Must read: FTSE 100, Direct Line, M&S, UK home sales

GLOBAL MARKETS

After the FTSE 100 hit a two-week high on Tuesday, the blue-chip index is in the green again, taking its cues from a strong session on Wall Street, with the Nasdaq finishing 1.7% higher. Prudential (LSE:PRU) is at the top of the leaderboard after reporting a rise in first-half profit. Banks like Barclays (LSE:BARC), Standard Chartered (LSE:STAN) and Lloyds Banking Group (LSE:LLOY) are also outperforming. 

• Learn more: SIPP Portfolio Ideas | How SIPPs Work | Transfer a SIPP

Investors will be paying close attention to the ADP employment report today in the United States for clues as to what to expect from Friday’s non-farm payrolls report, and whether the US economy is heading for a soft landing.

DIRECT LINE  

Direct Line Insurance Group (LSE:DLG) has appointed Adam Winslow as CEO. He’s expected to take up the role in the first quarter of next year, succeeding Jon Greenwood who has been acting chief executive since January after Penny James stepped down. 

James held the top job at the UK insurer for nearly four years, but the company struggled with issues relating to inflated claims, costs and used car prices. This resulted in a scrapped dividend and profit warnings. But even after her departure, shares continued to suffer and are down around 28% year-to-date. 

Incoming CEO Winslow boasts an impressive CV, currently CEO of UK and Ireland general insurance at rival Aviva. Investors are hoping that he can provide a boost to the ailing insurer. Shares in Direct Line are trading higher today, reflecting the market optimism towards Winslow’s appointment. 

Highlighting the challenge at hand, Direct Line’s first-half results will be released on 7 September after it reported a sharp slump in operating profit for 2022.

ZOOPLA HOME SALES 

Zoopla says 1 million residential homes will be sold in Britain this year, down 21% from 1.26 million last year to reach the lowest level since 2012. For house purchases dependent on mortgage financing, the drop is expected to be even steeper, down 28% with over a third of all sales being carried out by cash buyers. 

The Bank of England’s aggressive stream of inflation-combative rate hikes have sent borrowing costs through the roof. Getting onto the housing market was already a daunting challenge for most because the average UK house price is many multiples above average earnings. And while house prices have eased, more than offsetting this benefit has been the jump in mortgage costs, making it much more challenging for first-time buyers, for homeowners looking to move house and for those on flexible rate mortgages or fixed-rate mortgages near to expiry. 

On top of that, many potential sellers are also less keen to list their properties in the current environment because they have fallen in value. More and more potential homeowners are turning away from the sales market towards lettings instead, in the hope that in one or two years, house prices and mortgages will become more affordable once again. This increased demand has made renting also extremely expensive, leaving the overall housing market in dire straits.

MARKS & SPENCER 

Marks & Spencer Group (LSE:MKS) is expected to rejoin the FTSE 100 when the index’s reshuffle is confirmed after the market close. Changes will become effective on Monday 18 September. 

Despite the cost-of-living crisis, with consumers feeling the squeeze, M&S has been the star performer across UK retail this year, outshining rivals with a stellar share price gain of over 75% so far this year, compared to Next (LSE:NXT) for example which is up around 17%. 

It has successfully embarked on a considerable turnaround under the leadership of Stuart Machin, involving revamping its store estate and investing in technology and e-commerce. Its previously sluggish home and clothing division has been catching up with its historically very successful food segment, thanks to improvements in its clothing range with particularly strong demand for summer holiday items this year. 

The analyst community are getting behind M&S’ turnaround, with several price target upgrades in August including from Goldman Sachs, Deutsche Bank, Barclays, and Credit Suisse, providing a further vote of confidence in the retail giant. 

August has been a painful month for financial markets, with the FTSE 100 and the FTSE 250 nursing difficult losses. Despite investor nervousness, M&S has still managed to come out on top, logging a strong month-to-date gain, landing it among the best performers on the UK mid-cap index over the past six months.