Proactive Investors -
- FTSE 100 makes early progress
- Food price inflation remains high - BRC/Kantar
- Chancellor to meet business leaders today to discuss energy support - BBC
9.28am: FTSE holds firm but oil stocks weigh
London’s blue chips have continued their bright start to 2023 boosted by better than expected inflation figures in France which comes on the back of an improved picture in Germany yesterday.
Victoria Scholar, head of investment, interactive investor said: “The FTSE 100 is extending gains after its first session of the year in which the UK index gained more than 1%.”
“China-sensitive Burberry is trading at the top of the FTSE 100 while commodity stocks like Glencore (LON:GLEN), BP (LON:BP), Shell (LON:RDSa), and Centrica (LON:CNA) are languishing at the bottom on the back of weaker oil and gas prices.”
“European bourses are higher for a third consecutive session with the CAC 40 outperforming. France’s inflation rate eased to 5.9% in December, beating analysts’ expectations for 6.4%.”
J Sainsbury (OTC:JSAIY) PLC received a boost from sales figures from Kantar which showed the food retailer saw growth of 6.2% in the four weeks to December 25 with the figures also lifting Tesco (LON:TSCO) PLC which rose 1.3% as the report showed a 6% increase in sales during the same period.
9.05am: Christmas sales top £12bn according to Kantar
More on the Kantar sales figures which offered some encouragement that food price inflation may have peaked.
Food price rises eased for a second month running with supermarket prices up 14.4% year-on-year in December, compared to 14.6% in November and 14.7% in October, in a signal that price rises are finally starting to slow.
Kantar's Fraser McKevitt said the figures suggested the "worst has now passed", although he added that this remained a "painfully high figure at the current rate, impacting how and what we buy at the shops".
Overall, sales hit a new record at £12.8bn, topping £12bn for the first time, with shoppers spending an extra £1.1bn this December compared to last year, driven higher by a boom in demand for cold and flu medicines.
Consumers continued to trade down to supermarkets’ own-label products this period, with sales rising by 13.3%, well ahead of a 4.7% increase in branded lines.
McKevitt said: “Tesco’s Finest range remains the single largest premium own label line by some distance, while Aldi and Lidl were the biggest contributors to the premium own label sector’s overall growth in 2022.”
Buoyant Christmas sales were enjoyed across the board this month. The traditional grocers still captured most of the Christmas purchasing, with Tesco, Sainsbury’s, Asda and Morrisons accounting for more than two-thirds of all spending.
Asda led this group, with sales up by 6.4%, closely followed by Sainsbury’s and Tesco which achieved sales growth of 6.2% and 6.0% respectively. Despite sales falling by 2.9%, Morrisons had its best performance since June 2021, standing the retailer in good stead for a return to growth in the new year.
Aldi remained the fastest-growing grocer with 27.0% growth taking its market share up from 7.7% this time last year to 9.1%. Lidl’s sales increased by 23.9%, moving its market share up by 0.9 percentage points to 7.2%.
Iceland’s sales grew by 10.2%, with sales of frozen poultry rising by 15% and frozen prepared foods by 18%. This pushed Iceland’s market share to 2.5%. Co-op’s market share now stands at 5.6% while Waitrose has 4.7%. Ocado (LON:OCDO) increased sales by 8.2%, maintaining a market share of 1.7%.
8.15am: Bright start to 2023 continues
FTSE 100 opened higher continuing its bright start to the year even though a survey showed that food price inflation hit a fresh high in December.
Figures from the British Retail Consortium showed annual food inflation leaped to 13.3% in December, up from 12.4% in November, the highest monthly rate since it began collecting data in 2005.
However, a survey from Kantar was slightly more encouraging showing grocery price inflation in December fell by 20 basis points to 14.4%, the second time in a row the rate has dropped.
Take-home grocery sales hit £12.8bn for the four weeks to 25 December 2022, the first time the £12 billion mark has been breached, the report said.
But this failed to dent London’s blue-chip index which at 8.15am was up 10 points at 7,565, while the FTSE 250 advanced 56 points to 19,190.
With corporate news thin on the ground attention will shift to US data later in the day with ISM manufacturing figures and the latest Federal Reverse FOMC meeting minutes among releases expected across the pond.
The ISM Manufacturing index for December is expected to fall further into recessionary territory to 48.5 from 49.0 in November while the FOMC minutes should shed more light on how policymakers are weighing early signals of slowing inflation pressures against the persistently strong labour market data.
Back in London, and the BBC reported business leaders are set to meet the chancellor to discuss the energy support package amid speculation that the government will halve its help.
Further strong gains by the Hang Seng provided support for Prudential PLC (LON:PRU) which rose 1.5% and HSBC Holdings PLC (LON:HSBA), up 0.9%.
Ahead of the expected slew of trading updates from the retail sector WH Smith (LON:SMWH) received support from Deutsche Bank (ETR:DBKGn) which upped its price target to 1,690p from 1,390p and reiterated a 'buy' rating. Shares were up 0.5% in early trading.
7.52am: Chancellor to meet business leaders to discuss new energy package - BBC
The UK chancellor, Jeremy Hunt, is expected to meet with business groups at lunchtime to discuss the government’s energy support after March according to the BBC.
The Federation of Small Businesses, UK Hospitality, the CBI and the British Chambers of Commerce are all expected to attend the meeting, the report said, amid speculation that the government will halve its help with energy bills.
Gas and electricity prices have been fixed for firms until the end of March, but many want the support to continue.
The revised scheme is expected to run for 12 months until March 2024.
The details of the support businesses will receive towards their energy costs are expected to be announced next week, according to the BBC.
7.38am: Food inflation hits new high
UK food price inflation hit a new record high in December according to the British Retail Consortium (BRC) which predicted 2023 would be another tough year for consumers and businesses.
Annual food inflation leaped to 13.3% in December, up from 12.4% in November, according to the figures compiled by the BRC and data firm Nielsen, the highest monthly rate since it began collecting data in 2005.
The BRC said high prices for animal feed, fertiliser and energy fed into increased food prices on supermarket shelves and cautioned that consumers would probably face further hikes this year.
“It was a challenging Christmas for many households across the UK,” said the BRC’s chief executive, Helen Dickinson. “Not only did the cold snap force people to spend more on their energy bills, but the prices of many essential foods also rose as reverberations from the war in Ukraine continued to keep high the cost of animal feed, fertiliser and energy.”
Dickinson also warned that “2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning.”
Inflation in fresh food was even higher with growth in early December hitting 15%, another record high, although the overall annual rate of shop price inflation reported by its members - mostly large retail chains and supermarkets - dropped to 7.3% from 7.4%.
This was driven by a drop in inflation for non-food items to 4.4% from 4.8%.
7.05am: More New Year cheer
FTSE 100 is expected to open higher, building on yesterday’s gains, as US markets closed off their worst levels for the day and despite mixed showings by Asian markets.
Spread betting companies are calling the lead index up by around 20 points.
In the US, Wall Street started the New Year on the back foot, despite a bright start, as falls in a number of tech heavyweights and weak manufacturing PMI figures dented the mood.
At the close the Dow Jones Industrial Average was down 13 points, or 0.04%, at 33,135, the S&P 500 was off 16 points, or 0.41%, to 3,824 and the Nasdaq Composite was 80 points lower, or 0.76%, at 10,387.
Shares of Tesla and Apple (NASDAQ:AAPL) both slipped, weighing on the broader market and continuing the tech sector’s struggles of last year.
Back in London and the corporate news is expected to be fairly quiet while on the economic data front, BRC Shop Price Index, Consumer Credit and Mortgage Approvals figures are due.
In the US later today, all eyes will be on the latest FOMC meeting minutes for an indication as to how the Federal Reserve views its next move on interest rates.