London close: Stocks mixed as bargain hunters swoop

Tue 21 Jun 2022

LONDON (SHARECAST) - (Sharecast News) - London stocks had pared some earlier gains to close mixed on Tuesday, as investors stepped in to pick up some recently-battered shares, but Ocado bucked the trend after a discounted share placing.

The FTSE 100 ended the session up 0.42% at 7,152.05, while the FTSE 250 slipped 0.32% to 18,949.05.

Sterling was also struggling for direction, last trading 0.05% stronger on the dollar at $1.2259, while it weakened 0.09% against the euro to €1.1642.

"Once again, the mood on Wall Street is setting the tone for Europe as the impressive rebound in US stocks are helping equities on this side of the Atlantic," said Equiti Capital market analyst David Madden.

"US markets remained closed yesterday as it was a public holiday, but now those traders are back to work, they are playing catch up.

"European equities are up for a third day in a row as worries about a cooling of growth have been put on hold for now."

In economic news, growth in UK manufacturing output eased last month according to a closely-watched survey, while price expectations fell to a nine-month low.

The CBI Industry Trends Survey's output growth balance was +25 for the three months to June, compared to +30 in May.

Growth was also expected to ease further over the next three months, with a balance of +20, although it remains above the long-run average of +9.

Total order books also softened, to +18 from May's +26 and below consensus for +22, while export orders also weakened.

Expected domestic price growth for the three months ahead eased markedly, however, to a nine-month low of +58 from +75 in May and the survey high of +80 in March.

"While manufacturing output is still being supported by a backlog of orders, growth appears to be softening," said Anna Leach, deputy chief economist at the Confederation of British Industry.

"Stocks of finished goods are now seen as broadly adequate and we may be seeing the first signs that weaker activity is beginning to slow the pace of price increases in the sector.

"Manufacturers continue to report a range of challenges, including significant cost pressures, shipping delays, shortages of key inputs and recruitment difficulties."

Elsewhere, the average annual grocery bill was set to rise by nearly £400 this year, according to research published earlier, as surging inflation continued to push up prices.

Retail consultancy Kantar said like-for-like grocery prices had risen 8.3% over the past month, up 1.3 percentage points on May and the highest level since April 2009.

In the 12 weeks to 12 June inflation was 6.7%, with the fastest rising prices seen in dog food, butter and milk.

As a result, Kantar now expects average grocery bills to rise by £380, more than £100 higher than its last forecast.

"The inflation number makes for difficult reading, and shoppers will be watching budgets closely as the cost of living crisis takes its toll," said Fraser McKevitt, head of retail and consumer insight.

"Based on our latest data, the average annual grocery bill is on course to rise by £380.

"This is over £100 more than the number we reported in April, showing just how sharp price increases have been recently and the impact inflation is having on the sector."

Across the pond, sales of existing homes in the US slowed for a fourth month running, returning to the levels seen in 2019 before Covid-19.

According to the National Association of Realtors, existing home sales fell by 3.4% month-on-month to reach a seasonally-adjusted annualised pace of 5.41 million.

The median price for an existing home surpassed $400,000 to reach $407,600, meanwhile, and was up 14.8% year-on-year with prices higher across all regions.

On London's equity markets, DS Smith rose 3.72% after the packaging business posted significantly improved full-year profits despite "another year of volatile trading conditions".

Miners gained following heavy losses in the previous session, with Antofagasta up 2.98%, Rio Tinto rising 2.44% and Glencore 2.08% higher, while oil giants BP and Shell gushed up a respective 0.98% and 1.92% as oil prices rose.

Telecom Plus - better known under its trading name Utility Warehouse - rallied 3.17% after it posted record full-year results amid strong demand, and lifted its 2023 profit expectations.

Educational publisher Pearson was boosted 2.18% by an upgrade to 'buy' from 'hold' at Deutsche Bank, while Spire Healthcare Group pushed up 2.8% after an initiation at 'buy' by Berenberg.

On the downside, Ocado Group slumped 2.51% after the online grocer and warehouse technology developer said it raised £575m in a share placing to fund its expansion.

Just over 72.3 million new ordinary shares were placed at 795p per share with existing and new institutional investors.

The placing price was a discount of around 9.4% to the closing share price on Monday, with the company also raising an additional £3m selling shares to management and in an offer to retail investors.

Elsewhere, Primark owner Associated British Foods was knocked 2.22% lower by a downgrade to 'neutral' at JPMorgan.

Low-cost carrier easyJet descended 6.31% after its Spanish cabin crew said they would strike for nine days in July, as part of an effort to secure better wages.

Local union USO revealed earlier that easyJet's staff would walk out between 1 and 3 July, 15 and 17 July, and 29 and 31 July, potentially adding to existing headwinds in the travel sector as it struggled to deal with rebounding demand.

EasyJet flight attendants in Spain were demanding a 40% hike in basic salaries, according to USO general secretary Miguel Galan.

Rival budget airline Wizz Air was 4.08% lower on the news, while shares in holiday giant TUI lost 4.03%.

Reporting by Josh White at Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,152.05 0.42%
FTSE 250 (MCX) 18,949.05 -0.32%
techMARK (TASX) 4,244.45 0.25%

FTSE 100 - Risers

Smith (DS) (SMDS) 292.80p 3.72%
Avast (AVST) 507.40p 3.17%
Antofagasta (ANTO) 1,329.50p 2.98%
Fresnillo (FRES) 811.00p 2.74%
Rio Tinto (RIO) 5,267.00p 2.73%
Melrose Industries (MRO) 156.55p 2.56%
Pearson (PSON) 788.80p 2.18%
Harbour Energy (HBR) 364.10p 2.16%
Aveva Group (AVV) 2,488.00p 2.13%
Glencore (GLEN) 482.60p 2.08%

FTSE 100 - Fallers

Ocado Group (OCDO) 855.60p -2.51%
Admiral Group (ADM) 2,105.00p -2.50%
Associated British Foods (ABF) 1,610.50p -2.22%
Whitbread (WTB) 2,606.00p -1.96%
Sainsbury (J) (SBRY) 205.10p -1.58%
United Utilities Group (UU.) 1,016.50p -1.31%
Ashtead Group (AHT) 3,365.00p -1.15%
BT Group (BT.A) 186.35p -1.11%
International Consolidated Airlines Group SA (CDI) (IAG) 119.34p -1.03%
Severn Trent (SVT) 2,778.00p -0.97%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 150.00p 12.78%
PZ Cussons (PZC) 201.50p 4.73%
Telecom Plus (TEP) 1,824.00p 3.17%
Allianz Technology Trust (ATT) 211.00p 3.16%
Polar Capital Technology Trust (PCT) 1,844.00p 3.12%
Spire Healthcare Group (SPI) 220.50p 2.80%
Ascential (ASCL) 264.40p 2.56%
Indivior (INDV) 289.40p 2.48%
Edinburgh Worldwide Inv Trust (EWI) 169.80p 2.29%
JTC (JTC) 610.00p 2.18%

FTSE 250 - Fallers

easyJet (EZJ) 415.70p -6.31%
Coats Group (COA) 64.50p -4.30%
Wizz Air Holdings (WIZZ) 2,023.00p -4.08%
TUI AG Reg Shs (DI) (TUI) 158.45p -4.03%
IntegraFin Holding (IHP) 235.40p -3.92%
FDM Group (Holdings) (FDM) 878.00p -3.41%
RHI Magnesita N.V. (DI) (RHIM) 2,238.00p -3.37% Group (MONY) 170.60p -3.18%
WH Smith (SMWH) 1,489.00p -3.12%
Carnival (CCL) 705.20p -3.08%
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