• FTSE 100 down, down 47 points, after sharp falls in US and Asian markets
  • UK inflation rate drops in August, helped by lower fuel prices
  • Dunelm up after record profits

Home goods retailer Dunelm Group PLC (LSE:DNLM) was a rare riser on Wednesday after reporting a 32.4% rise in full-year pre-tax profits to a record £209m , on total sales of £1.6 billion, up 16.2% year-on-year.

The retailer said its active customer base grew by 8.5% during the year and paid a final dividend of 26p per share, up from 23p a year earlier.

Shares rose 3.4% to 745p, bucking the weak market trend.

Managing Director Nick Wilkinson said: “We feel confident and well prepared to weather the current economic pressures.”

“That said, the operating and economic environment is extremely challenging.”

Dunelm said sales remained “robust” in the first 10 weeks of the new fiscal year and is on track to deliver full-year 2023 results in line with analysts’ expectations for a profit before taxes of £178 million.

Analysts at Peel Hunt were optimistic: “There are no signs of a decline in trading or weakness in any category,” he said.

“Indeed, Dunelm enters the year 2023 with record brand awareness, active customers and an intention to double in value.”

“We are seeing strong market share growth and a dividend yield of over 35% over three years,” the broker added.

9:30 a.m.: Aston Martin shares head south in potential legal action

Aston Martin Lagonda is facing legal action from two former dealers who claim they owe around £150m for underwriting the development of its struggling Valkyrie hypercar, the Financial Times has reported.

The luxury carmaker revealed that Nebula Project AG (a Swiss company owned by Andreas Baenziger and Florian Kamelger) had filed a complaint against Aston in London, according to the report, although details are not public.

The case involves a deal to fund the development of the £2.5million Valkyrie hypercar, according to two people with knowledge of the matter, the FT said.

When the automaker began developing the Valkyrie in 2016, it turned to Baenziger and Kamelger to underwrite the project.

According to three people familiar with the arrangement at the time, they were guaranteed royalty payments of around 3%, worth around £150million, once the cars went on sale.

However, last year Aston claimed the pair withheld deposits from Valkyrie customers with the company and took them to court to recover the £15million they were owed.

At the same time, he terminated the contract.

The FT quoted a statement from Aston chairman Lawrence Stroll on Tuesday evening, who said: “We are confident in our legal position and believe their counterclaims are retaliatory and without merit.”

8:55 a.m.: Back to square one

Back to square one, Richard Hunter, head of markets at Interactive Investor, said after sharp falls in global stock markets following the scorching US CPI report wiped out recent market gains.

As of 8:50 a.m., the FTSE 100 was trading 73 points lower at 7,313, with the broader FTSE 250 down 157 points at 19,010.

“The implications of the warmer-than-expected numbers are clear,” Hunter said.

“While the recent market rally was based on the assumption that inflation had peaked, it remains more resilient than expected, so the Federal Reserve will have no choice but to continue its aggressive monetary policy. “

“The likelihood of a 0.75% hike at the September meeting has now become a virtual certainty, with a minority of economists raising the possibility of a sharp 1% rise.”

The theme continued at home with UK inflation figures released this morning coming in slightly weaker than expected.

“The Bank of England is expected not to press the monetary brake pedal as hard as the Federal Reserve is expected to in terms of rate hikes after the US inflation snapshot States is higher than expected” Susannah Streeter, Hargreaves Lansdown, Senior Investment and Market Analyst.

. “The slight drop in inflation in the UK, the first in 11 months, will ease the pressure on policymakers and give them some breathing room.”

“But inflation is still too high” and with “signs of continued upward pressure on wages amid the scramble for talent”, “the Bank of England cannot rest easy”, said- she warned.

“Rates are still expected to rise when policymakers meet next week, but a smaller 0.5% hike now looks more likely.”

8:30 am: Deutsche Bank downgrades abrdn to sell

Deutsche Bank took a more cautious stance on asset manager abrdn PLC, downgrading the stock to sell with a reduced price target of 135p from 175p.

Analyst Rhea Shah said there were downside risks to the shares from an earnings and capital perspective with a 25% cut in the dividend now expected from the final payment for 2022.

Additionally, Deutsche is also pricing the excess capital locked up in the Indian holdings at a 5% higher discount to reflect concerns over the use of the sale proceeds.

8:10 am: FTSE 100 opens lower after sharp falls in global markets

The FTSE 100 opened sharply lower on Wednesday, reflecting sharp falls in global markets spooked by stronger-than-expected US CPI figures yesterday, which dashed hopes that lower inflation would ease pressure on the Federal Reserve. to maintain its aggressive stance on rising interest rates.

As of 8.10am, the blue chip index traded down 4o points to 7,346, with the broader FTSE 250 down 87 points to 19,084.

UK inflation fell to 9.9% in August from 10.1% in July, and slightly below market expectations “supporting, rather than increasing, pressure on the MPC to take action,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

He forecast the headline CPI inflation rate to hit nearly 11% in October, but with growing confidence that this will prove the peak “and that it will decline rapidly in 2023”.

7:45 am: Businesses face delays in getting government energy support – FT

The Financial Times reported that businesses have been warned by UK government officials that they will have to wait longer than households for aid from its £150billion energy package, due to the difficulty of launching a support system before November.

According to the report, the prospect of weeks of delays is of growing concern to business leaders, as hundreds of thousands of companies come to the end of their fixed-price energy contracts in early October.

Leaders were told in recent meetings with the government that the program might not be ready before November, although officials said they still hoped the program would go live next month.

“It’s not over yet,” said a government official. “I don’t know if he will arrive before November. There is some debate as to whether it can be brought forward and happen before that.

7:25 am: UK PPI below expectations in August

Producer input prices rose 20.5% on the year to August 2022, compared to 22.6% on the year to July 2022 and below forecasts for a rise to 22, 6%, according to the Office for National Statistics.

Producer prices (ex-factory) increased by 16.1% over the year to August 2022, compared to 17.1% over the year to July 2022 and below forecasts of a rise to 17.5%.

Crude oil and petroleum products contributed the most to the decline in the change in the annual inflation rates for inputs and output, respectively.

On a monthly basis, input prices decreased by 1.2% and output prices decreased by 0.1% in August 2022; this is the first time monthly rates have been negative since August 2020 and September 2020, respectively.

7:15 am: UK inflation rate drops in August

The Consumer Price Index (CPI) rose 9.9% in the 12 months to August 2022, from 10.1% in July, according to the Office for National Statistics (ONS). and below expectations for an increase to 10.1%.

On a monthly basis, the CPI increased by 0.5% in August 2022, compared to an increase of 0.7% in August 2021.

The ONS said a fall in motor fuel prices made the biggest contribution to lower annual HICP and CPI inflation rates between July and August 2022, while rising prices foodstuffs made the largest, partially offsetting contribution to the change. in the prices.

6:55 a.m .: FTSE 100 down after US markets fall

The FTSE 100 is set to open lower this morning after sharp falls in the US overnight on stronger than expected US CPI numbers.

Spread betting companies are calling the main index down about 50 points.

US markets suffered heavy losses at the close, rocked by stronger-than-expected inflation data, which dashed hopes that the Federal Reserve might cave in and scale back its tightening policy in the near future.

All three major U.S. stock indexes fell sharply, snapping four-day winning streaks and posting their biggest one-day percentage declines in more than two years.

The Dow Jones Industrial Average slid 1,276 points, or 3.9%, to 31,105, the S&P 500 fell 178 points, or 4.3%, to 3,933 and the Nasdaq Composite fell 633 points, or 5.2%, to 11,634.

On this side of the pond, we will have our own inflation reading this morning.

Michael Hewson, chief market analyst at CMC Markets UK, said: “In July we saw food prices drive gains, although recent declines in petrol prices may help with the monthly numbers. “

“Nevertheless, yesterday Kantar reported food price inflation of 12.4% in August, suggesting that economists’ forecasts of a modest drop to 10% in today’s August figures could be optimistic.”

“Core prices could be more problematic given that they rose sharply to 6.2% in July, and if the US is any guide yesterday, they could rise further.”

“That would be more of a concern for the Bank of England and could force it to move 75 basis points next week, with the potential to do more by the end of the year. At least the delay this week gives the Bank of England the luxury of waiting to see what the Fed does before making a decision on 50 basis points or 75 basis points.