The FTSE 100 fell on Thursday as the weight of investor caution after recent volatility offset very robust earnings updates from Persimmon, Entain, Hikma and Entain. Ex-dividends also dragged on the index on Thursday.
After a strong rally yesterday, traders shouldn’t be surprised to see the FTSE 100 down 1% on Thursday given the swings we’ve seen in global equities this week as markets contend with concerns about the unwinding of the Yen carry trade and US growth.
“Markets may have simmered down but this roller-coaster week isn’t over yet. UK markets opened lower in a move that unwinds a good chunk of yesterday’s gains. Corporate earnings are starting to slow but there’s plenty for traders to get their teeth into,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Deliveroo hit two of its major financial milestones over the first half centred around positive free cash flow and profitability. Commentary suggested encouraging behaviour from those looking for a quick bite to eat, but second quarter volumes were weaker than expected across both the UK and international markets. Elsewhere, Ladbrokes owner Entain delivered a good half and upped guidance, while Persimmon saw a boost from higher selling prices.”
Persimmon’s first-half results were notable not because they were a complete blowout but because they broke the trend of falling revenues and completions. Completions were up 5% on last year, and revenue and operating profit increased.
“Persimmon’s had a great first half to the year, despite the ongoing affordability issues weighing on buyers’ purchasing power. Revenue growth came from a healthy mix of both higher sales rates and average selling prices,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Given Persimmon’s houses are typically cheaper than the UK average, its selling prices were always likely to prove more resilient than other names in the sector during tough times. The private order book has also climbed at double-digit rates, indicating that buyers are more confident about the market’s health than they were 12 months ago and are more willing to sign on the dotted line. Alongside its in-house materials business, which is a key differentiator against peers, Persimmon’s profitability looks to be holding up better than most this year too.”
Persimmon shares were 1.4% higher at the time of writing.
Beazley was the FTSE 100’s top riser after profit before tax rose 99% in the first half on higher insurance premiums and steady claims. Investors will also be reassured that the insurer said the recent technology outage will have no impact on its guidance for the year. Beazley shares were 12% higher.
Entain shares were also higher after offering investors a glimmer of hope as it upgraded guidance for the year. Losses for the half year were less than expected and the group saw positive revenue increases from some areas of its bookmaking business.
AJ Bell investment director Russ Mould explains today’s rally is more of a relief rally than out and out optimism about future prospects: “Ladbrokes and Coral owner Entain has been in a bit of a mess for some time, so investors will take succour from the company’s latest results.”
“Yes, the company is still losing money at the pre-tax level, but the scale of these losses has been significantly reduced and the company has notably upgraded its outlook.
“This provides some decent foundations for incoming CEO Gavin Isaacs’ efforts to revive Entain’s fortunes when he takes charge at the beginning of next month. He won’t be able to duplicate the benefit the company enjoyed from Euro 2024 and there is still plenty on his to do list.”
Spirax was the biggest FTSE 100 casualty, sliding 9%, after a 3% decrease in revenue for the first half.