Economic news

FTSE 100 Starts Week on Glum Note as Ashtead Tanks on Disappointing Profit Outlook

  • Compass Group slides on 'conservative' FY outlook
  • MusicMagpie soars on potential buy offer
  • UK's budget update on watch
  • FTSE 100 slips 0.1%, FTSE 250 up 0.3%

Nov 20 (Reuters) - UK's FTSE 100 opened the week's account on a negative footing as shares of equipment rental firm Ashtead Group plunged on downbeat annual profit outlook, while investors awaited updates on the government's fiscal policy later this week.

The multinational-heavy FTSE 100 slipped 0.1% by 0953 GMT on Monday, while the sterling strengthened 0.2% against the dollar.

Shares of Ashtead Group dived 9.5% after the company said its annual profit would come in below market expectations citing lower emergency response activity in its U.S. business, and a likely more than $2 billion depreciation charge for the year.

Both the FTSE indexes had posted steep gains last week on bets that interest rates have peaked.

"While a 'wait and see mood' has descended, confidence is still quietly bubbling that interest rate cuts could be on the horizon," Susannah Streeter, head of money and markets at Hargreaves Lansdown said in a note.

Investor attention turns towards Britain's budget deficit readings for October on Tuesday, followed by the UK's Autumn Statement on Wednesday that would provide insights on the government's budget plans.

The domestically-focussed FTSE 250 index rose 0.3%.

"Focus for domestically orientated stocks is being trained on the UK Chancellor's Autumn Statement this week, with rumours swirling of an extension of fiscal incentives for companies, as well as mooted cuts to inheritance tax," Streeter added.

Britain's next government will almost certainly need to raise taxes and make unwelcome spending choices even if this week's budget update from finance minister Jeremy Hunt presents a superficially brighter picture.

Compass Point expects 2024 underlying operating profit to grow about 13%, but some analysts said the outlook was 'conservative' sending shares of the world's largest catering firm down 5.1%.

MusicMagpie surged 29.3% after the firm said it was in early-stage talks with BT Group and Aurelius Group regarding a possible offer to buy the British online retailer of used smartphones and electronic products.

Reporting by Siddarth S in Bengaluru; Editing by Sohini Goswami and Shailesh Kuber

Source: Reuters

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