Equity update

Severn Trent sailing along with the current

Adam Vetesse, analyst at eToro: Investors holding utilities providers tend to be looking for steady performance, a solid dividend and not many surprises and that is what Severn Trent has provided with this update.

There has been no material change in forecast since the November interim update and whilst that does not sound particularly exciting, with inflation numbers missing across the pond and rate cuts seemingly being pushed back, defensive stock market moves may well be firmly back in fashion for those with a more cautious outlook.

Adverse weather events can bring bad press for water firms like Severn Trent when the infrastructure can’t handle large rain volumes, but barring one of these, it seems the company is on track to deliver by the time full year comes around in May.

Dunelm profit rises but challenges remain

There are some challenges we expect retailers to face such as inflationary pressure on margins and higher input costs, both of which Dunelm are familiar with. Less likely would be containers of duvets being rerouted due to geopolitical tension, but that’s exactly what Dunelm is contending with due to attacks in the Red Sea. Going the long way round costs more money and takes more time which at a point where consumers thought they might get a few quid back in their pockets due to inflation easing, will be a bitter pill to swallow.

Nonetheless, pre-tax profit is up and demand is noted as resilient, so if Dunelm can keep these operational costs down as best as possible then this performance can continue throughout the year. On the other hand, if we see stubborn inflation delay rate hikes and operational hazards continue to be a sticky point, then shareholders will feel some of this pain.

FTSE climbs, Coca-Cola HBC outperforms, despite Wall Street sell-off

Mark Crouch, analyst at investment platform eToro, says: “Stock investors are coming to terms with the latest developments in the will they/won’t they question regarding a rate cut from the Fed. The Dow Jones plunged more than 1.3 % yesterday – the worst trading session Stateside in almost a year – as hot inflation data cooled hopes of any forthcoming easing action from the Fed.

“UK investors are dealing with a different environment though, with the latest CPI data showing a faster-than-expected fall in UK prices for last month – emboldening expectations of a cut to UK rates, even though the annual rate of inflation remains above the BoE’s target.

“The upshot has been the FTSE 100 up around 1% in early afternoon trading, with an additional boost coming from Coca-Cola HBC. The bottling company gained in excess of 7%, after reporting a dazzling set of results, including its best ever earnings, record free cash flow and double-digit organic revenue growth. The news follows yesterday’s better-than-expected quarterly sales from partner Coca-Cola.”