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- FTSE 100 down 14 points at 7,456
- Tesco (LON:TSCO) raises profit outlook, picks up market share
- Spirent plunges after cutting annual guidance
Spirent plunges after cutting outlook
Spirent Communications (LON:SPT) shares have plunged 34% after it cut its annual outlook, warning of a weak near-term orderbook.
"The impact of negative operating leverage will very materially affect operating profit in this financial year," the automated test and assurance solutions provider warned.
The uptick in Telecommunications orders seen over the second quarter "dissipated" over the summer, and the expected rebound in September has not materialised.
However, it saw strong growth in its non-telecommunications end markets.
Elsewhere, Seven Trent is up 1.2% after JPMorgan (NYSE:JPM) moved the stock to neutral from underperform.
Tesco's results lift Sainsbury; L&G hit by downgrade
The FTSE 100 remains in the red, after a brief spell in the green, despite strong results from Tesco which have given a lift to industry rival J Sainsbury (OTC:JSAIY), which is up 1.1%.
SSE PLC (LON:SSE) rose 0.4% after its trading update despite weakness in renewables.
Aarin Chiekrie at Hargreaves Lansdown (LON:HRGV) said: “Mother nature weighs on performance at SSE. The pivot towards renewable energy is a bold and admirable move for the power utility company but it comes with a hefty dose of risk, since they are not always reliable. Adverse weather conditions in the first half meant that renewables output was around 19% behind plan.
But he noted that’s where the group’s diverse portfolio of assets comes in. “Flexible thermal assets continue to demonstrate their value in the group’s energy system, helping to plug some of the energy shortfalls from renewable assets,” he noted
Relx PLC was on the rise, up 0.8%, as Goldman Sachs (NYSE:GS) upgraded to buy with a 3,405p price target, while Aviva PLC (LON:AV) climbed 0.6% as Jefferies upgraded to buy from hold with a 480p price target.
But Legal & General PLC fell as Jefferies doengraded the stock to hold from buy with a reduced price target of 230p, down 335p.
Compass Group PLC (LON:CPG) advanced 1.4% as RBC raises the firm to sector perform from underperform while Asos got a boost from USB which upgraded to buy from hold, sending shares up 1.9%.
FTSE lower but Tesco pushes higher
The FTSE 100 opened lower after rising bond yields sparked a sharp sell-off in US equities on Tuesday but it was a brighter picture at grocer, Tesco.
At 8:15am, London’s lead index was down 8.43 points, 0.1%, at 7,461.73 while the FTSE 250 fell 105.52 points, 0.6%, at 17,572.24.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: “’Chill winds of worry are swirling about high interest rates settling in and there is set to be little respite from the sell-off.”
“Investors have again been reminded by central bank policymakers in the US that the screws may have to be tightened on monetary policy again, and kept there for some time, to stop inflation whipping higher again.”
The renewed worries followed strong jobs data in the US where vacancies unexpectedly rose in August – markets now see a near 40% chance that the Federal Reserve will increase rates at its December meeting, although no change is still forecast in November.
Bucking the weak market was the UK’s largest retailer Tesco which raised profit guidance after a strong first half which saw it pick up market share from its rivals.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Tesco has delivered another strong set of results, as its long-term turnaround strategy continues to pay off.”
Sophie Lund-Yates at at Hargreaves Lansdown suggested Tesco was “performing its own supermarket sweep, knocking competition out the way in the process and loading up on market share.”
The firm reported increased market share in the UK and Republic of Ireland.
Ken Murphy, chief executive said: “We're seeing the results at both ends of the basket, with strong growth in our Finest range as shoppers look to save by treating themselves at home, voting with their feet as they switch from premium retailers to Tesco.”
Elsewhere, SSE PLC was little changed as it held guidance despite a weak performance in renewables but it was a grim morning for shareholders in Spirent Communications (LSE:SPT), which fell 34% to 86.59p after it cut its annual outlook, warning of a weak near-term orderbook.