (although under today’s gray skies one might wonder if we dreamed it),” said Danni Hewson, head of financial analysis at AJ Bell.

“Consumers rushed to update their summer wardrobes, finding that department stores had pulled out the red pen to assuage any guilt of spending on frivolities when budgets are uncomfortably tight.”

Friday’s GfK survey data also points to a sudden drop in consumer confidence in June, amid relentless inflation and rising interest rates.

GfK’s consumer confidence index fell six points in July to minus 30 as worries about personal finances and the wider UK economy for the year ahead fell by six and eight points respectively. However, expectations for personal finances over the next 12 months are still 19 points higher than last year at the same time, while expectations for the broader economy remain 24 points higher than last July.

In Europe, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was down 0.4%.

The pound was listed at $1.2855 on Friday midday in London, up from $1.2851 at the close of trading on Thursday. The Euro settled at $1.1126, down from $1.1144. Against the yen, the dollar was trading at 141.68 yen, up from 140.31 yen.

In the FTSE 100, the index was led by Hargreaves Lansdowne, which was up 2.0%.

Jefferies has raised the digital wealth management service provider from “underperform” to “buy”.

On Wednesday, Hargreaves reported an increase in net new business in the fourth quarter, although it noted a decline in equity trading volumes amid fragile investor confidence.

In the FTSE 250, FirstGroup rose 1.9%.

The Aberdeen, Scotland-based public transport provider said overall financial year operations so far were in line with the expectations it set out when it released its annual results in early June.

At the time, the company said the current business and outlook for fiscal 2024 was in line with its own expectations. It had said it expected “further sequential progress” for its First Bus division. For First Rail, it expected profits from open access and additional rail services to be at least in line with FY2023.

Among London small caps, DWF jumped 13% to 96.00 pence.

DWF announced that it had agreed to a takeover offer with Inflexion Private Equity Partners. Inflection will pay 100 pence per share as part of its cash offer. This offer values DWF at around £342 million.

Inflexion said it believes private ownership is best for DWF given the growth opportunities available to it.

abrdn New Dawn Investment Trust rose 6.6%.

The investor in Asia-Pacific companies has agreed a memorandum of understanding for a proposed combination with Asia Dragon Trust.

The combination will be carried out through a reconstruction plan, in which abdrn New Dawn will be liquidated and its assets transferred to Asia Dragon in exchange for shares of the enlarged company.

abrdn Fund Managers, which currently manages the two companies, will continue to manage the expanded group.

She said shareholders will benefit from “greater economies of scale” thanks to the expanded asset base, greater secondary liquidity of Asia Dragon shares, as well as improved cost efficiency.

Asia Dragon Trust shares rose 0.6%.

On AIM, Renalytix rose 12%.

The London-based kidney health diagnostics company has announced a distribution agreement with Dubai-based Vector Pharma FZCO for its kidneyintelX.dkd test in the Middle East.

The prognostic test, used to identify type 2 diabetes and chronic kidney disease in adults, will be marketed in Saudi Arabia, Bahrain, Qatar, Oman, Kuwait and the United Arab Emirates.

Stocks in New York were called higher. The Dow Jones Industrial Average was up 0.1%, the S&P 500 index 0.2% and the Nasdaq Composite 0.4%.

Brent oil was quoted at $80.61 a barrel at midday in London on Friday, up from $79.33 on Thursday. Gold was listed at $1,963.82 an ounce, down from $1,969.54.

Looking ahead to next week, the UK and global business calendar is busy. There are also the decisions of the central banks of the United States on Wednesday, of the EU on Thursday and of Japan on Friday.

This article is originally published on zonebourse.com

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