London’s major shares continued to plunge through late morning trading on Wednesday, even after supermarkets giant Tesco (TSCO) posted bumper profits. Investors are clearly worried increasingly about rising US bond yields and soaring energy prices that have been stoking inflation threats, and possibly, sooner than expected interest rate rises.
Oil prices were camped above $82 per barrel after producers’ cartel OPEC failed to increase output and natural gas continued to touch record highs, leaving investors fretting that rising prices will prove far stickier than hoped.
All eyes are now on Friday’s US jobs report, where a weak number could heighten concerns that we are heading for a worrying stagflation scenario.
This is seemingly being reflected in stock market futures, with Wall Street’s major indices pointing sharply lower when the US market opens later this afternoon, with falls of between 1% and 1.3% anticipated for the Dow, S&P and Nasdaq.
TESCO TOPS FTSE
Shares in Tesco continued to top the FTSE 100 leader board at lunchtime, up nearly 5% to 265.55p after Britain’s biggest grocer increased its full year profit outlook on the back of a strong first half performance which saw pre-tax profit more than doubled to £1.14 billion.
One-year like-for-like sales growth of 2.4% in the UK and Republic of Ireland was driven by a sharp recovery in its Booker catering business and growth in the UK business as it outperformed the rest of the groceries market.
Tesco is now guiding to adjusted retail operating profit of between £2.5 billion and £2.6 billion and has also initiated a £500 million share buyback programme.
CEO Ken Murphy said his charge had ‘a strong six months; sales and profit have grown ahead of expectations, and we’ve outperformed the market. With various different challenges currently affecting the industry, the resilience of our supply chain and the depth of our supplier partnerships has once again been shown to be a key asset.’
Tobacco giant Imperial Brands (IMB) slumped 4% to £14.90, despite assuring it is on track to meet its profit growth forecast amid higher tobacco prices.
However, the company also warned that a pandemic-related bump to growth thanks to travel restrictions and changes in consumer buying patterns was unwinding as lockdowns ease.
Travel group TUI (TUI) softened 1% to 323.3p after it launched a €1.1 billion rights issue to help it weather ongoing depressed demand during the pandemic.
TUI also issued a fourth quarter trading update showing an improvement in bookings in what is nevertheless a relatively tepid market.
Recruitment company Page (PAGE) powered more than 7% higher to 659p on the news third quarter gross profit rose by 65% as job markets bounced back.
The staffer is now forecasting a full year operating profit in the region of £155 million, which would mark a rise from £17.0 million in 2020 and £146.7 million in 2019.
OTHER RISERS AND FALLERS
Elsewhere, home improvement retailer Topps Tiles (TPT) nudged marginally higher to 62.99p as the tile specialist said full year adjusted pre-tax profit will come in slightly ahead of the £13.6 million called for by consensus following an excellent final quarter of the year.
‘We remain confident on the outlook, against a backdrop of strong demand for DIY products and continued investment into home improvements’, insisted CEO Rob Parker.
Car retailer Marshall Motor (MMH:AIM) jumped almost 8% to 224p after upgrading 2021 profit guidance yet again.
Marshall Motor now expects continuing underlying profit before tax for this year will be ‘not less than £50 million’, with the company benefiting from exceptionally strong new car margins as a result of supply shortages, which has offset the impact of reduced volumes, not to mention a strong margin performance in used cars.
Marshall Motor’s automotive retail rival Lookers (LOOK) also upgraded its outlook on annual profit following ‘strong’ third-quarter performance amid ongoing demand for new and used vehicles.
The Mark Raban-steered company said it now expects underlying pre-tax profit for 2021 to be ‘materially ahead’ of its previous expectations, sending the shares 5% higher to 63.65p.
German business park investor Sirius Real Estate (SRE) shed 3% to 125.2p, despite boosting first half rent collections, putting it on track to meet the market’s full year expectations.
And inkjet printing technology group Xaar (XAR) fell 4% to 151.2p on news it has agreed to sell its 3D printing assets to joint venture partner Stratasys Solutions for up to $33.8 million.
