FTSE 100 higher with US inflation at its lowest level in more than three years, Trainline soars on positive trading update, Fevertree lowers revenue guidance

“The FTSE 100 bounced back sharply on Thursday following a strong session in Asia and Wall Street overnight, after US inflation fell to its lowest level in more than three years,” says AJ Bell investment director, Russ Mould.

“This has left the way clear for interest rate cuts in the US. A 50 basis-point cut by the Fed seems to be off the table for now as recession fears have eased, meaning a quarter percentage point reduction seems the likely outcome.

“The markets will be watching producer price data from the US later on, given movements in so-called factory gate prices typically offer a window into the trajectory of prices consumers are likely to face.

“The European Central Bank (ECB) is widely expected to trim its rates by 25 basis points later today. The ECB is ahead of its counterparts in the UK and US having first moved to ease monetary policy in June.

“The FTSE 100 benefited from a rebound in energy prices, which lifted heavyweight constituents BP and Shell. Crude moved higher on supply risks associated with Hurricane Francine and its impact on operations in the US Gulf of Mexico.”

Trainline

“Double-digit gains in net ticket sales and group revenue point to a fantastic first-half period for Trainline.

“Acting as a big tailwind is a structural shift in the UK for people to use digital tickets rather than paper ones. As more people become accustomed to scanning their phone to get through station barriers, the bigger the opportunity for Trainline to position itself as the go-to place for buying these types of tickets.

“A second tailwind is increased carrier competition in mainland Europe, primarily in Spain and Italy. Trainline has been able to position itself as an easy way to navigate the increasingly complex travel system and get good deals.

“Investment a few years ago in raising awareness of its brand in Spain is now paying off, having tripled net ticket sales in the last two years in that country.

“Trainline has been getting into the habit of delivering good news over the past year. This momentum, together with increased earnings expectations, has helped to breath some life back into its share price after Covid delayed the company’s growth plans. It now looks firmly back on track.”

FeverTree

“You might have expected a return to profit growth in the first half to have put some fizz back into premium mixers outfit Fevertree’s share price. However, the company’s trading has been pretty ropey, with the uplift in profit largely accounted for by lower glass bottle pricing, and the cut to full-year revenue guidance announced today is significant.

“Blaming the UK weather is unlikely to go down too well. While it is understandable a soggy start to the summer would have dampened appetite for spirits and cocktails, the vagaries of the British climate are something Fevertree should be used to.

“Business in the UK and across Europe was also impacted by a subdued consumer backdrop and the timing of shipments.

“The good news comes from the US, which is now its biggest region by sales as it grows market share. The company’s strategy of moving outside the tonic categories is paying off, given Americans don’t have huge appetite for gin.

“More broadly, across the business, Fevertree is expanding its soft drinks range to account for lower alcohol consumption among younger people.

“The company has seen signs of improving trading in July and August and investors will hope these trends continue through the remainder of the year. However, nearly 10 years after its IPO, the initial period when Fevertree was consistently beating expectations, driving the shares to all-time highs, feels like a distant memory.”

These articles are for information purposes only and are not a personal recommendation or advice.