RS Group expecting profit at top-end of forecasts, AO World lifts guidance

London open

The FTSE 100 is expected to open 40 points lower on Tuesday, having closed up 0.33% at 7,724.94 on Monday.

Stocks to watch

RS Group said it expected full year profit to be towards the top end of consensus estimates after third quarter revenues grew 8% despite a tough economic backdrop. The distributor of industrial and electronic products said strong trade in EMEA and the US offset an 8% fall in Asia-Pacific sales due to the shortage of computer parts.

Online electrical retailer AO World lifted its profit guidance for the year to March 2023 as it said profitability was running ahead of its previous expectations, having taken actions to cut costs and improve margins. In an unscheduled update for the third quarter, AO said that since the beginning of the current financial year, it has been focussed on profitability, prioritising more profitable cash generative sales and reducing costs.

Hungary has exempted the purchase of a 51% stake in Vodafone's Hungarian unit by local firm 4iG from a competition probe, according to a government decree. The deal has been declared to be of national strategic interest, it added. Vodafone on Monday had agreed the €1.8bn sale of its Hungarian business to 4iG and the Hungarian state.

Newspaper round-up

Businesses will receive reduced support for their energy bills from the end of March as the Treasury attempts to cut the cost of compensating for soaring gas and electricity prices, the UK government has confirmed. James Cartlidge, the exchequer secretary to the Treasury, said on Monday that the government would provide £5.5bn of “transitional support” for businesses over 12 months from 1 April 2023. – Guardian

The Bank of England’s chief economist has warned high rates of UK inflation could persist for longer than expected, despite a fall in wholesale energy prices in recent weeks and the economy on the brink of recession. Huw Pill said the slowdown in the British economy and sharp fall in European gas prices could help to take the sting out of the highest rates of inflation in more than four decades. Threadneedle Street forecasts headline inflation – which was running at 10.7% in November – will ease from the middle of this year. – Guardian

Nicola Sturgeon and Andy Burnham are plotting to force ministers to spend at least £3bn on making HS2 services run to Scotland. Ministers last summer culled a section of HS2 designed to allow Scotland to benefit from the controversial high-speed rail line, amid concerns that costs were spiralling out of control. – Telegraph

City AM, the free London business newspaper, has shut down its Friday print edition as it blamed a shift to home working among bankers in the Square Mile. The publication said it will become digital-only on Fridays to respond to the shift in working habits and lower demand from advertisers. – Telegraph

The value of commercial properties in Britain fell by £130 billion last year as landlords were hit by rapidly rising interest rates and the prospect of a recession. Commercial property capital values dropped by 3 percent last month alone, according to the latest monthly index from CBRE, the real estate and investment company. The monthly fall in December means that commercial properties lost 13.3 per cent of their value in 2022, wiping about £130 billion from the value of Britain’s £1 trillion estate of commercial warehouses, shopping centres and offices. – The Times

US close

Wall Street stocks delivered a mixed performance on Monday as major indices struggled to extend gains recorded in their first strong session of 2023.

At the close, the Dow Jones Industrial Average was down 0.34% at 33,517.65 and the S&P 500 slipped 0.08% to 3,892.09, while the Nasdaq Composite saw out the session 0.63% firmer at 10,635.65.

The Dow closed 112.96 points lower on Monday following a strong performance in the previous session after non-farm payrolls came in slightly higher than expected.

Monday marked the beginning of another week full of key macroeconomic data, with last month's consumer price index out on Thursday, while earnings will also be in focus, as the likes of Bank of America, Bank of New York Mellon, BlackRock, Wells Fargo, JPMorgan Chase, Citigroup, and Delta Air Lines all report their latest quarterly figures on Friday.

As far as the bank earnings go, investors will zero in on the level of bad loan provisions and mortgages, given that although rising interest rates will be good for earnings, higher-than-expected interest rates will likely threaten credit quality, loan growth, and net interest margins.