Proactive Investors -
- FTSE 100 slips back, down 33 points
- AB Foods slips 5.3% as cost pressures dent margins
- Whitbread rises on profit growth, £300mln buyback
9.00 am: Investors in cautious mood
The FTSE 100 remained on the back foot in early exchanges with investors digesting a hefty batch of European earnings and looking ahead to some key updates from US tech giants later today.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: ‘’Caution is in the air ahead of the results from big tech rolling in, and the latest snapshot of US consumer confidence.”
“Investors are assessing the extent to which nervousness about what may lie ahead for economies is holding back marketing budgets and delaying purchases by shoppers.”
Whitbread PLC (LON:WTB) sits top of the FTSE 100 risers after reporting strong profit and revenue growth alongside a £300mln share buyback.
“We see clear further upside risks to consensus forecasts for FY23/24,” said analysts at Barclays.
But Associated British Foods PLC (LSE:LON:ABF) tumbled 5.5% after its results. The owner of Primark reported flat profit despite strong growth in sales in both its Food and retail divisions but cost and inflationary pressures hit margins.
UK banks were a weak feature as Santander (BME:SAN) UK made cautious comments over the weaker housing market.
The bank flagged a decline in mortgage applications by 37%, amid a slowdown in the housing market with house prices set to fall back to 2021 levels.
Shares in NatWest (LON:NWG) fell 2.1% and Lloyds Banking Group (LON:LLOY) by 2%.
8.40 am: Grocery price inflation falls but too early to call the top
Grocery price inflation dipped but it is too soon to call the peak, according to market research firm, Kantar.
Kantar said consumers are still paying 17.3% more than this time last year at UK supermarkets but that’s slightly lower than last month’s 17.5% grocery inflation.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top."
"We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year."
"We think grocery inflation will come down soon, but that’s because we’ll start to measure it against the high rates seen last year. It’s important to remember, of course, that falling grocery inflation doesn’t mean lower prices, it just means prices aren’t increasing as quickly.”
The data covering the four weeks to April 16 showed demand for own-label goods has soared, up 13.5% year on year, with the very cheapest value lines soaring by 46%.
Amid rising prices, both Aldi and Lidl hit new record market shares over the latest 12-week period at 10.1% and 7.6% respectively.
Lidl was the fastest-growing grocer with sales increasing by 25.1%, while Aldi is just behind on 25.0%.
Fraser McKevitt expands: “Consumers are continuing to shop around, visiting at least three major retailers every month on average. The discounters have been big beneficiaries of this, with Aldi going past a 10% market share for the first time this month. "
The three largest grocers continued to grow at similar rates in the 12 weeks to 16 April 2023, Kantar said.
Asda led the pack with sales up 8.8% year on year, giving the retailer a 14.0% share of the market. Tesco (LON:TSCO) and Sainsbury’s (LON:SBRY) weren’t far behind with their sales increasing by 8.0% and 8.7%, claiming 27.0% and 14.9% of the sector respectively.
Morrisons’ sales continued to increase, and it now holds an 8.7% share of the market. Co-op’s market share stands at 5.7%, with sales growing by 2.7% in the latest 12 weeks.
Waitrose’s sales increased by 3.2%, its best performance since June 2021, pushing its market share to 4.5%. Iceland matched the 12-week market growth rate of 9.4%, maintaining its level of share at 2.2%.
Ocado (LON:OCDO) outpaced the overall online market, increasing sales by 8.7%.