It’s 10 years to the day that the Bank of England (BoE) last raised interest rates. However the UK is now far closer to a rate hike than ever due to recent BoE hawkish signals. The anniversary is worth marking given the (positive) impact a rise may have on sterling and the longer-term message a harder BoE line sends hard-pressed home-buyers (and many sellers).
Talking of which…sterling was -0.12% down overnight to $1.2921 while the euro was up 0.07% to $1.1352. The US holiday yesterday saw a lack of direction for the EUR/USD pair; some mixed sentiment seeped out of the euro area yesterday including a fresh Italian bank rescue.
Expect more volatility as the week starts to close: many eyes will be on the G20 Hamburg summit on Friday when President Trump meets President Putin. Meanwhile a rash of data arrives shortly including EU retail sales and UK services PMI information, plus British Retail Consortium shop price changes.
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Persimmon selling prices climb
We start with a strong half-year update from housebuilder Persimmon. The builder claims revenues climbed 12% to £1.66bn with legal completions up 8% to 7,794 new homes. The average selling price climbs 3.5% to £213,000.
Persimmon claims UK house buyers are taking the snap UK General Election in its stride. Confidence remains resilient and "compelling" (but for how long?) mortgage rates continue to offer good support, it says.
“We anticipate that the Group's operating margin in the first half of 2017 will comfortably exceed the 25.7% delivered in the second half of the prior year,” says Persimmon. Persimmon shares are up almost 30% year-to-date and almost 50% up on the year at 2,379p.
Ocado profits down
Next, a half-year update from Ocado. The online grocer says revenues increased 12.5% to £659.6m. Earnings before interest and tax climbed 2.7% to £45.2m driven by a reduction in unfunded promotional activity. However overall profits were down 9.4%.
Order volumes are up 15.6% to an average of 260,000 per week (1H 2016: 225,000), with the highest number of orders delivered in a week reaching 280,000 says Ocado. But the average basket size was down 1.4% to £108.45.
"After several years of price deflation in the UK,” says boss Tim Steiner, “we have seen this begin to ease in the period and, when combined with our increasing scale and operational efficiencies, this trend will support the continued profitable growth of our retail business.”
Booker non-food sales climb 9.6%
Lastly, Tesco’s acquisition target Booker Group. The wholesaler says Q1 group sales climbed 4% but 4.2% on a like-for-like basis. Non-tobacco sales were especially strong, up 9.6%. Good weather and a late Easter all helped row things along.
Booker claims a strong balance sheet and is seeking a 3.02p per ordinary share dividend at a cost of £54m. This is in addition to the 4.97p per share proposed at the AGM. Don’t expect any more forward-looking statements given the takeover bid.
“On 27 January we announced the planned merger with Tesco and we are currently going through the review process with the Competition Authority. As a result of the proposed merger, we are in an offer period as defined in the Takeover Code.”
Breaking news: UK car sales fell in June. It's thought sales will be 5% lower. More later...