Currys has warned of “inevitable” price rises due to Budget measures it said will add £32 million to its costs.
In its half-year results, the electricals chain called government policy an “unwelcome and material headwind.”
The focus is also on interest rates, with the European Central Bank seen cutting by another quarter point.
FTSE 100 Live Thursday
- Currys in Budget price warning
- SThree warns of tough year
- De La Rue order book surges
Market update: Diageo rallies after upgrade, FTSE 250 recruiters struggle
10:23 , Graeme EvansThe share price recovery of Currys powered on today after forecast-beating results more than offset its warning of a £32 million post-Budget hit to costs.
The electricals chain jumped 12% or 9.85p in the FTSE 250 index, taking gains for this year to 75% as figures for the six months to 26 October revealed a significant improvement in profitability and cash flow.
The upturn included 5% growth in underlying UK and Ireland sales.
Boss Alex Baldock said Currys was well placed for the peak trading season but also faced “new and unwelcome headwinds” from government policy.
He warned that these will depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.
The £32 million hit includes £9 million related to National Living Wage changes and £12 million from additional National Insurance contributions.
At the wrong end of the FTSE 250 index, the shares of specialist staffing firm SThree slumped 24% or 85.5p to 275.5p after it warned that challenging conditions are likely to continue throughout its 2025 financial year.
The specialist in science, technology, engineering and mathematics (STEM) roles said increased political and macroeconomic uncertainty, particularly in Europe, had further delayed decision making.
The update impacted larger players in the recruitment sector as Hays fell 6% or 5.1p to 77.6p and Page Group dropped 13.6p to 361.6p.
The wider FTSE 250 index fell 25.28 points to 20,948.17, with other big mid-cap movers including Watches of Switzerland after Kepler lifted the Rolex retailer to Buy with a new target of 650p. Shares rose 3% or 18.5p to 581.5p.
The FTSE 100 index rose 17.59 points to 8319.21, led by a gain of 4% for Diageo after its shares were boosted by UBS’s double upgrade from Sell to Buy.
The Swiss bank’s turnaround optimism and new target price of 2920p is based on hopes that Don Julio tequila and Crown Royal whisky can drive a strong US performance in 2025.
Shares rose 96p to 2585.5p, still 8% lower for the year to date.
Other strong blue-chip performances came from British Gas owner Centrica, up 3p to 133.2p, and Lloyds Banking Group with a 1p advance to 55.2p.
Associated British Foods fell 60p to 2132p after its shares began trading without the value of its latest dividend award. Rentokil Initial lost 13.7p to 401.7p and British American Tobacco reversed 54p to 2945p.
STEM recruitment firm SThree slides on 2025 warning
09:09 , Graeme EvansThe shares of specialist staffing firm SThree have slumped 25% after it said it was braced for challenging conditions to continue throughout its 2025 financial year.
The specialist in science, technology, engineering and mathematics (STEM) roles said increased political and macroeconomic uncertainty, particularly in Europe, had further delayed decision making and the anticipated easing of market conditions.
Chief executive Timo Lehne said: "The nature of our business model has meant we have been able to withstand the external pressures until now.
“However, the anticipated easing of market conditions has not yet materialised, with delayed decision making continuing to impact new placement activity whilst contract extensions remain robust.
“With this dynamic expected to persist through next year, the board has taken a prudent view of 2025.
Lehne said he remains confident in the company’s strategy and that it is well placed for when market conditions improve.
The shares fell 90p to 271p, their lowest level since late 2020 after the company forecast pre-tax profits in the year to November 2025 will be about £25 million.
The shares of fellow FTSE 250 stocks Hays and Page Group also fell by 7% and 4% respectively.
Diageo leads FTSE 100, Currys jumps 8% after results
08:34 , Graeme EvansDiageo is top of the FTSE 100 index after UBS switched the Smirnoff and Guinness maker from Sell to Buy and upped its price target from 2300p to 2920p.
The shares rose 3% or 79.5p to 2569p, still 9% lower in the year to date.
Miners Antofagasta and Glencore lifted 1.5% and Ashtead put back 58p to 5358p after recent heavy selling to leave the FTSE 100 up by 6.48 points to 8308.10.
Associated British Foods fell 53p to 2139p after its shares went ex-dividend, while tobacco firms British American Tobacco and Imperial Brands weakened 2%.
In the FTSE 250, Currys rose 8% or 6.1p to 85.1p after chief executive Alex Baldock said the company’s performance continues to strengthen after posting half-year results ahead of City expectations..
Richard Hunter, head of markets at Interactive Investor, said: “Currys has posted an update which is positive on any number of fronts, and its confidence for future prospects has been mirrored by a strong market reception to the numbers.”
De La Rue lifted by stronger currency order book
08:06 , Graeme EvansDe La Rue today said its currency order book stood at the highest level in five years, boosted by multi-year, polymer-based banknote contracts.
Chief executive Clive Vacher said in today’s half-year results that the orders “solidly underpin our growth expectations”.
He added: "With these firm foundations, our ongoing Currency business is now well positioned to take full advantage of an improving market, with a substantial upward step change in activity in 2025 and beyond."
Half-year revenues fell 10.2% to £145.1 million after a 16.3% decline in Currency more than offset a 4.4% rise in the Authentication division, which makes products to protect against illicit trade, counterfeiting and identity theft.
Adjusted operating profit of £7.3 million for the six months to 28 September fell 7.6% on a year earlier.
De La Rue recently agreed the sale of the Authentication division to Crane NXT for £300 million.
This will allow the repayment of existing banking facilities and reduce the remaining deficit on its legacy defined benefit pension scheme.
Vacher added: "We have made substantial progress in 2024 both operationally and strategically.”
European Central Bank seen cutting deposit rate
07:45 , Graeme EvansThe European Central Bank is expected to cut its deposit rate by another quarter point to 3% when the latest policy decision is announced at 1.15pm UK time.
Such a move would extend rate cuts since June to 100 basis points, a run that has weakened the euro to a two-year low against the US dollar.
A half point cut is seen as unlikely today as policymakers keep their options open for 2025, given uncertainty around the timing, extent and impact of US tariffs.
Deutsche Bank sees quarter point cuts at every meeting in the first half of next year and for the deposit rate to end 2025 at 1.5%.
The Federal Reserve is likely to make another interest rate cut next week after yesterday’s inflation reading of 2.7% met Wall Street expectations.
Currys warns of price rises after £32m Budget hit
07:23 , Graeme EvansThe boss of retailer Currys has used the company’s improved set of half-year results to criticise “new and unwelcome headwinds from UK government policy”.
Alex Baldock said: “These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.”
Currys calculates that recent changes to Government policy including the Budget will have an incremental cost to the group of £32 million.
This includes a £9 million rise in wages due to National Living Wage increases and £12 million in relation to National Insurance contributions.
It intends to mitigate the impact through further cost saving measures, including process improvement, automation, offshoring, outsourcing and overhead efficiencies.
Group revenue rose 1% to £3.9 billion in the six months to 26 October, driven by a 5% like-for-like sales increase in the UK and Ireland.
Adjusted profit before tax of £9 million represented a £25 million improvement on the previous year’s loss.
Baldock added: “"We're very encouraged by our progress. Currys' performance continues to strengthen, with profits and cashflow growing significantly, and the Group's balance sheet is strong.”
FTSE 100 holds firm ahead of ECB decision, tech stocks rally
07:03 , Graeme EvansThe FTSE 100 index is forecast to add another seven points after London’s top flight rose 0.3% to 8301.62 in yesterday’s session.
In the US, the Dow Jones Industrial Average fell following in-line inflation figures but the S&P 500 rose 0.8% and the Nasdaq Composite jumped 1.8%.
Big risers as traders priced in another rate cut by the Federal Reserve next week included Nvidia after a gain of 3%, while Tesla surged 6% and Amazon by 2%.
The focus of today’s session is on the European Central Bank amid expectations for another quarter point move lower in its base rate.
