FTSE 100 steady, UK inflation comes in higher than expected, British Land gets retail boost, Sage shines and unveils buyback, Severn Trent profit up and Hornby continues to chalk up losses

“After yesterday’s wobble on heightened tensions between Russia and the West, the FTSE 100 was steady in early trading on Wednesday,” says AJ Bell Investment Director Russ Mould.

“For now, investors seem to have largely shrugged off concerns about the Ukraine war. Moscow said yesterday the Ukrainians had fired US-made long-range missiles into Russian territory after President Joe Biden gave them the green light to do so. However, investors will be watching closely for signs of further escalation.

“The devil was in the detail of the latest UK inflation figures. The increase in the headline number was largely thanks to the increase in the energy price cap and is unlikely to cause too much disquiet.

“What is more telling is higher than expected rates of core and services inflation. These are more likely to move the dial when it comes to the Bank of England’s decision making about a December rate cut.

“Physical retail was largely written off during the pandemic but the latest results from property investor British Land, like those recently reported by its peer Land Securities, show the right kind of assets are in demand. The company has been boosted by high occupancy levels as retailers compete for space in out-of-town retail parks.”

Sage

“Accounting software may not be the most exciting corner of the tech industry but Sage’s results have certainly fired the imagination of investors today.

“The meaningful increase in full-year profit and revenue announced today has a cherry on top in the form of a large share buyback, underpinned by the group’s strong cash generation.

“The business is performing strongly thanks to greater uptake of its cloud-based products and the market will be encouraged to see the group making progress across all geographies.

“Inevitably AI comes into the conversation too – with its artificial intelligence assistant Sage Copilot rolled out to a greater proportion of its customer base. Accounting involves lots of spreadsheets so you can see how AI might be useful when it comes to the more basic and repetitive administrative task of keeping these updated.

“The one concern for the company, whose client pool is largely made up of small and medium-sized businesses, is a downturn in the economy might disproportionately affect them. However, for now Sage says they remain resilient.”

Severn Trent

“The big increase in profit at water utility Severn Trent may sit uncomfortably with the company’s admission it will miss some water-safety performance metrics this financial year.

“Pollution in Britian’s rivers and seas and the travails of Severn’s unquoted peer Thames Water mean this sector’s name is mud with many.

“However, a modest increase in the dividend and the improved financial performance may be enough to get some investors back on side.”

Hornby

“You could hardly say toy outfit Hornby’s turnaround is going like clockwork. The company continues to chalk up losses which only ramps up the pressure ahead of its key trading update.

“It will be praying its model railways are filling stockings of big kids and little kids alike when it comes to the big day. A decent Christmas could give the recovery a bit of momentum ahead of a planned rejig of its logistics set-up in 2025, which is expected to help reduce costs.”

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