Must read: FTSE 100, Made.com, crypto, US midterms, ITV, Wetherspoons, Taylor Wimpey

There's noticeable activity across a range of asset classes today, but all eyes are on a bunch of corporate results this morning. Our head of investment rounds up all the action.

GLOBAL MARKETS 

European markets are trading mixed, with the FTSE 100 underperforming with results from Flutter Entertainment (LSE:FLTR) and Aviva (LSE:AV.) sending both stocks to the bottom of the basket. After a heavy sell-off for the housebuilders yesterday, stocks in the sector are attempting to regain ground this morning. 

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As the US midterm election results slowly drift in, it looks like the Democrats are doing better than expected, holding onto some key Senate seats, with President Joe Biden avoiding an embarrassing Republican sweep. The Republicans are still likely to take control of the House while the battle for US Congress could go either way. The better-than-expected Democratic results so far are putting mild pressure on the dollar, which is trading modestly lower against the euro, the pound and the Japanese yen. 

Cryptocurrencies are selling off after the near collapse of FTX. Following a liquidity crisis with $6bn of withdrawals in three days, the crypto exchange was salvaged by a last-minute bailout by its larger rival Binance.

MADE.COM / NEXT 

Made.com Group (LSE:MADE) has fallen into administration after running out of cash, putting up to 500 jobs at risk. Retailer Next (LSE:NXT) is buying the brand name and intellectual property from the furniture seller while PWC has been appointed as administrator. 

Made.com benefited from a boom in demand during the pandemic’s lockdowns when home renovations were extremely popular. This success prompted the affordable furniture brand to float on the London Stock Exchange last June. However, the company has been struggling with a series of headwinds from the reopening of the economy and the end of the interior design boom, problems with the global supply chain that sharply increased delivery times and the cost-of-living crisis which has meant households are holding off on expensive purchases given the rise in energy bills and interest rates.

It looks like competitor, DFS Furniture (LSE:DFS) has been picking up the slack from Made.com which has benefited from a pick-up in order volumes since September, growing its market share on the back of its rival’s struggles. Shares in Made.com have been trading consistently lower since the 2021 IPO, falling from a high of almost £2 to now almost worthless. 

There has been a trend in retail for big fashion brands like Next and H&M to expand into homeware in recent years given the surge in demand particularly during Covid. Earlier this year, Next announced a tie-up with Jasper Conran for a range of homeware and now it is taking on the brand name and IP of Made.com, potentially indicating its intention to expand further into this potential growth area.

ITV 

ITV (LSE:ITV) reported a 2% drop in nine-month advertising revenues amid tough comparables versus the summer of 2021 when the Euro Football Championship was on, sending shares lower today. Total revenues grew by 6% to £2.52 billion during the period thanks to a 16% jump at ITV Studios. The TV group forecasts a drop of between 1% and 1.5% for full-year ad revenues, dropping from a record high in 2021. ITV gets set to launch its streaming platform ITVX next month with a content budget of £160 million next year. 

ITV Studios was the standout performer while ad revenues struggled. Advertising tends to be a discretionary spend that is the first to face cut backs when business belts tighten and the economy slows. Therefore, the looming threat of recession does not bode well for ITV’s potential advertising revenues.

Meanwhile, there was a report last month that ITV could be considering selling its production arm ITV Studios, sending shares sharply higher buoyed by the prospect of a cash windfall from the sale. However, there is yet to any confirmation of this so far. The speculation has helped push ITV shares up 16% over a one-month period, but the stock is under pressure this morning and is still down nearly 40% year-to-date.

JD WETHERSPOON 

Wetherspoon (J D) (LSE:JDW) said like-for-like sales in the first 14 weeks of the financial year were in line with expectations, coming in 9.6% higher than the same period last year and said it expects positive cash flow this year. However, it warned that October had been a slower month and interest costs are forecast to rise by £10 million next year. 

Wetherspoon’s was hit hard by pandemic lockdowns with this year’s economic reopening providing a tailwind to food and drink sales. The pub chain enjoyed a particular boost during the warmer summer months, but revenue tapered off into autumn as it got darker and colder. No doubt Wetherspoon’s will be hoping for a boost to sales around the FIFA World Cup and around the seasonally vital festive period for hospitality with the potential for Christmas party bookings to lift sales.

The pub group has been grappling with pressures from cost inflation including interest charges and worker shortages as well as the cost-of-living crisis which has squeezed household budgets leaving less money left over to spend at the pub. 

Year-to-date shares have had a rough ride, shedding more than 50% reflecting the challenging macroeconomic backdrop of growing inflation, the recessionary threat and rising interest rates.

TAYLOR WIMPEY 

Taylor Wimpey (LSE:TW.) has downgraded its volume outlook from low single-digit volume growth to broadly similar year-on-year. However, the housebuilder says it remains on track to deliver operating profit in line with expectations of around £922 million. 

The fallout from the mini-budget accelerated the existing shift towards higher mortgage rates, which have been on the rise since the Bank of England began its rate hiking path last December. This is adding to cost-of-living pressures among households and weighing on the purchasing power when it comes to buying a property. Expectations are that the housing market will continue to soften into next year, which is encouraging potential buyers to hold off until prices and mortgage rates come down, adding to downward pressures on demand.

Taylor Wimpey has echoed a similar message from its rival Persimmon yesterday which warned of fewer completions next year. Investors in the UK housebuilders have had a tough time this year with Taylor Wimpey shares down nearly 50% year-to-date and similar declines for its competitors. The company has suffered a series of price target downgrades from the analysts lately as well, amid a growing sense of nervousness towards the sector.