- London’s FTSE 100 Index closed 34 points higher for a fifth straight session on Tuesday.
- Chancellor Rishi Sunak will be presenting his Spring Statement on Wednesday pronouncing new economic measures.
- Sunak is under extreme pressure to announce measures with updated growth and borrowing forecasts to ease the effect of the sharply rising cost of living.
The war between Russia and Ukraine has entered its fifth week, pushing the commodities, food, and energy prices to new highs, and with heightened concerns over increasing inflation and global economic recovery. However, London’s FTSE 100 Index closed 0.5% or 34 points higher for a fifth straight session on Tuesday, reaching its three-week high after the Russia and Ukraine crisis. The positive rally was pushed by banks and other financial stocks, after US Fed chief Jerome Powell’s comments on US interest rates on Monday night.
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Investors are looking forward to the release of UK inflation data and spring budget update today, 23 March, as Chancellor Rishi Sunak is under extreme pressure to announce measures with updated growth and borrowing forecasts to ease the effect of sharply rising cost of living and soaring energy bills that are squeezing UK households’ budget.
While the large constituent of financial and commodity stocks has supported the FTSE 100 Index to outperform this year, but investors worry that the sharply rising inflation and monetary policy tightening might slower the economy recovery.
The UK annual rate of inflation or consumer price index touched 6.2% in the year to February, its highest in 30 years mainly due to the cost-of-living crisis. As per Office for National Statistics (ONS), February’s CPI data were in lines with economic expectations, with economists predicting a figure of 5.9%. This was above January’s previous 30-year high of 5.5%. On a monthly basis, CPI inflation was 0.8%.
What Is Stagflation? How Is It Different From Inflation?
Let’s look at three FTSE-listed stocks, Diageo Plc, Knights Group Holdings Plc and Softcat Plc that are in spotlight.
Diageo Plc (LON: DGE)
The multinational beverage alcohol leader operates through over 200 outstanding brands that are sold in 180 countries. It has over 150 manufacturing sites spread across 30 countries. The company has recently announced to build a neutral crown royal distillery in Canada, worth CAD$245 million with a capacity to produce up to 10.5 million proof gallons of alcohol a year, to support the growth of its Crown Royal Canadian Whisky brand. The plant will also include blending and warehousing operations.
The market cap of the FTSE 100-listed business stands at £86,465.78 million as of 22 March 2022. The company has given its shareholders a return of 24.69% on a one-year basis as of 22 March 2022, while its year-to-date return stands at -7.27%. Diageo Plc’s shares closed at GBX 3,742.50, up by 0.81%, on 22 March 2022.
Knights Group Holdings Plc (LON: KGH)
Knights Group Holdings Plc is a legal professional services company that offers high-quality services to over 13,000 business clients across the UK. The company recently provided its trading update for the full year ending 30 April 2022 and said that the pandemic and related conditions have slowed growth to a greater extent than expected. It expects to deliver revenue of around £126 million and underlying profit before tax of around £18 million for the year ending 30 April 2022.
The market cap of the FTSE AIM 100-listed business stands at £307.96 million as of 22 March 2022. The performance of the company has gone down over the past year, and as of 22 March 2022, its returns on a one-year and year-to-date basis stand at -59.28% and -56.10%, respectively. Knights Group Holdings Plc’s shares closed at GBX 180.00, down by -50.68%, on 22 March 2022.
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Softcat Plc (LON: SCT)
UK provider of IT infrastructure products and services Softcat Plc helps commercial and public sector organisations design, procure, implement, and manage their digital infrastructure.
The company has reported an increase in revenue by 33.6% to £770.9 million in six months ended 31 January 2022, from £577.0 million for the same period in 2021, driven by good progress made in all customer segments and across each of software, hardware, and services, despite the ongoing supply chain challenges. Its operating profit increased by 12.4% to £64.1 million in HY ended 31 January 2022, from £57.1 million in the same period in 2021. The company also announced an increase in interim dividend by 14.1% to 7.3p per share, which will be paid on 13 May 2022 with the shares trading ex-dividend on 7 April 2022.
The market cap of the FTSE250-listed business stands at £3,426.21 million as of 22 March 2022. The company has given its shareholders a return of 11.14% on a one-year basis as of 22 March 2022, while its year-to-date return stands at 1.00%.
Softcat Plc’s shares closed at GBX 1,786.00, up by 3.90%, on 22 March 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.