FTSE 100 on cusp of hitting new all-time high, ITV’s new streaming platform gets World Cup boost and Taylor Wimpey looking to cut costs amid property market gloom

“A decent showing on Wall Street following news that US consumer prices dropped in December helped to lift investor sentiment in Asia and Europe on Friday. Investors are desperate for inflation to ease back so that central banks no longer have a reason to keep putting up interest rates,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 rose 0.6% to 7,838, led by healthcare, financials, industrials and basic materials stocks.

“The index would only have to rise another 0.8% to beat its intraday all-time high of 7,903 achieved on 22 May 2018. Smashing through this level would give overseas investors another reason to start looking more seriously at UK stocks.

“After the Brexit vote, UK stocks were off the menu for many international investors and valuations plummeted. This remained the case for some time until some canny players realised the opportunities to be had, leading to a wave of takeovers – decent businesses picked up on the cheap.

“Last year was a big turning point whereby the UK was one of the few major markets around the world not to see a big slump. Now if the FTSE 100 breaks a new record, it’s another trophy in the cabinet for the UK and a reason to shout from the hilltops that the market is not as dull as people think.

“Among corporate news, the recent spate of Christmas trading updates from the retail sector have shown it is not all doom and gloom, and sofa seller DFS has joined the pack saying life isn’t that bad. It would suggest that big ticket items are still on the menu for many people despite the gloomy economic backdrop. Therefore, it is worth watching airline operators closely to see if the nation’s appetite for foreign holidays is still intact, despite the cost.

“It may simply be a coincidence, but International Consolidated Airlines and aviation engines group Rolls-Royce topped the FTSE 100 leader board which suggests some investors might be wondering if the stronger appetite for spending than previously expected might extend to other sectors beyond retail.”

ITV

“Free to air broadcaster ITV has seized on the opportunity to report some good news as it flags a strong start for its ITVX streaming platform.

“A 55% increase in streaming hours in the first month after launch compared with the performance of its ITV Hub predecessor in 2021 sounds impressive, but there was the small matter of a winter World Cup to help draw people to the platform.

“Even the increase of nearly 30% excluding the football probably doesn’t tell the whole story as people may well have been on the platform anyway to watch the games and spotted another show they wanted to view.

“ITV’s challenge is to get those viewers to stick around. It points to good growth in January but it will need more than one strong month to overcome market scepticism about the ITVX venture and the significant content costs attached to it.

“ITV had to do something to contend with the shift from an analogue to digital TV world and it cannot really afford for ITVX not to work.”

Taylor Wimpey

“Given what Persimmon and Barratt had already said about the state of the housing market this week there wasn’t much chance of Taylor Wimpey offering up a surprise.

“It’s not difficult to draw a conclusion on the cause of the downturn in the property market – all three of the big housebuilders have drawn a dividing line between the period before the mini-Budget and the weeks after when the availability of inexpensive mortgages dried up overnight.

“The market is likely pleased to see Taylor Wimpey working on a rapid response to the deteriorating backdrop as it weighs the idea of taking £20 million worth of costs out of the business.

“The company has the usual, if warranted, gripe about planning and along with the weak market conditions the upshot is that it’s going to build less homes in 2023. Longer term this is likely to exacerbate a lack of supply in UK housing and could act as a backstop for falling prices.”

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