London close: Stocks mixed on return from long weekend

27th Aug 2024 15:58

(Sharecast News) - London's financial markets closed with a mixed performance on Tuesday, with Bunzl underpinning gains on the top-flight index after upgrading its full-year outlook.

The FTSE 100 edged up 0.21%, finishing at 8,345.46 points, while the FTSE 250 slipped 0.13%, ending the day at 21,162.07 points.

In currency markets, sterling was last up 0.35% on the dollar, trading at $1.3234, while it gained 0.34% against the euro, changing hands at €1.1856.

"Most US equity indices continue to gingerly advance ahead of Nvidia's second quarter earnings on Wednesday," said IG senior technical analyst Axel Rudolph.

"With the chipmaker's stock contributing around 5% to the S&P 500's 18.6% year-to-date gains, its results will be closely watched by investors and will likely have a significant impact on not just the S&P 500 but also other global stock indices."

Rudolph added that an unexpected fall in German consumer morale was followed by a positive surprise in US consumer confidence, as US house prices rose more than expected, underpinning stock indices.

"While the gold price traded flat, the price of copper stayed close to its five-week highs as the oil price ended a three-day winning streak by falling around 1.5%."

Shop prices fall in the UK for first time in nearly three years

In economic news, UK shop prices fell in August for the first time since October 2021, marking a significant shift in the retail sector.

The British Retail Consortium-NielsenIQ shop price index showed a 0.3% deflation, a notable change from July's 0.2% inflation.

That brought the annual growth rate to its lowest level in nearly three years.

Non-food items experienced the steepest decline, with prices dropping by 1.5% compared to a 0.9% fall in July, marking the lowest inflation rate in this sector since July 2021.

Food prices, although still rising, showed slower inflation, with overall food inflation easing to 2% in August from 2.3% in July.

Fresh food prices, in particular, saw inflation drop to 1%, the lowest since October 2021.

"Shop prices fell into deflation for the first time in nearly three years," said Helen Dickinson, chief executive of the British Retail Consortium.

"This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods.

"This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families."

On the continent, consumer sentiment in Germany looked set to weaken significantly in September, according to a survey by GfK and the Nuremberg Institute for Market Decisions (NIM).

The consumer sentiment index dropped to -22, down from a revised -18.6 in August, falling short of expectations for a reading of -18.2.

Across the Atlantic, US consumer confidence showed unexpected strength in August.

The Conference Board's consumer confidence index rose to 103.3 from 101.9 in July, surpassing the consensus forecast of 100.7.

While Americans expressed more optimism about current and future business conditions, concerns about the labour market persisted.

US home prices meanwhile continued to rise in June, outpacing inflation, according to the S&P/Case-Shiller US home price index.

The index recorded a 0.4% month-on-month increase, with prices in the 20 largest metropolitan areas up 6.5% year-on-year.

That was a slowdown from May's 6.9% increase but still above the expected 6.3%.

Nationally, house prices rose 0.2% month-on-month and 5.4% year-on-year, reaching an all-time high.

Bunzl rockets ahead, housebuilders in the red

On London's equity markets, Bunzl soared 7.97% after the company upgraded its adjusted operating profit guidance for the full year and announced a £250m share buyback.

"Renowned as being one of the more mundane businesses on the UK market, Bunzl's results have excited investors and reminded them that boring can be best sometimes," said AJ Bell investment director Russ Mould.

"The company has announced a bumper buyback and unveiled a double-digit increase in its dividend.

"This might seem somewhat at odds with its first-half results which saw revenue decline modestly, however this headline obscures a recent pick-up in performance not just in the latter part of the first six months of the year but also in the weeks since."

Mould noted that the operating margin was also up, with cash generation reliably strong.

"Bunzl supplies things that companies need to do business but do not actually sell to customers, such as takeaway cups for coffee shops or door mats for hotels and offices.

"Acquisitions have always been a significant component of Bunzl's growth strategy and the company's latest deal, its eighth of the year, takes its 2024 spending to £650m.

"Individually, these are not huge transactions but easier to swallow purchases which the company has demonstrated over time it can bring into the Bunzl fold without major disruption to the wider group."

Mining stocks also performed well, with Anglo American and Rio Tinto gaining 1.29% and 1.1%, respectively, supported by rising copper prices.

BHP Group edged up 0.77% after it reported a stronger-than-expected increase in full-year underlying profits, boosted by record iron ore volumes and higher copper output, although the company cautioned about an "uneven" recovery in China.

In the aviation sector, easyJet rose 6.9%, Wizz Air Holdings climbed 5.28%, and British Airways owner IAG added 1.56%.

The gains followed comments from Ryanair chief executive officer Michael O'Leary, who suggested that fare declines had stabilised.

Harbour Energy also saw a 7.97% increase as it announced an earlier-than-expected completion date for its acquisition of Wintershall Dea's asset portfolio.

On the downside, housebuilders faced significant losses, as Barratt Developments plunged 6.56%, Berkeley Group fell 4.32%, and Persimmon dropped 4.31%, among others.

The declines came despite Jefferies reiterating its positive stance on the sector, suggesting that while share prices had shown strong performance since last October, they were still not fully reflecting future earnings estimates.

Elsewhere, Associated British Foods slipped 0.6% after Deutsche Bank downgraded the Primark owner to 'sell' from 'hold,' citing the end of its profit recovery phase.

Ocado Group lost 2.14%, reversing earlier gains after announcing the delayed start of operations at two Australian customer fulfilment centres.

JD Sports Fashion declined 2.68%, giving back some of last week's gains despite news that its part-owned subsidiary, Applied Nutrition, was planning a £500m float on the London Stock Exchange.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,345.46 0.21%

FTSE 250 (MCX) 21,162.07 -0.13%

techMARK (TASX) 4,880.58 0.42%

FTSE 100 - Risers

Bunzl (BNZL) 3,452.00p 7.41%

easyJet (EZJ) 478.80p 6.90%

Smurfit Westrock (DI) (SWR) 3,505.00p 2.97%

International Consolidated Airlines Group SA (CDI) (IAG) 183.25p 1.98%

Whitbread (WTB) 2,898.00p 1.76%

Antofagasta (ANTO) 1,908.00p 1.60%

Anglo American (AAL) 2,279.00p 1.29%

BT Group (BT.A) 137.55p 1.25%

London Stock Exchange Group (LSEG) 10,135.00p 1.25%

Entain (ENT) 648.20p 1.15%

FTSE 100 - Fallers

Barratt Developments (BDEV) 515.60p -6.56%

Berkeley Group Holdings (The) (BKG) 4,980.00p -4.32%

Persimmon (PSN) 1,632.00p -4.31%

Scottish Mortgage Inv Trust (SMT) 826.20p -4.29%

JD Sports Fashion (JD.) 143.10p -4.12%

Vistry Group (VTY) 1,352.00p -3.08%

Taylor Wimpey (TW.) 160.75p -3.08%

Burberry Group (BRBY) 696.80p -2.55%

CRH (CDI) (CRH) 6,650.00p -2.52%

Prudential (PRU) 664.00p -1.72%

FTSE 250 - Risers

Harbour Energy (HBR) 303.30p 7.97%

Baltic Classifieds Group (BCG) 277.50p 6.53%

Wizz Air Holdings (WIZZ) 1,337.00p 5.28%

Ithaca Energy (ITH) 133.00p 4.23%

Carnival (CCL) 1,151.50p 3.69%

Discoverie Group (DSCV) 664.00p 3.43%

Network International Holdings (NETW) 397.80p 3.32%

Hochschild Mining (HOC) 194.00p 3.30%

Energean (ENOG) 958.50p 3.06%

Bank of Georgia Group (BGEO) 4,485.00p 2.99%

FTSE 250 - Fallers

Helios Towers (HTWS) 116.20p -5.53%

Elementis (ELM) 161.60p -2.77%

Just Group (JUST) 144.60p -2.56%

ICG Enterprise Trust (ICGT) 1,242.00p -2.51%

Great Portland Estates (GPE) 343.50p -2.28%

Travis Perkins (TPK) 902.00p -2.22%

Bellway (BWY) 3,046.00p -2.06%

Pacific Horizon Inv Trust (PHI) 585.00p -2.01%

HarbourVest Global Private Equity Limited A Shs (HVPE) 2,535.00p -1.93%

4Imprint Group (FOUR) 5,260.00p -1.87%