LONDON BRIEFING: Strong start for Ashtead; DS Smith trading in line

(Alliance News) - Stocks in London are called lower on Tuesday, amid the latest services PMI readings.

UK retail sales bounced back last month following a poor performance in July, according to the latest British Retail Consortium and KPMG sales monitor on Tuesday.

Total UK retail sales increased 4.1% on an annual basis in August, picking up sharply from the 1.8% rise recorded in July.

July's rise was the weakest year-on-year growth in retail sales since August 2022, according to the BRC. Meanwhile, August's rise was above the three-month average growth rate of 3.6% and in line with the 12-month average growth rate of 4.1%.

Helen Dickinson, chief executive of the BRC, cautioned that sales growth may slow in the coming months, even if volume growth does not, as the rate of price rises cools amid easing inflation.

In early UK company news, DS Smith said recent trading has been in line with its expectations, thanks to pricing and cost measures. Ashtead reported double-digit growth in its first financial quarter.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 33.5 points, 0.5%, at 7,419.26

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Hang Seng: down 1.9% at 18,479.07

Nikkei 225: closed up 0.3% at 33,036.76

S&P/ASX 200: closed down 0.1% at 7,314.30

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US markets were closed for Labour Day

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EUR: down at USD1.0783 (USD1.0791)

GBP: down at USD1.2614 (USD1.2620)

USD: up at JPY146.87 (JPY146.46)

GOLD: down at USD1,937.10 per ounce (USD1,938.92)

OIL (Brent): down at USD88.87 a barrel (USD89.01)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

10:00 CEST EU services PMI

10:00 CEST EU ECB consumer expectations survey results

11:00 CEST EU PPI

09:55 CEST Germany services PMI

09:30 BST UK official reserves

09:30 BST UK services PMI

10:00 EDT US employment trends index

10:00 EDT US IBD/TIPP economic optimism index

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Struggling Chinese developer Country Garden has made multi-million-dollar interest payments on two outstanding loans, reports said Tuesday, narrowly avoiding what would have been its first default. The firm in August said it was unable to make the payments, worth USD22.5 million, and was given a 30-day grace period. That grace period was due to end either Tuesday or Wednesday, but the company paid the interest, Bloomberg News reported citing sources. Country Garden told AFP it had no comment on the repayment, which was also reported by Chinese media. On Saturday the firm reportedly won approval from creditors to extend a deadline for a key bond repayment worth CNY3.9 billion, around USD534.7 million, to give it time to recover financially. Had that not been repaid, the company would have faced the prospect of becoming the biggest Chinese real estate firm to default since rival Evergrande in 2021.

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BROKER RATING CHANGES

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Morgan Stanley cuts Hiscox to 'equal-weight' (overweight) - price target 1,233 (1,387) pence

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SocGen cuts Kingspan Group to 'hold' (buy) - price target 77 (84) EUR

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JPMorgan cuts Tesco to 'neutral' ('overweight') - target 250 (270) pence

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COMPANIES - FTSE 100

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Ashtead Group reported a strong start to its financial year. In the first quarter ended July 31, the industrial equipment rental company said revenue rose 19% year-on-year to USD2.70 billion from USD2.26 billion, as pretax profit climbed 11% to USD585 million from USD527 million. "Our business has clear momentum with robust end markets in North America, which are supported in the US by the increasing number of mega projects and recent legislative acts," said Chief Executive Brendan Horgan. Despite "softening" conditions in UK markets, Ashtead expects its overall performance to be in line with its expectations.

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Ahead of its annual general meeting, DS Smith updated on its trading since May 1. The packaging company said overall trading is in line with expectations, thanks to "continued resilient pricing" and cost control measures, despite the challenging end markets. It cited "clear signs of a reduction in customer-destocking", as like-for-like performance in corrugated box volumes improving since the start of the year, but still below the prior year.

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COMPANIES - FTSE 250

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Caledonia Investments said it has agreed terms for selling off its majority stake in retail wealth management business Seven Investment Management, to Ontario Teachers' Pension Plan Board. Caledonia first bought the stake in 2015. It now expects to receive cash proceeds of around GBP255 million, net of transaction expenses, which it will hold on deposit for future investment. At the end of March, Caledonia's holding in 7IM was valued at GBP187.2 million, excluding a GBP13.2 million sum it plans to invest into the business before completion.

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OTHER COMPANIES

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AIM-listed financial markets software provider Arcontech said it is "optimistic" about a return to topline growth in the near term, as revenue slipped to GBP2.7 million in the year to June 30, from GBP2.8 million a year before. Pretax profit grew to GBP985,696 from GBP758,573, however. "We remain optimistic that we will return to revenue growth in the near term even though our markets remain challenging. Interest in our products is higher than we have seen for some time," said Chair Geoff Wicks.

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By Elizabeth Winter, Alliance News senior markets reporter

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