Despite flat Q4 sales, the Swedish fast-fashion brand’s H&M shares rose on Friday as the company announced 4% sales growth in 2023.

Despite the 4% yearly growth, which came around as the side effects of the pandemic ending, H&M’s net sales for the period from September 1, 2023, to November 30, 2023, remained unchanged compared to the same quarter last year.

“H&M will be hoping for a last-minute rush of shoppers buying clothes for Christmas given how its fourth quarter period to the end of November was disappointing,” said AJ Bell Investment Director Russ Mould.

Excluding Russia and Belarus, there was a 3% increase in SEK (Swedish Krona) currency and a 1% decrease in all local currencies.

Overall, H&M Group’s net sales declined by 4% in local currencies compared to the corresponding quarter last year.

“Like a lot of fashion retailers, H&M has suffered from having too much stock, which it needs to offload. The only way to do that quickly and efficiently is to sell these items at a discount. That’s bad for group profit margins,” Mould added.

Furthermore, the problem did not affect H&M alone.

“Inditex has seen a slowdown in growth, and ASOS and Boohoo are also finding life a lot harder,” said Russ Mould. “Consumers are being more cautious with spending on fast fashion, and there is also fierce competition from the likes of Shein,” he added.

Trainline shares had jumped 14.78% at the time of writing on Friday as the UK Department of Transport (DfT) abandoned plans for its own ticketing platform.

Unexpectedly, on Thursday, the Department for Transport (DfT), headed by Mark Harper, revealed its decision to forsake the plans for establishing a ticket-selling website and app for Great British Railways in a move to generate revenue and decrease costs for customers.

The DfT said on Thursday that they “confirm that we are not pursuing plans to deliver a centralised Great British Railways online rail ticket retailer.”

The plans for an app were initially introduced in May 2021, and the government’s platform would have directly rivalled Trainline.

But for now, the railway company’s stock prices shine as the abandonment of the DfT app “removes a potential competitive threat for the business in its core market,” said Russ Mould, investment director at AJ Bell.

Trainline’s “focus can now turn to the company’s efforts to expand in Europe, where rail travel is more reliable and affordable, and as it consolidates its position in its domestic market,” Mould added.

This year, investor worry escalated for Trainline as the possibility of a new online retail rival loomed in the UK, posing a threat to its dominant 62% market share, as noted by analysts from JP Morgan. 

“Trainline is a well-known brand, and its app has good functionality, but the initial reaction to plans for a state-backed app, when the shares fell more than 20% intraday, shows it is vulnerable to fresh competition,” said Russ Mould.

The FTSE 100 was broadly flat on Friday as London’s leading index consolidated after a landmark week for global monetary policy.

This week, the Federal Reserve sent strong signals to the market that they are well and truly done with the hiking cycle and were eyeing interest rate cuts next year.

Markets have quickly priced in up to 150bps in rate cuts by the Federal Reserve during 2024. The level of cuts predicted by futures markets is at odds with the Fed’s own projections, but there is a clear consensus US interest rates will fall next year.

Global stocks soared after Wednesday’s Federal Reserve instalment, with their dovish tone underpinning a risk-on rally.

The ECB and BoE provided their thoughts on interest rates yesterday.

While Europe and the UK’s central banks weren’t as dovish as the Federal Reserve, they certainly weren’t as hawkish as they have been in recent months.

“The FTSE 100 started the day modestly higher, consolidating its big gains from yesterday but not showing signs of extending its rally,” said AJ Bell investment director Russ Mould.

After starting the session higher, the FTSE 100 was trading down 0.3% at 7,627 on Friday.

Russ Mould continued to explain, “This may reflect the mixed messages coming from central banks this week. The market might be left feeling as if it has stepped through the looking glass. The Federal Reserve, despite a resilient US economy, is happy to talk rate cuts while the Bank of England and the European Central Bank, who face a much less rosy economic backdrop, are pouring cold water on hopes for a pivot.

“Perhaps the Bank of England and ECB remain concerned about energy prices and any possible inflationary pressures they might bring with winter upon us. America’s relative energy independence largely insulates it from this threat.

“Asian stocks pushed ahead as they reacted to the Fed’s dovish stance. The resulting weakness in the dollar tends to be good news for emerging markets.”

The FTSE 100’s miners were a beacon of light on Friday, posting strong gains on a day most other sectors traded negatively.

St James’s Place was the top faller after brokers cut their price target. The wealth manager shares were down 3.5% at the time of writing.

DS Smith was the top gainer, followed closely by miners Glencore, Anglo American, and Antofagasta.

Atlantic Lithium shares were weaker on Friday after the lithium miner completed a successful placement to fund development at its operations in Ghana.

Atlantic Lithium has raised A$8.0 million (approx. £4.2 million) through an institutional placement of 18,181,819 new shares at A$0.44 per share.

The proceeds will fund early works and permitting activities for its lithium project in Ghana, support an upgraded resource estimate in Q3 2024, and provide working capital.

Canaccord Genuity acted as lead manager, and Wilsons Advisory & Stockbroking as co-manager on the placement.

The fundraising comes as Atlantic Lithium aims to deliver Ghana’s first lithium mine after recently securing a mining lease for its project.

“Through the support of our existing institutional shareholder base and in welcoming a number of new institutions onto our register, we are pleased to have successfully raised A$8 million,” said Neil Herbert, Executive Chairman of Atlantic Lithium.

“As we await the completion and the receipt of the funds from the Minerals Income Investment Fund’s investment, as well as the completion of the off-take process that is currently underway, the proceeds put the Company in a strong position to continue advancing the Ewoyaa Lithium Project at pace.

“The Placing enables us to fund the numerous activities that are underway or imminent that seek to add further value to the Project, aligning with the growth ambitions of the Company.

“With a number of key milestones ahead of us, we look forward to providing further updates on our progress in due course.”

Bunzl, a world leader in distribution services, said underlying operating profit is expected to exceed prior estimates in the full year 2023.

The company had earlier indicated that its profit would experience a “moderate increase” compared to 2022, when taking into account constant exchange rates.

Bunzl shares were up 2.20% at the time of writing on Thursday.

Bunzl’s update further explains that, when taking into account the divestiture of the UK healthcare business, the overall Group revenue in 2023 is expected to show a decrease of 1 to 2% compared to 2022, considering constant exchange rates and currency fluctuations having minimal influence throughout the year.

“Bunzl delivers an early Christmas present for investors with a small upgrade to margin guidance. Revenue weakness was expected as COVID-related sales continued to normalise and tailwinds from higher inflation faded away,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

The end-of-year update further explains that the company’s revenue in 2023 is projected to be broadly in line with 2022, considering constant exchange rates and excluding the impact of the divestiture of the UK healthcare business.

Within this, the anticipated growth in revenue from acquisitions is expected to balance out the anticipated decline in underlying revenue.

Bunzl’s CEO, Frank van Zanten, said on Thursday, “We welcome three new complementary businesses to the group today, taking the total acquisitions announced this year to 17. Over the last four years, we have committed a cumulative circa £1.7bn to acquisitions, reflecting a step-up in our spend and with our pipeline remaining active and supported by our strong balance sheet.”

Looking into the future, Matt Britzman said that “higher-margin acquisitions, along with some organic improvements, are doing their job to prop up the bottom line. As we move into 2024, comparable periods should ease on the top line, reflected in guidance for some revenue growth next year, which is likely ahead of most analysts’ forecasts”.

“Bunzl has a resilient product range and a highly cash-generative model. The key thing to watch is how organic growth plays out from here. Prolonged weakness in this area puts added pressure on acquisitions to do the hard  work”, Britzman added.

A wave of optimism lifted European stocks on Thursday after the Federal Reserve signalled the interest rate hiking cycle was over, and the central bank would start to cut rates in 2024.

Interest rate futures markets are pricing in up to six interest cuts by the Federal Reserve and European Central Bank in 2024, equating to 150bps in interest rate cuts.

The German DAX and French CAC hit intra-day all-time highs as the FTSE 100 rose 1.9% in early trade on Thursday.

“Equity markets have enjoyed a hearty boost after Federal Reserve chair Jay Powell indicated further rate rises were not needed. While the market was already pricing in rate cuts from 2024, investors welcomed Powell’s comments with open arms. Having it spelt out was music to their ears,” said Russ Mould, investment director at AJ Bell.

“The market has been waiting a long time for this pivot in monetary policy and it’s finally come. The news sent the Dow to a new record high and put the S&P within a whisker of the 4,766-closing price achieved on 31 December 2021, just before the sharp interest rate hiking cycle began.

“The attention now shifts to when we could see rate cuts and it looks like May could be the magic moment.”

On Thursday, markets were in a clear risk-on mode, with stocks surging higher and bond yields falling.

The optimism was reflected in a cyclical rally in FTSE 100 stocks, taking miners, housebuilders and retailers considerably higher.

Ocado was the top riser as the food distribution technology company cheered the prospect of lower interest rates. Ocado is classed as a tech stock by many and has suffered during the tightening cycle. Hopes of a lower risk-free rate in 2024 fired the stock up on Thursday, gaining 9%.

Antofagasta, Anglo American, Glencore and Rio Tinto added between 4%-7% as miners did much of the heavy lifting in the FTSE 100’s rally. Lowering borrowing costs will boost major construction projects and provide support for commodity prices and mining activities.

The same school of thought helped plant-hire company Ashtead 7% higher.

Other interest rate-sensitive sectors, including housebuilders and retailers, were among the risers as traders positioned for an improving environment for the consumer in 2024.

Taylor Wimpey jumped 4.5% and Barratt Developments gained 3.4%. DIY specialist Kingfisher jumped 6%, while Howden Joinery ticked 4% higher.