FTSE 100 Live Friday
- Food stores drive retail slump
- Borrowing second highest for May
- Berkeley profits fall
Market update: FTSE 100 rebounds, Berkeley slides on earnings outlook
10:07 , Graeme EvansHopes of a diplomatic solution to the Iran crisis today lifted the FTSE 100 index as retail stocks struggled in the wake of shock industry figures.
Relief that the US has stepped back from immediate involvement in the Middle East conflict lifted Wall Street futures after yesterday’s public holiday.
The FTSE 100 index recouped a chunk of yesterday’s fall of 0.6% by lifting 34.84 points to 8826.64,a performance weaker than benchmarks in Paris and Frankfurt.
GKN Aerospace business Melrose Industries led London’s top flight, lifting 4% or 18.1p to 517.4p. British Airways owner IAG also rose 5.7p to 315.3p and banking group Standard Chartered added 37p to 1189.5p.
The impact of a bigger-than-expected 2.7% slide in retail sales volumes for May was felt at the bottom of the FTSE 100 board as Marks & Spencer lost 3p at 363.2p and Sainsbury’s eased 0.4p to 286.6p.
Market leader Tesco bucked the trend by rising 1.35p to 403.55p, even though the ONS figures showed sharply reduced sales volumes in supermarkets amid the impact of inflation and April bill hikes.
Housebuilder Berkeley led the fallers board in the wake of annual results, which included a forecast of lower profits of about £450 million for this year and next.
The brownfield regeneration developer said its operational and financial performance had been strong in a “volatile operating environment”.
Regulatory headwinds remain but it described government policy as “very supportive” as the group embarks on a 10-year plan to invest £5 billion of capital into new sites and its new build-to-rent platform.
The shares slid 7% or 288p to 3862p, which compared with falls of about 0.5% for rivals Persimmon and Taylor Wimpey.
Peel Hunt said Berkeley’s guidance for 2026 profits implied a 5-6% reduction to the City’s consensus forecast.
The broker added: “While disappointing to see guidance lowered, it is not hugely surprising given the trickier market conditions in London and the South East.
“However, the group’s long-term credentials are unchanged, with a sector-leading land bank and capital discipline.”
Other fallers included BP and Shell as the steadying of the Brent Crude price near to $77 a barrel left their shares down 3.2p to 389.75p and 15p to 2683p respectively.
The FTSE 250 index rose 134.28 points to 21,208.27, with recruitment firm Hays up 2p to 65.3p after yesterday’s profit warning sent shares down by 10%.
Retail sales add to GDP pressure after Q1 surge
08:58 , Graeme EvansCapital Economics said the sharp 2.7% drop in retail sales volumes in May adds to other evidence that the burst of economic growth seen in the first quarter is over.
Despite today’s worse-than-expected performance, the consultancy believes consumer spending may still outperform other areas of the economy this year.
It highlighted today’s rise in the GfK measure of consumer confidence from -20 in May to -18 in June and the latest figures on real wages growth.
The consultancy currently expects second quarter GDP to be down 0.1% following 0.7% growth in the first three months of the year.
FTSE 100 higher, Berkeley shares down 9% as retailers struggle
08:33 , Graeme EvansThe FTSE 100 index has risen 0.3% or 29.51 points to 8821.31, reflecting hopes of a diplomatic solution to the Israel-Iran conflict.
British Airways owner IAG rose 5.2p to 314.8p and Holiday Inn owner IHG added 98p to 8186p, while banking group Standard Chartered lifted 27p to 1179.5p.
The impact of poor retail sales figures was felt at the bottom of the FTSE 100 board as Marks & Spencer lost 4.05p to 362.15p and Sainsbury’s dipped 1.8p to 285.2p.
Market leader Tesco bucked the trend with a flat performance at 402.4p.
Housebuilder Berkeley shares led the fallers board after it forecast lower profits of about £450 million for this financial year and the next.
The brownfield developer slid 9% or 376p to 3774p, while Taylor Wimpey weakened 1.356p to 117.75p and Barratt Redrow lost 3p to 457.4p.
Berkeley encouraged by government policy, profits fall
07:52 , Graeme EvansBrownfield housing developer Berkeley today recorded a 5.1% fall in pre-tax profits to £528.9 million and said it expects a figure of about £450 million for the next two years.
The group, which hailed its strong operational and financial performance in a “volatile operating environment”, described government policy as “very supportive” but that regulatory headwinds remain.
The group said 92% of the 4,300 of homes delivered in the year to the end of March were on regenerated brownfield land.
Chief executive Rob Perrins said the company had “a clear plan for the next 10 years” and is ready to invest £5 billion of capital into new sites and its new build-to-rent platform, which will deliver at least 4,000 additional homes over this period.
He said: “Berkeley is determined to play a full part in helping the Government meet its growth ambitions and has been greatly encouraged by the tone set by the brownfield-led housing agenda.
“Converting this into delivery is challenging particularly as it comes after a period of extreme cost inflation and complex regulatory change.
“However, the challenges must not dampen the ambition as the prize is significant in the form of economic growth, revitalised towns and cities and better prospects for young people.”
Berkeley said Perrins is to become executive chair, with finance boss Richard Stearn becoming chief executive.
May public sector borrowing second highest on record
07:25 , Graeme EvansThe UK public finances today recorded the second-highest May borrowing figure since monthly records began in 1993 and the worst outside of Covid.
Borrowing – the difference between total public sector spending and income – was £17.7 billion in May, an increase of £700 million over May last year.
The figure in the first two months of the financial year was £37.7 billion, up £1.6 billion on the same two-month period of 2024.
This is the third-highest April to May borrowing figure since monthly records began, after those of 2020 and 2021.
May’s figure compared with the OBR’s forecast of about £17.1 billion.
Food stores drive big slump in retail sales
07:09 , Graeme EvansRetail sales volumes slumped by 2.7% in May, representing a bigger-than-expected reversal on April’s warm weather related bounce of 1.3%.
The biggest decline since December 2023 was driven by food stores, where volumes slid by 5% following growth of 4.7% the previous month.
The Office for National Statistics said: “The fall was mainly because of reduced sales volumes in supermarkets, with retailer comments talking of inflation and customer cutbacks, alongside reduced sales of alcohol and tobacco products.”
Non-food stores sales volumes fell by 1.4% over the month.
The overall 2.7% decline, which compared with City forecasts for a fall of 0.5%, leaves volumes 0.8% higher across the three months to May.
FTSE 100 seen higher, Brent Crude near $76
06:59 , Graeme EvansThe FTSE 100 index is set to put back some of yesterday’s fall of 51.67 points of 0.6% by opening about 0.3% higher.
London’s top flight closed last night at 8791.80 as European markets struggled in the face of ongoing Middle East concerns.
Wall Street was closed for a holiday yesterday, while Asia markets have posted a largely positive performance led by a rise of 0.8% for the Hang Seng index.
Brent Crude is 0.8% lower at $76.37 a barrel and down 0.7% at $3345 an ounce.
