Smith & Nephew flags top-end sales growth, BT posts first-half growth

London open

The FTSE 100 is expected to open 48 points higher on Thursday, having closed up 0.28% on Wednesday at 7,342.43.

Stocks to watch

Smith & Nephew has said that sales growth is now expected to be at the top end of guidance after a strong third quarter, though it did warn that margins would likely not grow as much as hoped. Underlying revenues for the full year are now expected to be "towards the higher end" of the guided range of 6-7%, which had already been upgraded at the half-year stage from 5-6%. Trading profit margins, however, are now expected to be "around 17.5%", reflecting headwinds in China. This was a slight change from earlier guidance of "at least 17.5%", and compares with a trading profit margin of 17.3% in 2022.

BT reported adjusted revenue of £10.4bn in its half-year results on Thursday, showing a 3% increase driven by higher sales of fibre-enabled products, inflation-linked pricing, and improved trading in the business segment. Adjusted EBITDA grew 6%, reaching £4.1bn, attributed to revenue growth, cost control, and reduced cost inflation. Despite an increase in net debt due to pension contributions, BT said it anticipated continued revenue and EBITDA growth in the full year, with capital expenditure around £5bn and normalised free cash flow expected to be in the range of £1bn to £1.2bn.

Newspaper round-up

Labour has warned that more than half a million homeowners face a surge in mortgage costs before the local elections in England in May, as ministers battle to contain the damage from what is expected to be a long period of high interest rates. With the Bank of England widely expected to hold its key base rate at 5.25% on Thursday, the party released analysis that showed 630,000 more homeowners would be hit by higher borrowing costs before local elections next year. – Guardian

Denmark’s Ørsted has cancelled two big offshore wind farm projects in the US at a cost of more than £3bn amid surging costs facing the global wind industry. Shares in the world’s biggest wind power company fell 25% on Wednesday after it told investors it had no choice but to take a 28.4bn Danish kroner (£3.3bn) impairment charge and stop the developments off the New Jersey coast. – Guardian

One of Europe’s biggest private equity firms has postponed plans for a blockbuster listing in Amsterdam amid tumultuous market conditions. CVC Capital Partners, which was preparing to float this month, is said to have put its plans on ice for a second time. The buyout firm previously attempted to float last year but pushed plans back. – Telegraph

Workers have suffered a drop in their real earnings over the past year as high inflation erodes the value of rising pay packets, according to official figures. The Office for National Statistics said real earnings for full-time workers had dropped by 1.5 per cent between April 2022 and April 2023, when including the impact of inflation. – The Times

Walt Disney has formally begun the process of buying Comcast’s one-third stake in Hulu — a deal that will give the entertainment giant full ownership of the streaming service and freedom to incorporate it into its Disney+ streaming service. Disney said it expected to pay Comcast, the parent company of NBCUniversal, about $8.61 billion by December 1. This represents NBCU’s percentage of the $27.5 billion guaranteed floor value for Hulu when it agreed to sell its stake to Disney in 2019, minus the anticipated outstanding capital call contributions payable by NBCU to Disney. – The Times

US close

US stocks raced ahead on Wednesday afternoon after the Federal Reserve kept interest rates unchanged, while weaker-than-expected economic data eased concerns of an overheating economy.

The Dow Jones Industrial Average rose 0.7%, the S&P 500 gained 1.1% while the Nasdaq surged 1.6%, with markets extending gains after the Federal Open Market Committee decision.

The FOMC concluded its two-day meeting in Washington by leaving the federal funds rate at a range between 5.25% and 5.5%.

In a press conference, Powell said policymakers would continue to "proceed carefully" and assess economic data as it comes through, but indicated the central bank would be patient to wait for rate hikes and tighter financial conditions to feed through to the economy.

The yield on a 10-year US Treasury was down 20 basis points at 4.734% by the close.