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London open: FTSE in the red as Ocado slumps on results
London stocks fell in early trade on Tuesday following solid gains in the previous session, as investors sifted through a raft of corporate news, with Ocado under pressure after disappointing results.
At 0840 GMT, the FTSE 100 was down 0.4% at 7,902.36.
Oanda market analyst Craig Erlam said: “In reality, the bumper start yesterday was simply a process of unwinding the losses from late last week which further suggests investors are in no mood to be discouraged.
“While bond markets have pivoted quite considerably from pricing in peak interest rates in the near future and rate cuts later in the year to multiple more hikes, perhaps even a reversion to 50 basis points, and no cuts this year, the message doesn’t appear to have gotten through to equity markets.
“That may well change if the February data continues to point to red-hot labour markets, stubborn inflation, and healthy household spending. But I expect that won’t be the case and investors may well be banking on that too. We all want to see resilience in the economy but if that leads to much higher interest rates, which are already now very high, that resilience won’t last long and hopes of a soft landing will quickly fade.”
Investors were still digesting the ‘Windsor Framework’ deal on Brexit announced by Prime Minister Rishi Sunak on Monday.
Sunak said the agreement was a “historic” and “decisive breakthrough” that “delivers smooth-flowing trade within the whole of the United Kingdom, protects Northern Ireland’s place in our union and safeguards sovereignty for the people of Northern Ireland”.
In equity markets, online grocer and technology company Ocado slid after it posted wider losses as the cost-of-living crisis and return to normal shopping habits after the Covid pandemic hammered its joint venture with Marks & Spencer.
The group posted a pre-tax loss of £501m for the year to 27 November 2022, compared with a loss of £179m a year earlier and worse than analyst forecasts of a £399m loss. Core losses were £74m compared with a profit of £61m a year earlier. Retail losses were £4m, down from a £150m profit in 2021.
Ocado retail revenue declined by 3.8% to £2.2bn in what the firm called a “challenging market” as the benefits of the trend towards online shopping sparked by Covid pandemic lockdowns wound down and customers bought fewer items “exacerbated by the cost-of-living crisis”.
Croda International was also in the red even as it posted a rise in full-year sales and profit and hailed a strong performance in Asia, Western Europe and Latin America, and growth across consumer care and life sciences.
Travis Perkins fell as the builders’ merchant reported a drop in annual profit due to a tougher housing market and restructuring costs, which offset a rise in sales.
On the upside, asset manager Abrdn gained despite saying it swung to a full-year loss, citing volatile markets and surging investments in what the company called “one of the hardest investing years in living memory”.
Man Group surged as it reported a rise in full-year pre-tax profit and assets under management amid industry-beating net inflows.
Outsourcer Serco was also higher as it hiked its dividend and posted a jump in full-year profit and revenue despite a decline in Covid-related work.
Outside the FTSE 350, online electrical retailer AO World racked up strong gains after it upgraded its profit guidance for the second time this year – and the third since November – citing the benefits of its cost-savings drive.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
|||||||
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
St. James’s Place Plc | +1.90% | +23.50 | 1,260.50 |
| 2 |  |
Centrica Plc | +1.73% | +1.80 | 106.10 |
| 3 |  |
Associated British Foods Plc | +1.11% | +22.00 | 1,996.50 |
| 4 |  |
Tui Ag | +0.89% | +14.20 | 1,606.80 |
| 5 |  |
Melrose Industries Plc | +0.63% | +0.95 | 152.20 |
| 6 |  |
Lloyds Banking Group Plc | +0.56% | +0.29 | 52.08 |
| 7 |  |
Vodafone Group Plc | +0.42% | +0.42 | 101.14 |
| 8 |  |
Kingfisher Plc | +0.36% | +1.00 | 277.30 |
| 9 |  |
Prudential Plc | +0.24% | +3.00 | 1,254.50 |
| 10 |  |
Shell Plc | +0.20% | +5.00 | 2,541.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -9.09% | -56.80 | 568.00 |
| 2 |  |
Croda International Plc | -3.55% | -246.00 | 6,682.00 |
| 3 |  |
Itv Plc | -2.63% | -2.36 | 87.36 |
| 4 |  |
Intertek Group Plc | -2.17% | -95.00 | 4,279.00 |
| 5 |  |
Carnival Plc | -1.74% | -14.20 | 801.20 |
| 6 |  |
Smith & Nephew Plc | -1.70% | -20.50 | 1,183.00 |
| 7 |  |
Mondi Plc | -1.66% | -23.50 | 1,393.50 |
| 8 |  |
Halma Plc | -1.60% | -35.00 | 2,158.00 |
| 9 |  |
Spirax-sarco Engineering Plc | -1.42% | -170.00 | 11,785.00 |
| 10 |  |
Marks And Spencer Group Plc | -1.39% | -2.20 | 155.65 |
US close: Stocks rebound after last week’s dire performance
Wall Street stocks closed higher on Monday, as major averages bounced back from their worst week of the year so far.
At the close, the Dow Jones Industrial Average was up 0.22% at 32,889.09, as the S&P 500 added 0.31% to 3,982.24 and the Nasdaq Composite was ahead 0.63% at 11,466.98.
The Dow closed 72.17 points higher on Monday, after heavy losses on Friday saw major averages register their worst weekly performance of 2023.
Going into the new week, the year-to-date stock market rally now looks to be fading, with traders starting to come to terms with minutes from the Federal Reserve’s latest policy meeting, in which policymakers reiterated their tough stance on inflation, as well as comments from multiple central bankers that seemingly indicated that interest rates could rise higher even still.
“Friday’s PCE shocker certainly gave investors a fright, but the bargain hunters have returned in trading today,” said IG chief market analyst Chris Beauchamp earlier.
“After the ‘good news is bad news’ theme of recent weeks, news of the UK-EU deal on Northern Ireland is one welcome development, and one that doesn’t involve the words ‘inflation’ or ‘interest rates’.
“But with a lighter calendar this week and earnings season firmly winding down it looks like bulls will have the chance to grab control in a way that has eluded them for weeks.
“But the overall outlook still seems to point towards high inflation and continued rate rises, something unlikely to prompt sustained gains for stocks.”
On the economic front, orders for goods made to last more than three years shrank more than expected in January as a surge in jet orders seen at the end of 2022 reversed.
According to the Department of Commerce, in seasonally adjusted terms, durable goods orders shrank at a month-on-month pace of 4.5% to reach $272.26bn – worse than the 3.0% drop that economists had pencilled-in and came on top of a downwards revision to the prior month’s jump.
Elsewhere, US pending home sales slumped 24.1% year-on-year, according to the National Association of Realtors, a 20th straight monthly decline.
In equities, railroad operator Union Pacific jumped 10.09% after its board bowed to hedge fund demands to dump its chief executive officer.
Seagen was 10.4% firmer, meanwhile, after a report in the Wall Street Journal suggested Pfizer was eyeing up the cancer biotechnology.
Shares in Pfizer were themselves down 2.32% by the closing bell.
Tuesday newspaper round-up: Elon Musk, John Lewis, Mike Lynch
Jeremy Hunt could offer striking public sector workers a bigger pay rise before his budget next month by cancelling plans for a fuel duty freeze costing £6bn, according to a leading tax and spending watchdog. With waves of fresh strike action planned across the public sector next month, the director of Institute for Fiscal Studies (IFS), Paul Johnson, said the chancellor faced a “straight choice” between subsidising car driving and helping public sector workers cope with the cost of living crisis. – Guardian
Elon Musk is facing yet another lawsuit as shareholders of Tesla accuse the chief executive and his company of overstating the effectiveness and safety of their electric vehicles’ autopilot and full self-driving technologies. Shareholders have alleged in the proposed class action lawsuit that Tesla defrauded them over four years with false and misleading statements that concealed how its technologies – suspected as a possible cause of multiple fatal crashes – “created a serious risk of accident and injury”. The case was filed Monday in a San Francisco federal court. – Guardian
Dame Sharon White has sacked the head of John Lewis’s department stores as the business fights surging prices and the threat of a resurgent Marks & Spencer. Pippa Wicks is stepping down from the company with immediate effect after less than three years in the post. – Telegraph
Some of Britain’s most prominent business figures have called on the prime minister to block the prospective extradition of Mike Lynch, the software tycoon, to the United States. Entrepreneurs including Brent Hoberman, a co-founder of Lastminute.com, along with City veterans such as Lord Stevenson of Coddenham, the former chairman of Pearson and HBOS, have written to Rishi Sunak complaining about America’s “unreasonable” use of an extradition treaty. – The Times
Bosses at public companies are expecting to embark on more acquisitions this year as an improvement in economic conditions sets the stage for a wave of dealmaking in the City. In a poll of FTSE 250 chief executives by Numis, 94 per cent expected to make acquisitions in 2023, compared with 86 per cent last year. The investment bank also found that 88 per cent of FTSE directors regard British companies as vulnerable to takeovers. – The Times
