Poor earnings updates from US technology shares and a sharp sell off in French luxury names translated into a soggy start for UK equities as the FTSE 100 began trade deep in the red. Although the index recovered some of the losses as the session progressed, it was unable to turn positive by lunchtime.

Tesla and Google reported earnings overnight with both of the tech giants trading down in the pre-market curtailing demand for risk assets. 

The French CAC started the session down over 1% as luxury brand LVMH plummeted taking the index with it. The negative sentiment from overseas was too much for the FTSE 100, which was trading down 0.05% at the time of writing. 

“The FTSE 100 was lower after disappointing corporate results in the US and a lacklustre session on Wall Street,” said Dan Coatsworth, investment analyst at AJ Bell.

“A volatile US presidential race presents an unhelpful backdrop for markets, with a first reading of US second-quarter GDP and the Federal Reserve’s preferred inflation measure later this week providing some insight into whether the ‘soft landing’ narrative still holds water.

“Weak results from LVMH and Rémy Cointreau suggest the malaise in the luxury goods sector is yet to abate and this puts further pressure on battered British fashion brand Burberry.”

Although concerns from overseas weighed on the index, Wednesday saw many positive stories for FTSE 100 companies.

After a sharp selloff on the back of a downbeat update from its peer, EasyJet shares soared on Wednesday on news the airline’s profit grew in the its third quarter as passenger. In stark contrast to Ryanair’s performance, EasyJet seem to be enjoying the current environment and could even be eating Ryanair’s lunch.

“easyJet’s third-quarter numbers landed a little better than expected. That’s a welcome relief after disappointing numbers from Ryanair earlier this week caused some share price turbulence for UK airlines,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Revenue moved 11% higher in the period as the group’s increased capacity was filled by a growing number of passengers. The group’s striking ability to sell extras to existing passengers also contributed to top-line growth. These include things like extra baggage, legroom, and food and are a great way to grab a larger share of sunseekers’ budgets.”

Reckitt Benckiser was another standout on Wednesday, not because of its share price performance on the day, but because the management is finally doing something about dismal share price performance over the past year by announcing plans to shake up the consumer goods company’s portfolio by disposing of non-core brands to focus on core brands it dubs ‘Powerhouses’.

Alongside plans to reduce its portfolio, Reckitts outlined a target to achieve £1 billion in costs savings which should be welcome news to investors.

The plan was outlined alongside the release of its half-year report which revealed falling operating profits despite volume growth across many of its categories.

“Investors will be happy to see Reckitt streamline the business,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Half-year results were solid despite lowering the sales outlook, partly due to extreme weather events impacting the nutrition business. But the real story here is the strategy shift. Selling assets that generated £1.9bn in sales last year is a bold move, but rightsizing is the aim of the game for many consumer goods companies these days. It’s no longer about size at all costs, and it gives Reckitt a chance to refocus.”

Easyjet investors will be delighted Ryanair’s problems are not industry-wide. Easyjet shares sank earlier this week after its peer announced falling profits and said it would cut its fares. Easyjet is experiencing no such problems.

EasyJet has reported a strong performance in its third quarter with headline profit before tax increasing 16% to £236 million as passenger numbers increased by 8% year-on-year, reflecting robust demand absent from Ryanair’s recent update.

Revenue per seat (RPS) also saw a modest increase of 1% year-on-year, aligning with the company’s guidance.

The easyJet holidays division performed exceptionally well, delivering £73 million in profit before tax, up from £49 million in the same quarter last year. This represents a remarkable 49% growth in profitability, accompanied by a 33% increase in passenger numbers for the holiday segment. The success of this division is contributing significantly to the overall positive performance of the company.

“Our strong performance in the quarter has been driven by more customers choosing easyJet for our unrivalled network of destinations and value for money,” said Johan Lundgren, CEO of easyJet.

“This result was achieved despite Easter falling into March this year, demonstrating the continued importance of travel and this means we remain on track to deliver another record-breaking summer, taking us a step closer to our medium term targets.” 

Looking ahead, the airline said it expects to reach a capacity of approximately 100 million seats for FY24. Furthermore, the fourth quarter of 2024 is anticipated to continue the positive trend seen in Q3, with revenue per seat expected to maintain its upward trajectory. Easyjet may well be eating Ryanair’s lunch.

The holiday division is projected to deliver over £180 million in profit before tax, representing more than 48% profit growth year-on-year.

Bookings for the fourth quarter are strong, with 69% of capacity already sold, which is 1 percentage point higher than the same period last year. Additionally, easyJet has 7% more capacity on sale. This translates to 1.5 million more seats sold for the peak summer period compared to the previous year.

Reckitt Benckiser shares underperformance has elicited a response from management who today announce a strategy to streamline the business by disposing of non-core brands and focusing on so-called ‘Powerbrands’.

In the face of margin pressure and shifts in consumer behaviour, Reckitt Benckiser is embarking on a major transformation with plans to sharpen its brand portfolio, focusing on high-growth, high-margin Powerbrands that dominate their categories. This strategic shift top acheive a ‘sharper, simpler Reckitt’ follows a comprehensive nine-month review.

The reshaping involves significant disposals. Reckitt will exit its ‘Essential Home’ portfolio by the end of 2025, which includes well-known brands like Air Wick, Mortein, Calgon, and Cillit Bang. These brands generated £1.9 billion in revenue for FY2023. Additionally, the Mead Johnson Nutrition business, featuring Enfamil and Nutramigen, is now considered non-core. Reckitt will explore all strategic options for these assets to maximise shareholder value.

The focus will now be on ‘Powerbrands’ – Reckitt’s core portfolio is thriving. Powerbrands such as Mucinex, Strepsils, Gaviscon, Nurofen, Lysol, Dettol, Harpic, Finish, Vanish, Durex, and Veet have demonstrated strong performance. This group has achieved a 7% net revenue CAGR between FY2018 and FY2023, with an impressive 61% gross margin in FY2023. Emerging brands like Move Free and Biofreeze, along with local heroes such as Lemsip and Airborne, will also be part of the future-focused portfolio.

Cost optimisation is a key component of the new strategy. Reckitt aims to streamline its organisation, reducing management layers and duplication. The company will transition to a unified category structure operated through three geographical regions: North America, Europe, and Emerging Markets. This restructuring is expected to yield significant savings, with a targeted 300 basis point reduction in fixed costs by 2027. The end goal is to reduce the fixed-cost base from 22% to approximately 19%. However, this transformation comes at a price, with estimated one-off cash restructuring and transformation costs of around £1.0 billion.

The new Reckitt will emerge on January 1, 2025, reporting financials in three segments: Reckitt, Essential Home, and Mead Johnson Nutrition. While the core Reckitt business focuses on health and hygiene, dedicated teams will manage the Essential Home and Mead Johnson Nutrition segments to maximize their potential value. Through these strategic moves, Reckitt aims to create a leaner, more agile company poised for long-term growth and shareholder value creation.

The FTSE 100 reversed early losses on Tuesday after traders bought into a sell-off in mining companies in the very early hours of the session. Strong results from Compass Group helped the index carve out gains.

Having touched lows of 8,152, the FTSE 100 rebounded to trade at 8,226, 0.3% higher on Monday.

“The FTSE 100 was dragged down by a poor showing from the mining sector off the back of a weak copper price,” said Dan Coatsworth, investment analyst at AJ Bell.

“Copper futures have fallen by nearly 7% over the past five days amid concerns about sluggish demand from China as it struggles with a slowdown in economic growth. The market has taken the view that China isn’t digging deep enough with stimulus measures to fire up the economy and therefore commodities demand is at risk.”

However, concerns about China took a back seat as the session progressed, and investors shifted their attention to Compass Group’s strong earnings and a reassuring statement from Beazley.

Compass Group was the FTSE 100’s top riser after delivering a very respectable 10.3% increase in organic revenue in its third quarter, helped by strength in North America and Europe. The food services company upgraded its profit outlook, saying it expected operating profit growth for the year would be above 15%, and shares reacted accordingly with a 4% increase.

“Food service giant Compass continues to attract new business at pace, helping to support a second upgrade to annual forecasts this year,” Coatsworth said.

“This suggests the company’s decision to ease prices in line with inflation is a good one as it helps drive loyalty among existing customers and attract new ones, bolstering an already strong market position. It also suggests a return to the office – as hybrid working policies are adjusted – is proving beneficial.

“The company and its management team see plenty more business to go after, with a large chunk of catering still done in-house.”

Beazley was the second-highest riser after issuing a statement to calm any fears about the impact of last week’s tech outage. The cyber security insurer’s shares were hit heavily by concerns it would have to fork out for claims but today said its guidance for the year remained unchanged by the events.

The bottom of the leaderboard was littered with miners such as Anglo American, Glencore and Rio Tinto as the impact of commodities selloff lingered.