FTSE 100 higher ahead of US inflation figures, Persimmon sticks with guidance despite horror first half and mixed fortunes for Walt Disney

“The FTSE 100 was a touch higher at the start of what could be an important day for markets as the US readies its latest inflation numbers,” says AJ Bell Investment Director Russ Mould.

“The last reading provided a positive surprise as it undershot expectations for the first time in a long time. A repeat could revive a flagging equity rally, but a negative shock could accelerate recent selling.

“Asian shares were mostly lower overnight after the Biden administration brought forward measures to stop US technology going to China.

“Deliveroo is making strides in becoming a more efficient and financially stable business – just imagine how it would be doing if the market environment had not turned against it. The takeaway platforms enjoyed a portion of super-sized growth during the pandemic but now they’re back on more meagre rations.

“Times may be tough but people are still buying expensive watches judging by Watches of Switzerland’s latest robust update. A market where demand is outstripping supply is never a bad one to be in and whether time is running out on the company’s strong run, for now it is ticking along very nicely indeed.”

Persimmon

“Housebuilder Persimmon is sticking with its full year expectations and that suggests it is doing a decent job of managing said expectations.

“The first half was truly bleak and understandably so given the removal of the crutch provided by the Help to Buy scheme and as potential purchasers face up to much more expensive borrowing costs.

“Given the inflationary pressure on build costs has been in place for some time and shows no sign of disappearing any time soon, a drop in volumes and average selling prices was always likely to leave Persimmon exposed.

“Persimmon’s strategy of retrenchment and adopting a wait and see approach seems a prudent one. The company had already rebased its dividend and keeping a financial buffer to see it through the current turmoil seems sensible. The company is also looking at belt-tightening, putting pressure on contractors and adopting more efficient build processes.

“There are lots of uncertainties for the company right now, including the future direction of rates, whether the supply and demand dynamics in the UK can continue to limit the damage on house prices and what happens to the economy from here.”

Walt Disney

“Entertainment giant Walt Disney may have ticked higher in after hours trading after its latest results, investors cheered by a strong showing from its parks and experiences arm, but it has still given back nearly all its gains from earlier this year.

“Bob Iger is not walking off into the sunset with his work at the House of Mouse done anytime soon. Having rejoined to fix an ailing business, it is undoubtedly proving more tricky than first thought and the extension to his contract by two years out to 2026 was both reassuring but also an admission of an extended timeline for the turnaround. An actors’ strike is just another wrinkle for Iger to deal with.

“A larger than expected drop in subscriber numbers may suggest Wall Street analysts aren’t big cricket fans, as much of this can be attributed to the loss of rights to the IPL which has resulted in losing eyeballs in India.

“Disney is following in the footsteps of Netflix by cracking down on password sharing and increasing subscription fees. This seems to have worked out for its streaming rival which doesn’t have the same wealth of content as Disney.

“In terms of future content, the strategy seems to be shifting to fewer but higher quality releases, which is important if the company is not going to dilute the appeal of its key brands.”

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