Market movers: Hays, CRH, UK car production

Victoria Scholar, interactive investor's head of investment, runs through today's big stories and how financial markets are reacting. 

GLOBAL MARKETS

European markets have opened on a positive note with all major bourses in the green. The FTSE 100 has broken above resistance turned support at 7,500 with CRH surging to the top of the UK index, thanks to strong first-half earnings. The DAX is also enjoying gains after Germany’s economy unexpectedly grew in the second quarter with GDP rising 0.1% versus a preliminary flat reading. Focus for investors turns to the Jackson Hole economic symposium in Wyoming for clues into the outlook for US monetary policy and central bankers’ views on how to curb inflation without inducing unnecessary economic strain.

• Read about: Free regular investing | Opening a Stocks & Shares ISA | Cashback Offers

HAYS

Hays (LSE:HAS) full-year operating profit rose 128% to £210.1 million from £95.1 million a year earlier. With fees up 32%, the recruiter was able to return cash to shareholders by raising its share buyback programme by a further £18.2 million and announcing a special dividend of 7.34 pence per share.

Despite concerns about a UK recession, the recruitment business is still faring extremely well, thanks to strength in the underlying labour market, skill shortages and historically high unfilled job vacancies in the economy. Hays is well positioned to benefit from the mismatch between demand and supply of labour across the UK jobs market. Its other markets such as Australia and New Zealand, as well as Germany, also enjoyed strong performances with fees up 24% and 34% respectively. However, there could be macro headwinds to come with the labour market beginning to show signs of cooling and with rising inflation and interest rates weighing on businesses and their capacity to hire.

Shares in Hays are enjoying a bounce today but have struggled lately, shedding around a third of their value since September 2021.

CRH

CRH (LSE:CRH) is trading at the top of the FTSE 100, rallying almost 5% thanks to strong first-half earnings. The world’s second-largest building materials supplier said revenue rose 14% to $15 billion, while EBITDA increased by 21% to $2.2 billion, and margins were maintained or expanded across all divisions. CRH also raised its dividend by 4% year-on-year to 24 cents a share.

The business performed well in the first half, particularly in Europe thanks to strong pricing momentum and robust demand, at least partially offsetting the pressures from rising cost inflation, which is likely to remain the biggest headwind for the rest of the year. Nonetheless CRH is still managing to return cash to shareholders thanks to strength on the top and bottom line via its dividend increase as well as its recent share price rally with the stock up around 20% since the June low.

UK CAR PRODUCTION

UK car production rose by 8.6% year-on-year to 58,043 units in July, growing for a third consecutive month, according to the Society of Motor Manufacturers and Traders (SMMT). However, output remains 46.4% below pre-pandemic levels.

There are painstaking wait times when it comes to ordering a new car in the UK, as the industry grapples with problems with the global supply chain, semiconductor shortages and now soaring energy costs. However, the latest figures paint an encouraging picture in that at least some of the headwinds could be starting to ease off. Having said that, the latest data is somewhat flattered by last year’s comparables, which captured the industry in 2021 when it was on its knees post-pandemic battling against parts shortages, Covid-related staff absences and factory shutdowns. The focus for the UK car production continues to be its mega-shift away from petrol and diesel vehicles towards zero-emissions cars instead.