Leading UK shares ended lower on Wednesday but off their weakest level after Russian president Vladimir Putin said the country would increase the amount of gas it will send to Ukraine via Europe, reining in surging gas prices that contributed to market weakness.
At the close, the UK benchmark FTSE 100 was 81 points, or 1.15%, lower at 6,995.87, above the session low of 6,946.
The more UK focused FTSE 250 shed 344 points, or 1.5% to finish at 22,386.62.
The energy price spikes are the biggest thorn making investors very uncomfortable right now, but there are still other price pressures causing pain, and adding to the worries that stagflation could take hold. Engineering conglomerate Melrose Industries (MRO), which warned of delays this week to orders due to computer chip shortages, was the one of the biggest fallers on the FTSE 100, as concerns about the supply chain crisis loom ever larger.
Mining stocks were particularly weak, with Antofagasta (ANTO) topping the FTSE loser board with a 5.5% fall to £12.82.
On Wall Street by London’s close, the Dow Jones Industrials Average was 320 points, or 0.93% lower at 33,994, with the broader S&P 500 index down 0.78%, while the tech-laden Nasdaq Composite lost 0.42%.
TESCO TOPS FTSE
Shares in Tesco (TSCO) continued to top the FTSE 100 leader board at the finish, rallying 6.6% to 269.73p 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 3.5% to £14.95, 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) ended largely flat at 327p 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 Pagegroup (PAGE) powered almost 8% higher to 653.44p 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) close 3% up at 64p 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 7% higher to 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) reversed earlier losses to gain around 2% to close at 157.6p on news it has agreed to sell its 3D printing assets to joint venture partner Stratasys Solutions for up to $33.8 million.
