FTSE 100 analysis: BT Group CEO set to stand down – Top UK stocks

FTSE 100 hits 8-month low

The FTSE 100 is trading marginally lower this morning, with the blue-chip index set to lose ground for a fifth consecutive session and open at its lowest level in eight months!

That follows on from a mixed session in Asia, where we discovered that China’s factory-gate prices fell at the fastest pace in seven and a half years in June while consumer inflation rose at its slowest pace since 2021. That is raising expectations that China will need to introduce more stimulus to get the economy going again.

Central banks dominate the economic calendar today, with speeches scheduled from the Federal Reserve’s Michael Barr, Mary Daly, Loretta Mester and Raphael Bostic this afternoon, followed by a speech from the Bank of England Governor Andrew Bailey tonight at 2000 BST.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, has been under heavy pressure over the past week and is now trading at an eight-month low.

The index could continue to freefall to 7,180, which emerged as a low enough floor to attract buyers in on multiple occasions since late 2021.

Notably, the RSI is now deep in oversold territory to suggest we could see a rebound soon. Reclaiming the previous 2023-low and returning above 7,300 is now the immediate job before looking to climb back above 7,450 to test the falling trendline.

Top UK stock news

BT Group is down 0.9% after announcing chief executive Philip Jansen will stand down over the next 12 months, prompting it to launch a search for his successor. The announcement comes after media speculation over the weekend, which said Jansen may be considering opportunities to become chairman at a company over in the US. Frontrunners to replace Jansen include the head of BT’s consumer business, Marc Allera, and the head of Swedish telecoms firm Telia Company, Alison Kirkby, according to Sky News. Meanwhile, BT Group is on high alert for a takeover approach from its major shareholder and rival Deutsche Telekom, according to The Times.

Morgan Stanley said UK equities are the cheapest global asset class. It said it doesn’t expect large cap stocks to outperform overseas rivals in the next few months but said mid-and-small cap companies look attractive. It named BAE Systems, Ashtead Group, 3i, BP, Smith & Nephew, Haleon, Prudential, Rio Tinto, AstraZeneca, Indivior, Segro and SSE as its Top Picks.

Rio Tinto is down 1.3% this morning. Chairman Dominic Barton warned there is a wave of near-term challenges in China as he reaffirmed the mining giant’s medium and long-term outlook during an interview on Bloomberg Television. ‘It has been bumpy but I think we need to remember that they have, in effect, come out of Covid a year after us,’ he said. ‘There are also challenges, as you mentioned. There is a big real estate issue.’ That came as iron ore prices slumped 13% in the second quarter to wipe out the gains we saw in the first.

Boohoo is down 0.4% in early trade. The online clothing retailer is drafting a letter to the regulatory body that oversees the AIM market demanding that Revolution Beauty clarifies its announcement that accused the clothing retailer of obstructing efforts by Revolution to finalise its financial accounts, according to Sky News. Boohoo is also considering requisitioning a second extraordinary general meeting to try and remove Revolution’s directors, which were reappointed after being ousted during a recent meeting of shareholders. Revolution Beauty is down 4% this morning.

Unite Group is down 1.5% after its portfolio of student accommodation properties was independently valued at £2.92 billion at the end of June, up 1.2% on a like-for-like basis from the end of March. That was driven by both rental growth and better property yields. The value of the portfolio of its joint venture in London rise 1.1% to £1.94 billion. Unite said it has sold 98% of its rooms for the next academic year, keeping it on course to increase rental income by about 7% in 2023/2024, marking an improvement from its previous goal of 6% to 7%.

Big Yellow Group is down 1.5% this morning after it said occupancy started to grow again in the quarter and that the number of interested prospects enquiring about its properties has returned to pre-pandemic levels. Revenue rose 6.7% in the three months to the end of June to £48.1 million, with like-for-like growth coming in at 5.4%. Like-for-like occupancy rates at the end of the quarter stood at 81.9%, down from 86.5% the year before. Still, lower occupancy rates were more than countered by an 9% rise in average prices.

OnTheMarket is down 2.1% despite saying it delivered record results in the year to the end of January as the price comparison site reported a 14% rise in annual revenue to £34.4 million and squeezed out a £200,000 pretax profit after reporting a £1.2 million loss the year before. That came despite lower demand from the property market following tough comparisons from last year twinned with the tougher environment amid higher interest rates today, although it said high-quality leads improved 26% as it switched its strategic focus to more serious property buyers. Trading has been in-line with expectations since the start of the new financial year but the troubles in the housing market continue, which it warns ‘could have an impact’. ‘Despite these headwinds for our customers the board believes that there is still growth potential for OnTheMarket this year and continues to expect growth in revenue and profitability in FY24,’ said OnTheMarket.

The PRS REIT, a closed-ended real estate investment trust, is up 1.2% after refinancing its £150 million revolving credit facility. It was due to expire in February but was extended to mid-July. It has been replaced by a £102 million fixed-rate facility that will mature in 15 years, along with another £75 million of floating-rate debt that will last for two years. Around two-thirds of the new debt will be deployed by the investment manager to fund developments that are largely completed or ‘stabilised’. It added that occupancy rates stand at 98% and that it collected all the rent due over the 12 months to the end of May.

Future is up 3.1% after it said it plans to return £45 million through a share buyback programme if investors give it the authority at a general meeting. That would allow it to repurchase up to 10% of its issued share capital. The company said it has decided to return cash rather than invest it because it provides ‘greater flexibility to achieve an optimal use of cash to deliver value for shareholders, while still maintaining a strong balance sheet’.

Bakkavor has been upgraded to Buy and given a target price of 120p by HSBC. The food maker is down 0.8% at 94p this morning.

Coca-Cola HBC has been upgraded to Buy at Numis and given a price target of 2,950p. The bottling giant is up 1% at 2,395p today.

Prudential has been reinstated at Outperform by KBW and given a price target of 1,550p. The insurer is up 2.7% at 90.52p.

Capricorn Energy has been raised to Buy and given a price target of 225p by Jefferies. The oil and gas firm is down 0.7% at 184.8p.

HSBC downgraded a wave of property firms this morning. Land Securities has been downgraded to Reduce and given a price target of 485p. Shaftesbury has been downgraded to Hold and given a target price of 121p. British Land has been cut to Reduce and given a 233p price target. Primary Health was lowered to Hold and given a target of 102.1p.

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