Proactive Investors -
- FTSE 100 falls 13 points to 8169
- Ocado (LON:OCDO) surges after cutting first-half losses
- UK grocery inflation falls further
Retailers helping cut FTSE losses
The FTSE 100 is making another effort to climb towards the flat-line again, cutting its loss to 0.2% from almost 0.5% earlier as B&M (LON:BMEB), M&S (LON:MKS), Sainsbury 's (LON:SBRY), Kingfisher (LON:KGF) and Tesco (LON:TSCO) are among the risers.
London's doing the best among the major European markets, with Frankfurt's DAX and Milan's FTSE MIB both down around 0.45%, while in Paris the CAC 40 is losing 0.57% and in Madrid the IBEX is off 0.66%.
In France, and the wider Euro Stoxx 600, which has fallen 0.46%, luxury stocks are notable fallers, including Kering (LON:0IIH), LVMH (EPA:LVMH), L’Oréal and Hermes.
US stock futures are pointing to a flat start, currently.
Among the continental news, Deutsche Bank (ETR:DBKGn) has been ticked off by Germany’s financial watchdog over its 2019 financial report, as it failed to include €2.1 billion of deferred tax assets linked to multiyear losses at US operations. Deutsche Bank put out a statement saying it disagreed, arguing that the results "comply fully with IFRS requirements".
Ocado 'at crossroads', Rio iron ore 'weak'
Let's hear what market analysts think of this morning so far.
The Footsie is being dragged down by Rio Tinto (LON:RIO) and Experian (LON:EXPN), says Dan Coatsworth, investment analyst at AJ Bell.
He says Rio Tinto's latest production update was disappointing, with iron ore the biggest worry area after a weak quarter for output.
Experian’s update was "generally fine but didn’t deliver the earnings upgrades needed to justify its premium stock rating".
Burberry is also extending yesterday’s losses as "investors continued to lose patience with the luxury goods company. While it is getting a new boss this week, the scale of the challenge to fix the business looks large", says Coatsworth.
Susannah Streeter at Hargreaves Lansdown (LON:HRGV) says the blue-chip index is struggling "as investors assess the struggles in the retail sector" following the updates from Burberry and Hugo Boss.
"The wash-out weather and its effect on buyer behaviour has been highlighted in Kantar’s update, showing that sales of cold and flu products rose 35% and fake tan jumped 16% as the sun has remained hidden for much of the July," she says.
Water companies United Utilities and Severn Trent (LON:SVT) have both fallen around 2% after it was revealed they are joining those facing enforcement cases brought by regulator Ofwat.
"Ofwat is showing more teeth following the huge public outcry about the amount of pollution in the UK’s waterways. Bringing an enforcement case means that Ofwat is concerned that the companies have failed to meet their obligations. A detailed investigation will follow to determine if contraventions have occurred and what measures they may have to take to clean up their act. If there are serious breaches fines could follow," says Streeter.
Shares in Ocado have roared ahead jumping 17% in early trade, with John Moore, senior investment manager at RBC Brewin Dolphin, saying: the company "finds itself at a crossroads".
"While there is decent growth at its business divisions, the deferral of rolling out additional customer fulfilment centres is a drag on the momentum the company needs to ramp up cashflow and refinance the debt that falls due over the next three years.
"On the positive side, revenue and cashflow remain on a positive trend, and the easing of inflation should help attract more customers.
"However, there is a lot of ground to make up for Ocado to get to where many analysts hoped it would be by now, and some self-help will be required to meaningfully reverse the share price decline of the past three years."
Small cap fallers
There's some big share price drops among the small caps this morning, including auto component supplier Strip Tinning Holdings PLC (LON:STGS), wjocj saw its shares fall 25% following a warning about the impact of a slowdown in the glazing and battery technology markets.
The company, a supplier of specialist connection systems, reported a challenging first half of 2024 with revenue and profitability impacted by market headwinds.
Vanquis Banking Group PLC (LON:VANQ), which has slumped 16% after warning that a series of new impairments will affect its financial strength metrics.
In its statement, Vanquis said £29 million of the new write-downs related to its vehicle finance activities with a further £11 million for a redundant app and property.
Ian McLaughlin, the sub-prime lender's chief executive, said: "We have been carrying out a comprehensive review of our balance sheet and this has led to the revaluation of some historic balances. While finding these one-off items is disappointing, it does mean that our financial position is now clearer and more stable.”
Fintech group TruFin plunged 31% after it emerged that its Satago Financial Solutions business had seen the early termination of an agreement with Lloyds Banking (LON:LLOY).
Satago was providing the high street lender single invoice finance and whole-of-book invoice factoring services. TruFin said that Lloyds' decision does not reflect the quality or robustness of Satago's platform.