London stocks finished in positive territory on Tuesday, as bourses in the US added to Monday’s record highs in early trading, with sentiment underpinned locally by well-received results from the likes of Reckitt Benckiser and Whitbread.
The FTSE 100 ended the session up 0.76% at 7,277.62, and the FTSE 250 was 0.96% firmer at 23,161.37.
Sterling was keeping its head above water as well, last trading 0.07% higher on the dollar at $1.3777, and strengthening 0.26% against the common currency at €1.1887.
“After a rather lacklustre start to the week yesterday, markets in Europe have kicked on with the FTSE 100 breaking above yesterday’s peaks and putting in another 20-month high, as it looks to close the gap on the underperformance seen post pandemic to its European peers and head back towards the 7,500 level, as well as last year’s peak up at 7,689,” said CMC Markets chief market analyst Michael Hewson.
“Once again, it’s been better than expected company trading updates that have helped drive the moves higher.
“Helping to lead the way we’ve seen decent numbers from the likes of Whitbread and Reckitt Benckiser who are leading the UK market higher.”
On the economic front, household expectations for inflation over the next year hit their highest level in October since the 2008 financial crisis, according to a survey from Citigroup and YouGov.
It said households now expected inflation to reach 4.4% over the next year, which was a 0.3 percentage point increase on September’s reading.
Expectations for the next five to 10 years were steady at 3.7%, having increased sharply in August and September, but remained at the highest level since the second quarter of 2013.
Shortages of retail products, meanwhile, hit a level not seen for more than 35 years in October as stock failed to keep pace with rising demand.
The Confederation of British Industry said retail sales growth accelerated in the year to October from a month earlier, and was about average for the time of year, with sales also expected to be above seasonal norms in November.
Stock adequacy fell for the seventh month running to a new low for the CBI’s survey since 1985, with retailers, distributors and wholesalers all reporting stock shortages.
“The UK’s economic recovery has been pretty bumpy lately and the same seems true of the retail sector,” said Ben Jones, the CBI’s principal economist.
“Sales performance has jumped around in recent months, while stock shortages continue to bite.
“Disruption to supply chains, combined with staff shortages and uncertain public health conditions mean retailers are finding it difficult to plan for the winter ahead.”
Looking ahead to the Autumn Budget, Chancellor Rishi Sunak confirmed reports earlier that he will lift a public sector pay freeze when he presents his figures on Wednesday.
In the 17th pre-Budget announcement, the Treasury said the size of the pay rise would be dependent on recommendations from pay review bodies that set wages for frontline workers such as nurses and teachers.
It also confirmed an uplift in the national minimum wage for people aged 23 and above to £9.50 an hour from £8.91.
In equity markets, Reckitt Benckiser jumped 5.81% after it upgraded its 2021 revenue outlook, reporting a 3.3% increase in like-for-like net revenue to £3.28bn in the third quarter.
The Finish dishwasher tablets and Durex condoms producer said it expected annual like-for-like net revenue to increase by between 1% and 3%, up from earlier guidance of flat to 2%.
Premier Inn owner Whitbread was up 4.37% after it narrowed interim losses as sales rebounded ahead of expectations, with room revenues potentially hitting full recovery “at some point” in 2022 despite “challenging” supply chain issues and labour shortages.
B&M European Value Retail was boosted 3.17% by an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, while Renishaw was a high riser, gaining 5.41% after an upgrade to ‘buy’ at Stifel.
Essentra gained 4.57% after saying it was considering selling its filters business as a first step to becoming a pure-play components business and that its results were on track to meet full-year expectations.
On the downside, IT infrastructure and services provider Softcat slumped 0.96% even after it reported record full-year results amid strong public sector demand and a recovery in the corporate sector.
Cybersecurity firm Darktrace was also under the cosh again, falling 2.2% after tumbling on Monday on the back of a Peel Hunt initiation at ‘sell’.
Ladbrokes owner Entain was down 6.32% after US-based DraftKings said it would not be making an offer for the London-listed gambling group.
In September, DraftKings proposed 2,800p a share in cash and stock for Entain, which also owns Coral.
Polymetal lost 3.1% after it said third-quarter gold equivalent production had fallen 8% year-on-year to 437,000 ounces.
Ocado was 1.61% weaker after Credit Suisse reiterated its ‘underperform’ rating on shares of the online supermarket and cut the price target to 1,500p from 1,550p as it said there was “little room for new optimism”.
Market Movers
FTSE 100 (UKX) 7,277.62 0.76%
FTSE 250 (MCX) 23,161.27 0.96%
techMARK (TASX) 4,603.52 0.92%
FTSE 100 – Risers
Reckitt Benckiser Group (RKT) 5,814.00p 6.27%
BT Group (BT.A) 143.25p 5.95%
Whitbread (WTB) 3,294.00p 4.41%
Compass Group (CPG) 1,494.50p 3.78%
Barratt Developments (BDEV) 666.80p 3.22%
Flutter Entertainment (CDI) (FLTR) 14,575.00p 3.15%
B&M European Value Retail S.A. (DI) (BME) 636.20p 3.05%
InterContinental Hotels Group (IHG) 4,993.00p 2.78%
Persimmon (PSN) 2,699.00p 2.66%
International Consolidated Airlines Group SA (CDI) (IAG) 160.50p 2.66%
FTSE 100 – Fallers
Entain (ENT) 2,002.00p -6.32%
Fresnillo (FRES) 884.80p -4.14%
Polymetal International (POLY) 1,375.00p -3.03%
Antofagasta (ANTO) 1,437.50p -2.94%
BAE Systems (BA.) 562.00p -2.09%
Ocado Group (OCDO) 1,794.00p -1.81%
Rentokil Initial (RTO) 585.00p -1.35%
Johnson Matthey (JMAT) 2,692.00p -0.92%
BHP Group (BHP) 1,979.80p -0.81%
Pearson (PSON) 625.40p -0.64%
FTSE 250 – Risers
Renishaw (RSW) 5,255.00p 6.12%
Ashmore Group (ASHM) 354.40p 5.48%
Essentra (ESNT) 286.00p 4.57%
Mitchells & Butlers (MAB) 246.60p 4.31%
SSP Group (SSPG) 259.70p 4.09%
WH Smith (SMWH) 1,625.50p 3.83%
Wetherspoon (J.D.) (JDW) 983.00p 3.69%
Dunelm Group (DNLM) 1,311.00p 3.64%
Quilter (QLT) 154.85p 3.51%
Reach (RCH) 338.00p 3.36%
FTSE 250 – Fallers
Harbour Energy (HBR) 366.80p -3.73%
Cairn Energy (CNE) 187.70p -2.90%
Hochschild Mining (HOC) 149.90p -2.66%
Centamin (DI) (CEY) 95.60p -2.57%
Premier Foods (PFD) 110.40p -2.30%
Trustpilot Group (TRST) 333.40p -2.23%
Darktrace (DARK) 733.50p -2.20%
Serco Group (SRP) 127.10p -1.55%
Baltic Classifieds Group (BCG) 205.00p -1.44%
Softcat (SCT) 1,989.00p -1.44%
