First half revenue rises at Grafton, Barratt Developments sees 'record' full-year performance
London open
The FTSE 100 is expected to open four points lower on Wednesday, having closed down 0.17% at 7,536.47 on Tuesday.
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DIY company Grafton said first half group revenue increased by 2.4% £1.48bn, with like-for-like revenue up 3.9%, although there were signs of weaker UK markets in May and June due to Brexit concerns. The company, which operates in the UK, Ireland, Belgium and the Netherlands, said group trading in May and June was measured against very strong prior year comparatives, while Britain saw weaker demand in the residential repair, maintenance and improvement and house building markets at the end of the period.
GlaxoSmithKline announced on Wednesday that ViiV Healthcare, its majority-owned global specialist HIV company also held by Pfizer and Shionogi, had seen positive week 48 results from its phase III ‘TANGO’ study, which assessed whether adults living with HIV-1 who had maintained viral suppression for at least six months on a ‘tenofovir alafenamide’ fumarate-containing regimen of at least three drugs were able to maintain similar rates of viral suppression after switching to the two-drug regimen of ‘dolutegravir’ plus ‘lamivudine’. The FTSE 100 pharmaceuticals firm said the study met its primary endpoint for non-inferiority, and no patients met confirmed virologic withdrawal criteria or developed treatment resistance.
Barratt Developments hailed a “record” full-year performance on Wednesday, with pre-tax profit expected to come in above market expectations. In an update for the year to 30 June 2019, the housebuilder said wholly-owned completions edged up 2.6% to 17,111 homes. Meanwhile, pre-tax profit is anticipated to be ahead of market expectations of £884m, at around £910m, up from £835.5m in 2018 and driven by continued strong progress from margin initiatives, a solid close to the year and additional contribution from joint ventures.
Dunelm saw sales accelerate over the past three months even as margins increased, leading management to forecast full-year profits before tax would come in towards the upper end of its previous guidance range. Over the 13 weeks ending on 29 June, sales at the home furnishings retailers jumped by 11.6% year-on-year to reach £264.1m, with like-for-like revenues ahead by 12.1% and total gross margins increasing by 160 basis points and by 200 points at the core level. For the full year, profits before tax were now seen at the upper end of the £124.0-126.0m range announced on 20 June, versus £102.0m in the 2018 financial year.
Newspaper round-up
The former auditor of Patisserie Valerie, the cake and cafe chain at the centre of an alleged accounting fraud, has been placed under increased scrutiny after the industry watchdog called the quality of its work “unacceptable”. Grant Thornton was the worst performer in the Financial Reporting Council’s annual review of audits by the UK’s big accountants. The FRC said half of the eight Grant Thornton audits it inspected for 2017/18 required significant improvement. – Guardian
Water companies in England have been warned to clean up their act after the environment watchdog described their performance last year as “simply unacceptable”. Southern Water and Yorkshire Water were singled out for high levels of serious pollution incidents, where sewage is discharged into bathing water. – Guardian
City watchdog boss Andrew Bailey's bonus could be almost wiped out depending on the outcome of a probe into the regulator's oversight of collapsed firm London Capital and Finance (LCF). Mr Bailey, who runs the Financial Conduct Authority and is considered a front-runner to succeed Mark Carney as Bank of England Governor, has been under intense pressure in recent months after LCF collapsed, Neil Woodford's flagship fund was suspended and the FCA's report into RBS's GRG unit was called a "whitewash". – Telegraph
Kingfisher suffered an investor revolt at its annual meeting as almost a quarter of shareholders in the home improvement retailer objected to a bonus payment to its outgoing chief executive in a year when profits fell. The group that owns the B&Q and Screwfix chains said that it would go into talks with its investors and provide a response within six months after 24.19 per cent of the investors who voted were against its remuneration report. – The Times
Hargreaves Lansdown customers “locked in” the suspended Woodford Equity Income Fund allegedly have been prevented from transferring their account to rival investment platforms. Richard Wilson, chief executive of Interactive Investor, the investment platform, said that several Hargreaves customers invested in Woodford’s fund had contacted it to complain about Link Fund Solutions, Woodford’s authorised corporate director, or ACD. – The Times
US close
US stocks finished mixed on Tuesday ahead of a potentially key testimony from Federal Reserve chief Jerome Powell scheduled for the next day.
The Dow Jones Industrial Average ended the session down 0.08% at 26,783.49, while the S&P 500 was up 0.12% at 2,979.63 and the Nasdaq 100 added 0.53% to 7,826.86.
At the open, the Dow had dropped 109.93 points after the previous week's strong jobs data dampened expectations that the Federal Reserve would cut interest rates by 50 basis points when rate-setters in the US next met at the end of July.
Early in the day, Powell delivered the opening remarks at a Boston Fed conference but, as anticipated, made no references to monetary policy ahead of his semi-annual testimony to the House Financial Services Committee on Wednesday.
However, in an interview with the Wall Street Journal, Philly Fed boss Patrick Harker reportedly said that the US economy was "strong" and that he did not envisage any interest rate cuts in 2019.
Coming just a few days after a much stronger-than-expected jobs report for June raised questions about the central bank's interest rate policy, market participants were keen for fresh insights into Fed policymakers' most current thinking.