BUSINESS LIVE: UK borrowing soars; JD Sports buys Hibbett; ABF eyes ‘significant growth’

The FTSE 100 hit a record high today, catching up with major global peers which have struck all-time peaks this year as inflation cools.

The index of Britain’s leading publicly listed reached 8,071.12 points, surpassing a record 8,047.06 points struck in February last year.

The number of homes for sale is at a five year high, according to Zoopla, raising questions over whether house prices could fall further.

The property portal revealed there are 20 per cent more homes on the market than there were this time a year ago.

The FTSE 100 continues its advance after rallying to an all-time high on Monday, as easing tensions in the Middle East and hopes of looming interest rate cuts drive momentum.

Weaker sterling, positive corporate updates and fresh data showing easing grocery price inflation helped extend the rally on Tuesday, with the FTSE 100 up by roughly 0.6 per cent to 8,069.57 in early trading.

It follows a gain of 1.6 per cent on Monday that saw the FTSE 100 close at 8023.87, eclipsing the previous record close of 8014 in February last year.

The FTSE 250 made healthy gains – up 1.1 per cent, or 208.09 points, to 19,599.39 – amid yet more takeover activity, though it remains some way off its peak of 24,353 in September 2021.

The mid-cap index also extended gains on Tuesday morning, but a weaker pound limited gains to 0.3 per cent in early trading.

London-listed stocks have continued gains to new record highs this morning, helped by a weaker pound and positive corporate updates, while investors turn focus on earnings from US tech giants this week.

Surging commodity prices, a falling pound as well as gains in defence stocks have powered the FTSE 100 higher this year as investors take advantage of cheaper valuations in British equities.

Associated British Foods has jumped 7.7 per cent to the top of the FTSE 100 after the Primark owner forecast ‘significant growth’ in full-year profit as it reported a 39 per cent jump in the first half.

Other retailers such as J Sainsbury and Tesco are up more than 1 per cent each, while Ocado has added 4 per cent, after data showed UK grocery price inflation fell for the 14th month in a row in April, partly driven by an increase in supermarkets’ promotional activity.

JD Sports Fashion has gained 2 per cent after the sportswear retailer proposed to buy US athletic-fashion retailer Hibbett Inc for about $1.1billion.

CVC Capital Partners’ co-founder could be in line for a £130million pay day when the company he helped set up three decades ago goes public.

Donald Mackenzie is cashing in a big chunk of his 7 per cent stake when the private equity firm lists in Amsterdam later this week.

UK grocery price inflation fell for the 14th month in a row in April, partly driven by an increase in supermarkets’ promotional activity, industry data showed on Tuesday.

Market researcher Kantar said annual grocery price inflation was 3.2 per cent in the four weeks to 14 April, versus 4.5 per cent in the previous four week period.

Kantar said items bought on offer made up 29.3 per cent of supermarket sales – the highest level outside of Christmas since June 2021.

‘This emphasis on offers, coupled with falling prices in some categories like toilet tissues, butter and milk, has helped to bring the rate of grocery inflation down for shoppers at the till,’ Fraser McKevitt, head of retail and consumer insight at Worldpanel by Kantar, said.

But he noted prices were still rising quickly in markets such as sugar and chocolate confectionery and chilled fruit juices and drinks.

Richard Hunter, head of markets at Interactive Investor,

‘For the year as a whole, the group expects growth to be significantly above expectations both in terms of cash generation and profitability. Such optimism on immediate prospects enabled another increase to the dividend, where the projected yield of 2.7% including specials remains somewhat pedestrian in comparative terms but nonetheless shows a declared direction of travel.

‘In the background, the latest share buyback programme of £500 million is ongoing, which should provide some support to the share price.

‘The group is aware of potential bumps in the road ahead including, but not limited to the pressure on the consumer, geopolitical concerns, supply chain disruptions which are currently under control and the uncertainty which several general elections could bring later in the year.

‘Nonetheless, the diversified nature of the AB Foods business offers some insurance against most economic outcomes, while at the centre of the current success is a Primark business which continues to flourish both home and abroad.’

The London stock market is facing ‘death by a thousand cuts’ as two more FTSE 250 firms bow to foreign takeovers.

In another frenzied day of deal making in the Square Mile, construction business Tyman and music group Hipgnosis backed proposals that would see them bought and removed from the UK market.

Britain’s Debt Management Office (DMO) has bumped up its plans for government bond issuance in the current financial year, following OBR official data that showed a bigger budget deficit than forecast in the last financial year.

Gilt sales for 2024/25 are now projected at £277.7billion, up £12.4billion on the previous remit published last month.

Most of the revision reflects the fact that the government’s cash deficit in the 2023/24 financial year was £10billion higher than forecast at the March spring budget, according to official figures published earlier on Tuesday.

Retailers guided the FTSE 100 to a record high yesterday.

On a positive day for investors, London’s blue-chip index rose 1.6 per cent, or 128.02 points, to 8023.87.

That left the FTSE 100 above its previous record close of 8014.31 in February last year.

The mid-cap FTSE 250 index was also on the march, up 1.1 per cent, or 208.09 points, to 19599.39.

High Street store chains and major supermarkets led the way as optimism coursed through City trading floors.

Primark owner Associated British Foods expects ‘significant growth’ in profitability this year after earnings jumped 39 per cent in the first half, partly driven by margin recovery at its clothing chain amid the opening of new stores.

The group, which also owns major sugar, grocery, agriculture and ingredients businesses, said adjusted operating profit, its key profit measure, was £951million in the six months to 2 March, on revenue up 2 per cent to £9.7billion.

‘The group has delivered a strong first half performance and is on track to deliver significant growth in both profitability and cash generation ahead of expectations at the start of this financial year,’ it said.

It was previously forecasting ‘meaningful progress’ in full-year profit.

Primark’s first half revenue rose 7.5 per cent to £4.5billion, with like-for-like sales up 2.1 per cent and margin recovery to 11.3 per cent, up from 8.3 per cent.

JD Sports Fashion is set to buy American athletic-fashion retailer Hibbett for about $1.08billion (£899million), as the British sportswear retailer expands across the southeastern US.

JD Sports, Britain’s largest sportswear retailer, will pay $87.50 per Hibbett share in cash, representing a premium of about 20 per cent to the US firm’s last closing price.

The Bury, Greater Manchester-based company said it expects to fund the deal and refinance Hibbett’s existing debt through its existing US cash resources of $300million and a $1billion extension to its existing bank facilities.

The enlarged group would have combined revenues of about £4.7billion in North America, JD Sports said, adding that the region’s contribution to total sales would increase to about 40 per cent from the current 32 per cent.

The FTSE 100 closed at an all-time high yesterday as easing tensions in the Middle East and hopes of interest rate cuts in the UK sent shares soaring.

On a bumper day for savers with money tied up in the stock market through pensions, Isas and other investments, the blue-chip index closed up 1.6 per cent, or 128.02 points, at 8023.87.

That eclipsed the previous record close of 8014 in February last year.

Government borrowing was £6.6billion higher than forecast last year, hitting £120.7billion as wages and benefit payments surged, fresh data from the Office for Budget Responsibility shows.

Public sector net borrowing was £7.6billion less than the prior year in the 12 months to 31 March, but was higher than OBR forecasts of £114.1billion.