Daily market update: Barratt Redrow, Close Brothers, Dr Martens

“US inflation figures are the big event of the day for investors as they could provide insight into what the Federal Reserve does next with interest rates,” says Russ Mould, Investment Director at AJ Bell.

“Fed chair Jerome Powell will also continue his testimony before Congress, but don’t expect him to react to the latest inflation figures. He’ll probably stick to the script and say that the central bank will keep a close eye on events, particularly as the inflationary impact of Trump’s policies are still an unknown entity.

“The FTSE 100 was flat at 8,781 as strength in property stocks was offset by weakness in energy producers.

“Heineken got the party started in Europe as its shares surged more than 11% after better-than-expected operating profit growth and a pleasant surprise with volume growth. Investors were also treated to a €1.5 billion share buyback. The plethora of good news represents a big turning point for the drinks giant after a near-one-year decline for its share price amid a slow start to 2024.

“Capital preservation-themed Ruffer Investment Company slipped on news that co-manager Duncan MacInnes had left the asset manager which runs the investment trust with immediate effect. A lack of explanation left investors guessing as to what’s happened but it is never a good look when someone leaves their role without serving notice.

“The biggest player in the US online food ordering market enjoyed a 5.7% share price jump in pre-market trading following well-received results. DoorDash served up 24% year-on-year revenue growth and was upbeat about the outlook, causing investors to jump with joy.”

Barratt Redrow

“Barratt Redrow seems to have shaken off the gloom affecting much of its housebuilding peer group – suggesting the scale built through last year’s merger is starting to pay off.

“The company has identified more significant cost savings than expected as it brings the old Barratt Developments and Redrow operations together. It is still early days in the integration process and there are always risks with deals of this scale but investors will be encouraged by what they have seen so far.

“The announcement of a meaningful share buyback signals a degree of confidence from management in the future outlook.

“The company has work to do to get margins and volumes close to its medium-term target. Barratt’s improved profitability as a standalone entity wasn’t matched by Redrow, and this will probably require some help from improved mortgage affordability and manageable levels of build cost inflation.

“The market will be watchful of the impact of stamp duty changes on the UK property market. The looming cut to stamp duty thresholds is driving buyer demand in the short term but potentially with a drop-off to come in April when the new rules are introduced.”

Close Brothers

“While the motor finance mis-selling scandal does not look likely to result in anything on the scale of the PPI affair, it has had a devastating impact on Close Brothers.

“The shares are trading nearly 80% below their 2021 highs. In this context it’s not a great surprise that shareholders have reacted with a measure of relief to news the company will book a £165 million provision to cover any losses arising from compensation payments and legal costs. Perhaps they were thinking that figure could have been a lot higher.

“Today’s news follows a decent run for the share price in recent weeks on news the Supreme Court is reviewing the Court of Appeal’s initial judgement – which was seen as a poor outcome for lenders – and comments from the Treasury that any redress should be proportionate.

“The outcome could still be worse than the current provision implies so it’s too soon for Close Brothers to relax entirely. The company will emerge from this crisis as a different animal, having agreed the sale of its wealth management arm to private equity.”

Dr Martens

“The appointment of non-executives wouldn’t normally catch the market’s attention but investors have sat up and taken notice of developments at Dr Martens. Hot on the heels of Ije Nwokorie joining as chief executive, two more new faces are joining the board.

“Dr Martens has struggled in the US in recent years so it makes sense to appoint someone who knows the country’s retail sector inside out. Robert Hanson comes with considerable experience at US brands and will be able to offer advice on how best to get Dr Martens back on track Stateside.

“Shareholders’ patience has worn thin given the miserable share price performance since IPO. Dr Martens came to market as a private equity-backed business – normally in this situation, the private equity investor would use the IPO as an exit route to sell down the holding over a period of time.

“This scenario didn’t work out as planned for Permira as it would have banked on strong demand for Dr Martens’ shares so it could have easily offloaded blocks of stock post-IPO. Instead, Dr Martens’ shares have steadily fallen and Permira is still left holding a 38.36% stake. It’s no wonder the private equity group has put another one of its representatives on the boot maker’s board.

“Benoit Vauchy will be able to use his board seat to keep a close eye on the company’s turnaround efforts and make sure the new CEO is not dithering with implementing change. He joins fellow Permira representative Tara Alhadeff who has been on the board since 2015.”

These articles are for information purposes only and are not a personal recommendation or advice.