The FTSE 100 was charging in tomorrow’s Bank of England decision after UK inflation came in lower than estimated casting doubt over whether UK rates would indeed rise to 5.5%.

A UK CPI reading of 6.7% sparked a rally in London’s leading index as investors reacted to a chance the Bank of England sees the lower inflation rate as reason enough to hold off hiking rates – if not tomorrow at subsequent meetings.

Just yesterday there was little doubt UK rates were rising to 5.5% but the FTSE 100 surged 0.8% to 7,721 in afternoon trade as investors priced an upset to prior market consensus.

“UK shares enjoyed a strong start to the day after a surprise fall in UK inflation data. The FTSE 250 index jumped 1.3% to 18,667, led by housebuilders, builders’ merchants and property companies,” said Russ Mould, investment director at AJ Bell.

“Weaker inflation fuels the argument that interest rates no longer need to go up, or at least not by much more. That would be positive for property-related companies as well as retailers because consumers would, in theory, no longer face additional pressures on their finances.

“The FTSE 100 displayed similar trends, with housebuilders and property groups soaring, while the likes of B&M, JD Sports and Next were in demand.

“We could still get another rate rise from the Bank of England tomorrow, but the latest inflation data increases the chance that a further rate hike could be the last in the current cycle.”

As one would expect, housebuilders were leading the FTSE 100’s charge with Taylor Wimpey up 5.4% and Barratt Developments gaining 4%.

M&G was 2% higher after issuing a positive first-half report. Profits soared as the group continued a three-year trend of positive inflows despite challenging macro influences.

Bargain hunters stepped into Kingfisher after a sharp decline yesterday with shares adding around 3%.

Finsbury Food (LON: FIF) is recommending a 110p/share bid by a company backed by DBAY Advisors valuing the cake maker at £143.4m. There is a non-voting share alternative to the cash bid for eligible investors. The bid is less than ten times prospective earnings. The share price has not been at this level since early 2019. The share price moved ahead by 23% to 109.5p. Finsbury Food is one of the companies that has been on AIM the longest, although it has not always been a food company over more than a quarter of a century.

Clean water technology developer MYCELX Technologies Corp (LON: MYX) increased interim revenues by 51% to $5.6m and reduced its loss. Canaccord Genuity forecasts a full year loss of $1.6m and it expects at least breakeven in 2024. The share price jumped 24.7% to 60.5p.

Yesterday evening, Seed Innovations (LON: SEED) announced plans to buyback up to £850,000 of shares. The maximum number of shares is 21.5 million. The share price rose 17.5% to 3.7p, which is above estimated NAV.

Wishbone Gold (LON: WSBN) says drilling has started at the Red Setter project in Western Australia. Initial targets are at a shallow depth and the company is seeking broad spreads of mineralisation. The share price increased 15.2% to 2.65p.

Thor Energy (LON: THR) has raised A$1m via a placing at 4.2 cents/share to fund exploration in the Uravan belt. There is a 4,000 metre programme of reverse circulation drilling at the Radium Mountain/ Wedding Bell project in Colorado. This will be a follow up drilling campaign at Vanadium King project in Utah. The share price is 14.8% higher at 1.75p.

FALLERS

Late yesterday, online publisher Digitalbox (LON: DBOX) said interim revenues were £1.2m, which was ahead of expectations, but in the second half traffic numbers have been poor. That is due to less traffic coming from Alphabet and Meta, which are trying to retain traffic. Other changes from sources of traffic are also affecting the figures. Although traffic is down, the session values of higher. Digitalbox says it will still be profitable in 2023. The share price dived 28.6% to 3.75p.

Brandshield Systems (LON: BRSD) is raising money and planning to cancel the AIM quotation. A subscription will raise £2.68m at 5.68p/share, while a one-for-two open offer could raise up to £2.2m. This is a premium to the previous market price. The share price slumped 22.2% to 3.5p, which is a new low. The cybersecurity company, which reversed into a shell in December 2020, wants to reduce its cash burn. Leaving AIM is part of the cost reductions. The near-term focus will be growing revenues.

Interim sales of Tandem Group (LON: TND) fell 24% and it slumped into loss. Management still believes that the distributor of toys and leisure products could breakeven for the year as a whole. Net debt was £3.1m at the end of June 2023. There have been technical breaches on a property loan and Tandem hopes to consolidate its borrowings on a long-term basis by the end of the year. The share price fell 21% to 166p. Longboat Energy (LON: LBE) says that the gas discovery at the Velocette exploration well was sub-commercial. It could be an indication of other gas reservoirs in the area. The share price slipped 13% to 20p.

M&G shares rose on Wednesday morning as the investments and savings group recorded another period of net client inflows and increased operating profit.

Stronger performance during the first half of 2023 resulted from progress in their transformation strategy to focus on wealth and investment management.

M&G shares were 3% higher at the time of writing on Wednesday as M&G said they would increase their dividend by 5% to 6.5p for the period.

The dividend increase makes M&G’s already healthy yield that little bit more attractive.

Positive inflows

The company saw positive net client flows of £0.7 billion, excluding Heritage, driven by strong inflows into its PruFund UK proposition. M&G also re-entered the defined benefit pension market through two deals worth £617 million in premiums.

M&G is heading for its third consecutive year of net client inflows despite weakness elsewhere in the sector. Assets under management fell in line with weaker asset prices.

Its wholesale asset management business attracted £1.3 billion in net inflows, with 70% of mutual funds ranking in the top two performance quartiles. Private markets saw £0.7 billion in net inflows, a core area accounting for 40% of revenues.

Inflows translated into profit growth with adjusted operating profit rising 31% to £390 million. Operating capital generation increased 17% to £505 million, already delivering 53% of its £2.5 billion target for 2024.

The company remains focused on transforming M&G, aiming to generate £200 million in cost savings by 2025.

“The transformation programme continues at M&G, with a renewed focus on the Asset Management and Wealth businesses. A clearer strategy makes sense, and some needed momentum looks to be building in those two areas despite what continues to be a tricky backdrop,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“Choppy markets are never an easy thing to navigate as an Asset Manager, made even more difficult when the government steps in and makes things worse – M&G’s still feeling the effects of the failed UK mini-budget as redemptions from institutional clients in the UK impacted results. Nonetheless, the slack was picked up elsewhere. Notably, the popularity of diversified investments through the PruFund range continues to grow.

“Annuities were the standout though, as higher rates made operations more profitable. M&G’s looking to capitalise on the more favourable conditions, back in the bulk purchase market with two deals closing after the half ended. This marks the first business it’s done in the area since closing the annuity book back in 2016 – it’s becoming a hot spot for some of the big insurers so competition is likely to heat up, but nonetheless provides another string to M&G’s bow.”

The FTSE 100 edged higher on Tuesday as markets await central bank decisions later this week and insight into the trajectory of rates for the rest of this year.

The FTSE 100 was up 12 points to 7,665 at the time of writing and had been in a tight range for most of the session.

“Sentiment is subdued as the Fed begins the crunch two-day meeting and investors await the decision on interest rates and clues about how long they will stay elevated,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The battle against inflation still hasn’t been won, and there will be fresh skirmishes ahead especially if recent disinflationary forces ease off, which means higher rates to are likely to settle in for the long haul particularly in Europe and the UK.”

The Bank of England will announce their rate decision on Thursday.

Rising oil prices will be a concern for market participants hoping for lower rates as higher energy prices threaten to keep inflation rates elevated in the coming months.

Brent oil was trading at $95.24 Tuesday afternoon and looked set to attack the $100 mark in the coming sessions.

UK retail

After a relatively robust summer, the UK consumer picture was starting to cloud over with a raft of dismal updates from Uk retail companies including Kingfisher – the FTSE 100’s top faller on Tuesday.

“Further cracks are appearing in the corporate world. Gloomy Tuesday saw multiple UK companies issue profit warnings, led by Kingfisher which downgraded its earnings forecasts after a poor show from its Polish operations and a lacklustre turn in France,” said Russ Mould, investment director at AJ Bell.

“Fashion retailer Quiz has been having a terrible time, with management blaming inflation for dampening consumer confidence and demand for its products, prompting a near-40% sell-off in its shares.

“Doors and windows group Safestyle says its market slumped in August and September versus last year, and news that it is gaining market share wasn’t enough to prevent a 41% decline in its share price.

“Northcoders, a specialist in training for software coding, saw its share price crash 38% after implying that clients are much more reluctant to commit to training due to budget constraints, job cuts and recruitment freezes.

“Even alcohol seller Naked Wines couldn’t escape the doom and gloom, saying that its new financial year had started off slower than expected, causing its shares to crash 10%.

“These profit warnings suggest investors need to be on their guard for the next earnings season.”

There was a glimmer of hope from Ocado Retail who managed to increase sales despite the cost of living crisis. Ocado shares were 2% higher in mid-afternoon trade.

Hargreaves Lansdown was the FTSE 100’s top gainer, up 6%, after profit before tax jumped 50%, largely due to higher interest rates.

Ocado Group reported accelerating sales growth in the third quarter, with retail revenues up 7.2% versus last year. The improvement comes after +5% growth in the first half.

Today’s numbers will go a long way in increasing sentiment among investors who feared Ocado would suffer as consumers tighten their belts. Ocado shares were 3% higher at the time of writing and were among the FTSE 100’s top risers.

The online grocer also saw a return to positive volume growth in September as the number of items sold increased.

Ocado said its “Perfect Execution Programme” is strengthening its customer proposition. A major price drop campaign was launched in August. On-time delivery rates remained high.

Active customer numbers grew 1.5% to 961,000. Mature customers, who have shopped 5+ times, rose 6.6%. Average order value grew 4.2% and average selling prices increased 8.4%, though still below inflation.

Ocado saw positive momentum heading into Q4 but left full-year guidance unchanged. In Q3, retail revenues hit £569.6 million. Average orders per week reached 381,000, up 1.9%.

The growth comes despite tough comparables after strong customer acquisition last year.

“It has now been a year since I joined Ocado Retail and in January we set out our Perfect Execution strategy, making sure every element of our customer proposition and our operating model is at its best,” said Hannah Gibson, Ocado Retail’s Chief Executive Officer.

“We are delivering on this plan and have great momentum in the business, with revenue growing faster in Q3 than in H1 and a return to positive volume growth in the last month of the quarter. The continued progress in Q3 underpins our confidence in delivering our FY23 guidance of mid-single digit revenue growth and full year profitability, and we have started the final quarter positively.”

Scancell (LON: SCLP) reports that early data from the phase II SCOPE study of SCIB1 in combination with checkpoint inhibitors in advanced melanoma are positive. Tumour reduction at 13 weeks is 31-94%. This is for a relatively small number of patients, but it does indicate that there is strong potential for the treatment. The second stage of the study has a strong probability of success. This data will be available in the first half of 2024. This could garner industry interest. The share price improved 22.9% to 16.125p.

Spaceandpeople (LON: SAL) has renewed its contract with Network Rail until September 2024. This covers venues and events in London, Birmingham and Glasgow rail stations. Interim figures will be published on 25 September.  The share price jumped 22.6% to 97.5p.

Avacta (LON: AVCT) has completed the sixth dose escalation of ALS-6000-101 for the phase 1 clinical trial and it continues to show the safety of AVA6000, which is a tumour targeted form of doxorubicin. There will be a seventh dose cohort. The share price rose 12.7% to 119.5p.

Structural steel supplier Billington (LON: BILN) significantly improved margins in the first half and it still has a strong order book despite the contraction of the construction sector. This reflects the spread of projects. Revenues were 30% higher at £60.1m and pre-tax profit jumped from £1.3m to £4.59m. The full year pre-tax profit forecast is £9.9m. The share price increase 11.6% to 385p.

Renewable electricity supplier Good Energy (LON: GOOD) had a strong first half due to higher tariffs and lower supply costs, but the second half will be tougher. Interim revenues were 46% ahead at £156.1m and the company swung from a loss to a pre-tax profit of £13.1m. The energy services business is losing money as it is being built up. The interim dividend has been raised by one-third to 1p/share. Tariff reductions are happening ahead of falls in supply costs for the company and that will lead to a second half loss, but Good Energy will still be profitable for the full year. The share price initially rose by more than 10%, it is currently unchanged at 192.5p.

FALLERS

Trading has deteriorated since August at replacement windows supplier Safestyle (LON: SFE) and it is expected to lose £10m in 2023. Net debt could reach £6m at the end of 2023 – the credit facility is £7.5m. Management wants to strengthen the balance sheet. The share price dived 46.4% to 4.45p.

Shares in retailer Quiz (LON: QUIZ) slumped by one-third to 5.875p because revenues are below expectations. In the five months to August 2023, there was a 15% decline to £37m. Full year revenues could be 7% below previous forecasts and Quiz would move into loss.

A weak corporate market has knocked the profitability of software training company Northcoders (LON: CODE). Interim revenues rose 46% to £3.5m, higher costs of sales and marketing meant that the company slipped into loss. Net cash is £2m. Corporate demand has fallen off in the second half as customers become more cautious about budgets. Northcoders is not cutting back on its investment because of the long-term prospects and it will make a full year loss. The share price fell 32.5% to 130p.

Steppe Cement (LON: STCM) revenues fell by 16% on the back of a 11% decline in cement volumes. Production costs were higher. Profit slumped to $100,000. The share price slipped 11.5% to 23p.

QUIZ, the fashion brand, announced disappointing sales for the 5 months to August 2022, with revenues down 15.3% compared to the same period last year.

The company warned that if current trends continue, revenues for the full financial year could be 6-7% below expectations, resulting in a loss before tax of up to £1.5 million.

QUIZ shares crashed 35% in early trade on Tuesday.

QUIZ blamed the sales decline on cost-of-living pressures impacting consumer confidence and demand. Total revenues were £37.0 million, versus £43.7 million last year. Online sales were hit the hardest, down 23.8%.

The company said it is tightly controlling costs and reviewing strategies to drive growth. But it remains cautious on the outlook given persistent inflationary pressures on consumers.

QUIZ operates stores, concessions and websites in the UK and Ireland.

The full year results in July showed a 15% drop in Q1 revenues. The company has opened some new stores but also closed one UK store since April. It is trying to preserve cash, with total liquidity headroom now £6.4 million.

Avacta shares surged on Tuesday after CEO Dr Alastair Smith said he believed Avacta are ‘on the verge of a paradigm shift in how chemotherapy is delivered to cancer patients.”

UK biotech company Avacta Group has announced positive results from the latest cohort in its clinical trial of AVA6000, the company’s targeted chemotherapy drug.

In the sixth dosing cohort of the phase 1 study, AVA6000 continued to demonstrate an excellent safety profile. The drug was well tolerated by patients despite receiving nearly 3 times the typical dose of chemotherapy drug doxorubicin. Importantly, the toxicities associated with doxorubicin were not observed.

Avacta shares were 10% higher at 117p at the time of writing on Tuesday.

The favorable safety data will allow Avacta to progress to a seventh dosing cohort, where patients will receive the highest dose yet at 3.5 times the standard doxorubicin level.

After completing the current study, Avacta now plans to initiate a trial evaluating more frequent dosing of AVA6000 as a first line treatment for soft tissue sarcoma patients. This aims to determine the optimal dosing regimen for a potential pivotal phase 2 trial in 2024.

In addition to safety, the company reported signs of efficacy including significant tumor reduction in a sarcoma patient. More detailed clinical data from the phase 1 trial is expected in Q4 2023.

AVA6000 is Avacta’s targeted form of doxorubicin, designed to reduce side effects by releasing chemotherapy specifically in tumor tissue. The positive phase 1 results so far indicate it may allow higher and more frequent dosing compared to standard doxorubicin treatment.

“I believe that we are on the verge of a paradigm shift in how chemotherapy is delivered to cancer patients,” said Dr Alastair Smith, Chief Executive of Avacta Group.

“The safety and initial efficacy signals emerging from the data in the AVA6000 Phase 1 study are very encouraging indeed. The pre|CISION^TM platform is doing exactly what it was designed to do – target the release of active chemotherapy to the tumour tissue, sparing healthy tissues and improving the safety and tolerability of the drug whilst delivering potentially superior efficacy.

“I’m particularly pleased that, even at this early stage and in this patient group, we have a confirmed, significant response in a patient with soft tissue sarcoma, as well as other positive signals across a number of other patients.”