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London open: Stocks rally; AB Foods, Bunzl in the black
London stocks rose in early trade on Monday following heavy losses last week, helped along by well-received results from Bunzl and a guidance upgrade from Associated British Foods.
At 0840 GMT, the FTSE 100 was up 0.9% at 7,946.15. Stocks in the UK and US fell on Friday after the release of hotter-than-expected PCE inflation data.
In corporate news, Primark owner Associated British Foods rallied after it lifted full-year guidance as consumer spending proved to be more resilient in the first half and inflationary volatility eased.
The group said it now expects adjusted operating profit to be broadly in line with the prior year, having previously forecast adjusted operating profit below the €1.44bn made in 2021-22.
Richard Hunter, head of markets at Interactive Investor, said: “AB Foods has upgraded its expectations, boosted by a strong showing from Primark, the continued benefits of a diversified business and cost pressures which are showing signs of finally weakening.
“Primark remains a key driver in the group’s improving fortunes. The return of the consumer to physical shopping and the brand’s value offering are a complementary and compelling combination. While the group is understandably cautious on the immediate outlook for discretionary spending given the tough economic backdrop, for the moment the consumer is showing signs of resilience which defy the retail naysayers.”
Elsewhere, international distribution group Bunzl was also higher after it reported a rise in annual earnings, driven by product cost inflation, volume recovery in the first half and growth from acquisitions.
Pre-tax profit for 2022 rose 11.6% to £634.6m, as revenue grew 9.8% at constant exchange rates to £12bn. Shareholders were rewarded with a 10% rise in the total dividend to 62.7p a share.
Bunzl also revealed it had bought a business in Germany and completed the acquisition of another in Canada.
On the downside, Dechra Pharmaceuticals tumbled after it warned that based on the recent US de-stocking and current exchange rates, it now expects full-year underlying operating profit to be at the lower end of analyst expectations.
In broker note action, Shell was boosted by an upgrade to ‘buy’ from ‘neutral’ at Goldman Sachs, while Trainline rose after an upgrade to ‘buy’ at Deutsche bank.
Quilter was knocked lower by a downgrade to ‘sell’ at Citi.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rolls-royce Holdings Plc | +4.32% | +5.88 | 141.92 |
| 2 |  |
Bunzl Plc | +2.49% | +75.00 | 3,088.00 |
| 3 |  |
Bt Group Plc | +2.04% | +2.80 | 140.15 |
| 4 |  |
Shell Plc | +2.02% | +50.50 | 2,549.50 |
| 5 |  |
Smith (ds) Plc | +1.79% | +5.90 | 336.20 |
| 6 |  |
Carnival Plc | +1.75% | +13.80 | 802.80 |
| 7 |  |
Prudential Plc | +1.73% | +21.00 | 1,237.50 |
| 8 |  |
Direct Line Insurance Group Plc | +1.72% | +3.00 | 177.80 |
| 9 |  |
Burberry Group Plc | +1.67% | +40.00 | 2,437.00 |
| 10 |  |
Bp Plc | +1.62% | +8.90 | 559.10 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -1.30% | -20.00 | 1,522.60 |
| 2 |  |
Hargreaves Lansdown Plc | -1.28% | -10.80 | 831.60 |
| 3 |  |
Smith & Nephew Plc | -0.66% | -8.00 | 1,207.00 |
| 4 |  |
Segro Plc | -0.36% | -3.00 | 822.80 |
| 5 |  |
Hsbc Holdings Plc | -0.27% | -1.70 | 634.00 |
| 6 |  |
Fresnillo Plc | -0.05% | -0.40 | 768.40 |
| 7 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
| 8 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
| 9 |  |
Just Eat Plc | -0.00% | -0.00 | 861.00 |
| 10 |  |
Rsa Insurance Group Ld | +0.00% | +0.00 | 684.20 |
US close: Stocks slightly higher after set of mixed data
Stocks on Wall Street finished slightly higher on Thursday, following the release of a mixed batch of economic data.
At the close, the Dow Jones Industrial Average was up 0.33% at 33,153.91, as the S&P 500 added 0.53% to 4,012.32 and the Nasdaq Composite was ahead 0.72% at 11,590.40.
Earlier, the Department of Labor had reported declines for both initial and secondary weekly unemployment claims which appeared to show a still very tight jobs market.
However, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted how weather had again been unseasonably warm during the week ended 18 February.
Those figures came alongside other data showing a slightly slower pace of expansion in US gross domestic product of 2.7% for over the three months to December, compared to a preliminary reading of 2.9%.
More important was an upwards revision by the Department of Commerce to its estimate for the core PCE price deflator contained in the GDP report for the fourth quarter, to 4.3% from 3.9%.
On the corporate side of things, all eyes were on Nvidia whose shares rocketed 14.02% by the closing bell.
Overnight, the chipmaker had released better-than-expected revenue guidance for the current quarter on the back of demand for artificial intelligence processors.
Monday newspaper round-up: Britishvolt, Octopus, LSE Group
The Australia-based company Recharge Industries will take over collapsed battery maker Britishvolt after finalising a deal with administrators late on Sunday in the UK. The agreement revives hopes for the construction of a £3.8bn (A$6.7bn) “gigafactory” in northern England, the backbone of a plan to modernise the British automotive industry and supply the next generation of UK-built electric vehicles. – Guardian
Jeremy Hunt’s tax raid poses one of the biggest threats to UK businesses this year, according to a survey of British bosses that urged the Chancellor to make restoring competitiveness a “priority” for the Budget. Business leaders said reducing the tax burden on companies and their staff were two of their top three policy priorities this year. – Telegraph
Drivers risk being forced to pay a “tyre tax” as Britain explores a crackdown on brake and tyre wear emissions. Ministers have hired advisers to explore how to address harmful emissions that experts say are more harmful than diesel fumes. The Department for Transport has asked consultancy Arup to “develop recommendations on how to better assess and control these emissions which will persist after a transition to zero tailpipe emission vehicles”, according to a Government filing. – Telegraph
Investors who first backed the Octopus financial services and energy group have made 158 times their money, according to its co-founder. For the first time Simon Rogerson, who says he found his early backers in 2020 by dialling the numbers of random financial advisers in the Yellow Pages, has published some numbers for the overall privately owned Octopus business. – The Times
Results from London Stock Exchange Group this week could fire the starting pistol on the sale of as much as £4 billion of its shares by a consortium led by Blackstone, the American private equity group, and Thomson Reuters. A lock-up arrangement preventing these owners from selling an initial 10 per cent stake in the group expired in January, but in practice as insiders with seats on its board they can only begin to sell on Thursday, when the company’s “quiet period” ends. – The Times
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