FTSE 100 closes down 16
US stocks lower
Tesco biggest Footsie laggard
FTSE 100 closed Wednesday around 16 points lower as supermarket supertanker Tesco (LON:TSCO) was the biggest laggard.
The bluechip benchmark index closed down 16.51 at 7,348.
Shares in Tesco PLC tanked amid a Twitter storm and despite the supermarket giant building on its recent revival with a forecast-beating set of results.
For the year to 25 February 2016, Tesco saw underlying profits rise to £1.28bn, up 30% on last year (2016: £985mln) and ahead of the £1.2bn City analysts had predicted.
That was on sales of £49.9bn, an increase of 4.3% on the £47.9bn it reported a year earlier.
Shares fell 5.73% to stand at 184.4p.
The biggest gainer on Footsie was engineer Rolls Royce (LON:RR.), up 2.47% to 830.5p.
Meanwhile, the FTSE 250 - a more domestic company focused index, rose over 117 points on the day to close at 19,423.
1.15pm.. FTSE 100 falles in red...
The FTSE 100 has tumbled into the red ahead of the US opening, where stocks are expected to open mostly lower.
The Dow Jones average, which closed last night at 20,651, is tipped to open almost 10 points lower while the S&P 500 is expected to open at around 2,351, down three points.
Weighed down by weak supermarkets and miners, the FTSE 100 was down 10 at 7,356 at 1.00pm.
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Results from Tesco sparked off a Twitter-storm and also sent the shares more than 5% lower.
Some even seem to be losing patience with Dave Lewis, the chief executive, who is getting the Arsene Wenger treatment from some quarters.
@BBCBreaking #Tesco economic losses grow from £1.55bn in 2016 to £1.97bn in 2017. Share price currently 36% lower than July 2014 when last CEO was fired.
— vysyble (@seetrends) April 12, 2017
Meanwhile, Chris Bailey offers some interesting insight into why supermarkets are back and hypermarkets are out.
The smaller the stores...the better the #Tesco stores perform
Convenience and related still a compelling theme... pic.twitter.com/VA7c4SKF3K
— Chris Bailey (@Financial_Orbit) April 12, 2017
Among the mid-caps, recruitment firm Pagegroup PLC (LON:PAGE) was on the up-and-up, rising 6.6% after its first quarter trading update.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, noted that the shares were up despite the group warning of the potential impact of economic and political uncertainty in the UK, Europe and Brazil.
“The group delivered a record performance in the first quarter, as a steady performance in the UK was burnished by 25% growth in its South Asian business and 15% growth in the all-important EMEA division, which accounts for 46% of group profit,” Hyett noted.
Tiddlers under the cosh today included Comptoir Group plc (LON:COM), down 14.7%, and HydroDec Group PLC (LON:HYR), down 13.4%.
Restaurant group Comptoir saw adjusted profit before tax ease 4% to £1.6mln in 2016 from the year before.
READ Comptoir hit as diners turn cautious
HydroDec, the industrial oil refining group, said it expected underlying earnings (EBITDA) to be positive in the first quarter of the year – traditionally the toughest period of the year in terms of collecting feedstock.
The company advised that it “continues to monitor its working capital position for its current requirements”, which might have been taken as a hint that a share issue is in the pipeline.
11.35 ... FTSE 100 just about holding on to its gains
The FTSE is holding on to positive territory, despite supermarkets being on offer.
The FTSE 100 was up 11 at 7,376, well below its best level of the day, which was just above 7,400.
The worst blue-chip performers are all supermarket stocks, with Tesco PLC (LON:TSCO), down 5.5%, the hardest hit after its results statement.
#TSCO post £1.28bn underlying profit, slightly better than the £1.2bn market had expected. UK underlying profit up 60% to £803mln.
— Tom Howard (@proactivetom) April 12, 2017
There are suggestions also that today’s earnings data may be weighing on sentiment towards grocers.
“With real wage growth in Britain now lower than inflation the supermarkets will struggle to boost margins through price increases, and with consumers perhaps beginning to shop around for bargains again a new price war looms. Just as things seemed to be improving for these firms, perhaps another tough period is on its way,” speculated Chris Beauchamp at spread betting outfit IG.
Among the small caps, the PipeHawk plc (LON:PIP) order pipeline has started gushing, pushing the share price up by almost two-thirds.
Since the company’s interim results were announced on 20 March, total orders received by its QM Systems subsidiary have clocked in at £662,000.
Data solutions provider D4t4 Solutions PLC (LON:D4T4) had some data in its trading update the market took a liking to.
The shares climbed 18.4% to 157.5p as it said profit (excluding gains from currency fluctuations) for the financial year just ended is expected to be ahead of market expectations.
10.10 ... FTSE 100 gets nosebleed after rising above 7,400
The top-share index has fallen back below 7,400 again, as investors digest the unemployment and earnings figures.
In the three months to February, the unemployment rate was 4.7%, down from 5.1% a year earlier.
Employment rose by 39,000 to hit 31.84mln.
Average annualised weekly earnings growth slowed to 1.9% in February, which was its lowest rate of growth in 11 months and down from 2.2% in January.
“Despite coming in above consensus, today’s slowdown in wage growth and a disappointing employment figure suggests that the squeeze on consumers is intensifying,” suggested James Smith at Dutch finance house ING.
“Today’s slowdown means that headline inflation is now running at a faster pace than wages. As the near-20% fall in the pound since November 2015 feeds through to prices, we anticipate that CPI [consumer price index inflation] could break above 3% later this year.
“We’re beginning to see evidence that this is hitting spending growth – the sharp fall in the British Retail Consortium’s sales measure is the latest example. Throw in the slowdown in jobs growth today (increasing by 39k in the three months to February, from 92k previously), and it looks like the squeeze on households is intensifying.
“For that reason, we expect the Bank of England to continue to ‘look through’ rising inflation and focus instead on the uncertain growth outlook. We don’t anticipate any change in Bank rate before 2019,” Smith revealed.
The FTSE 100 index at 10.10 was up 27 points at 7,393.
Real earnings are falling for first time since the crisis. Pay ex bonuses rose 2.2% in 3 months to Feb. Below CPI inflation, which was 2.3%
— Ed Conway (@EdConwaySky) April 12, 2017
08.50 ... FTSE 100 gets its nose above 7,400
The FTSE 100 opened in positive territory and above 7,400 – a level last seen in mid-March – as it shrugged off the geopolitical concerns that dragged Asian markets lower.
The index of blue-chip shares rose just over 35 points to 7,400.57.
Better than expected full-year profits from Tesco (LON:TSCO) didn’t appear to go down well with the City as the shares were marked down 2.3%.
One might put the decline down to profit-taking but for the fact that rival Wm Morrison Supermarkets (LON:MRW) and Marks & Spencer (LON:MKS), which has a significant food offering, were also on offer.
“Imported food inflation is also coming back into the system, which presents a challenge for supermarkets as the sector is so competitive that raising prices risks losing customers to cheaper rivals,” said Laith Kahlaf, analyst at investment firm Hargreaves Lansdown, of the Tesco results.
“That’s particularly the case given the squeeze on household budgets we are likely to see as prices generally rise on the back of weaker sterling and higher commodity prices.”
Shares in the engineer GKN (LON:GKN) were in demand, prompting a 1.6% spike in the price.
Lower down the divisions smaller rival Hayward Tyler, which makes boiler pumps among other things, enjoyed a 5% bumped after it unveiled £3.7mln of new orders.
Proactive news headlines
Gold miner Pan African Resources PLC (LON:PAF) said it is raising US$123mln via an issue of equity and debt to fast-track the build of the Elikhulu Tailings Project in South Africa.
The company Wednesday unveiled plans for a US$51mln share placing, with stock offered at 14p, a modest discount to last night’s closing price.
It said it has also agreed in principle a US$72mln, seven-year debt facility with Rand Merchant Bank.
Tungsten mining specialist W Resources PLC (LON:WRES) has made further progress to the development of its La Parilla project in southwestern Spain with the award of a key vendor-financed contract.
The specialist engineer Hayward Tyler Group PLC (LON:HAYT) has unveiled new orders worth £3.7mln.
They include £1mln-worth of after-market business, a £1.5mln deal to deliver eight electric submersible motors and two contracts worth £1.2mln to supply three glandless boiler circulating pumps.
Property fund manager and investor First Property Group PLC (LON: FPO) has announced that its UK Pension Property Portfolio fund has been awarded best "Small Specialist Fund" by indexes and analytics provider MSCI as part of its annual UK Property Investment Awards 2017.
6.45am...momentum expected to build
London’s blue chips are set to consolidate Tuesday’s gains even though US markets were flat again overnight and Asia struggled due to growing geopolitical concerns.
Financial spread bet firms see FTSE 100 adding up to ten points when trading gets underway with Tesco’s finals the main point of interest. The UK index closed Tuesday 16.5 ahead at 7,365.5.
In the US, the Dow Jones Industrial Average was six lower at 20,651; the S&P500 lost almost four at 2,353 while the tech heavy Nasdaq exchange shed 14 points to stand at 5,866.
Fast food giant McDonalds (LON:MCD) was top gainer, up around 1% to $131.30, while Apple (NASDAQ:AAPL) was the biggest loser, down 1.08% to $141.62, as its spat with Qualcomm Inc (NASDAQ:QCOM) moved up a couple of notches on the rhetoric scale.
Asian markets were under the cosh. The G7 meeting, more accusations over Syria and reports that North Korea is planning another nuclear test this weekend sent shares in Tokyo, Hong Kong and Shanghai tumbling.
Business newspaper headlines
- Fred Goodwin in court as ‘misleading’ RBS faces wrath of shareholders - Daily Telegraph
- Technology and the internet risk fuelling a surge in migration and extremism, warns World Bank chief - Daily Telegraph
- Dialog ‘at risk of losing Apple contract’ - The Times
- Music venues under threat after rate rise - The Times
- Britain’s online alcohol sales are the highest in Europe - The Times
- US companies now have £1.6 trillion stashed in tax havens and Trump’s plans will make matters worse, Oxfam claims - The Independent
- UK companies spent more than £10 billion on online advertising last year - The Independent
- Google defends pay policy after US government says it underpays women - The Independent
- Working mothers suffer 3% pay penalty for each child, study finds - The Independent
- Uber banned in Italy - The Independent
- Barclays cut ties with anonymous whistle-blowing services provider last month - Financial Times
- Head of Uber's communications quits - Financial Times
- Student loan interest rate set to rise by a third after UK inflation surge - The Guardian
- Corbyn attacks M&S and other big firms over late supplier payments - The Guardian
- Investment banks scramble to hire more London staff as global economy booms - Daily Mail
- Investors lose £42 billion due to cyber breaches, report finds - City AM
Commodities/Currencies
Gold - US$1,275 up US$1
Oil (WTI) - US$53.49 up US$0.1
£/$ - 1.2486 sterling slightly lower