Directory performance keeps Next above water, foreign exchange benefits ConvaTec first half

London open

The FTSE 100 is expected to open flat on Thursday, after closing down 0.16% at 7,411.43 on Wednesday.

Stocks to watch

Clothing retailer Next store sales continued to unravel in the second quarter of the year, though a strong online and catalogue performance allowed it to modestly narrowed sales guidance for the full year. Retail sales fell 7.4% in the three months to 29 July, but Directory sales increased 11.4% so that Next brand sales were up 0.7% for the quarter but still down 1.2% for the first half as a whole.

Medical products and technologies company ConvaTec saw group reported revenue rise 0.3% in its first half to $831.3m, it reported on Thursday, with constant exchange rate growth sitting at 2.1% and organic growth of 1.5%. The FTSE 100 firm said its margin improvement programme brought a 40 basis point performance benefit in the six months to 30 June, with a 150 basis point increase in adjusted gross margin to 60.3% including favourable foreign exchange movements. EBITDA fell by 4.3% on a reported basis, however, to $216.4m, while that drop was 8.5% on an organic basis.

Newspaper round-up

Ordinary employees would have to work for 160 years to earn the average remuneration of FTSE 100 chief executives in 2016, according to new research. The average take home pay for the bosses of Britain’s top stock market-listed companies was £4.5m last year, according to the High Pay Centre’s annual survey of top executive pay. This compares to Office for National Statistics figures showing average annual earnings of £28,200 for full-time employees in the year to April 2016. – Guardian

The government has warned energy companies it is still prepared to legislate for an energy price cap, after British Gas announced a 12.5% electricity price rise for more than 3m households. The increase would add £76 to a typical annual electricity bill, and some experts warned that it could kick start a new round of price rises from the so-called Big Six energy companies. – Guardian

Britain’s largest energy companies could face an existential threat in the wake of a technology boom which threatens to upend the traditional utility business model, according to former energy chiefs. An influential six-strong group of former FTSE chief executives and policymakers has warned that traditional energy companies have already “chronically underestimated” the market’s pace of change and could lose out to a rising breed of tech-based rivals. – Telegraph

Tesla expects to spend more than double its 2016 figure this year, after burning through a record amount in its second quarter as it ramps up production of its most "affordable" electric car to date. Capital expenditure at the company, led by the billionaire entrepreneur Elon Musk, came in at $959m (£725m) in the three months the June, taking overall capex for the first half to $1.5bn. - Telegraph

The government’s favourite infrastructure and engineering consultant, CH2M Hill, is to be taken over by its US rival in a $3.35 billion deal. A fortnight after The Times revealed that Jacobs had approached CH2M Hill, the two companies announced the transaction. CH2M Hill is best known as the controversial delivery partner for the first phase of the government’s High Speed Two railway. Last month it landed the contract to oversee the redevelopment of the houses of parliament and it was one of the key players in the delivery of the 2012 Olympics. – The Times

Interim sales at Yoox Net A Porter have exceeded €1 billion for the first time after a strong performance in its key markets in North America and the Asia-Pacific region. The luxury online retailer said its results were “outstanding” and a result of organic growth of more than 20 per cent in the second quarter. – The Times

US close

US stocks ended mostly higher on Wednesday, with the Dow outperforming and breaching the 22,000 level for the first time as Apple shares hit a record high on the back of well-received earnings.

The Dow Jones Industrial Average closed up 0.2% at 22,016.24, while the S&P 500 nudged up 0.1% to 2,477.57 and the Nasdaq closed flat at 6,362.65.

Shares in tech giant Apple rose 4.7% to a record high after the company’s third-quarter earnings topped estimates. It reported adjusted earnings per share of $1.67 versus estimates of $1.57 and revenue of $45.4bn compared with expectations of $44.89bn.

CMC Markets analyst Colin Cieszynski said: “It has been a good news, bad news kind of day for trading in world markets. The good news is that the Dow broke through 22,000 to a new all-time high. The bad news is that despite a number of positive earnings reports from companies including Apple, Garmin and Allstate which sent their shares up 5%, 4% and 3% respectively, the S&P and Nasdaq were unable to confirm the Dow and instead traded flat to lower through much of the day.

“This action suggests that the bull market which started back in November, plus the recent advance that has seen the Dow rally for eight straight days, may be near exhaustion as we head toward the weakest time of the year for stocks.”