The FTSE 100 was up 0.8% to 7,445.7 in midday trading on Tuesday, gaining back some of Monday’s lost ground as the market slowly recovered from the shock of Beijing’s Covid-19 lockdown reports, which had sent investors into a panic over the potential economic slowdown.
Investors breathed easier as China began testing in Beijing, with the Hang Seng index up 0.3% to 19,934.7, reflecting an increase in optimism as stocks recovered after Monday’s nauseating shock.
It was a good day for miners as major commodities groups regained the lost ground from Monday, with Glencore shares up 3.8% to 466.5p, Anglo American rising 3.4% to 33,335p, Fresnillo increasing 3% to 770.1p, Endeavor Mining up 2.3% to 19,905p and Antofagasta shares rising 2% to 14,747p.
Airtel Africa enjoyed a shares rise of 2.5% to 147.6p after the company announced the win of a ‘super agent’ licence for its Airtel Mobile Commerce Nigeria subsidiary from the Central Bank of Nigeria, which reportedly allows Airtel to develop an agency network to service customers of licenced Nigeria banks, payment service banks and licenced mobile money operators throughout the country.
Taylor Wimpey shares were up 2.4% to 131.2p following the housebuilder’s report that the rise in interest rates from 0.5% to 0.75% had not impacted consumer interest in homes, and an 5.8% year-on-year increase in its order book to £2.97 billion, with the company on track to meet its annual guidance.
“Taylor Wimpey helped lay the foundations for gains across the housebuilding sector as it flagged persistent high demand in the market despite the cost of living crisis and the recent increase in interest rates,” said Mould.
“For now, soaring house prices are beating the increase in labour and raw material costs and keeping Taylor Wimpey and its peers’ impressive margins and cash generation intact.”
Associated British Foods suffered a decline of 5.1% to 12,460p, following the firm’s announcement that its Primark stores would need to raise prices in the coming months to offset increasing cost inflation.
“Attempts to cut costs to protect profitability haven’t proved sufficient so Primark is now planning ‘selective’ price increases but notably these won’t prove sufficient to prevent a greater reduction in margins than previously forecast in the second half of its financial year,” said Mould.
“Primark has a fine balance to strike as its bargain prices could help it gain market share if consumers trade down thanks to tighter household budgets. However, if it goes too far in lifting prices it could undermine its value proposition.”
HSBC shares took a dip of 3.6% to 483.5p in light of the financial institution’s $1.1 billion drop in profits on the back of rising inflationary pressures from the Russian war in Ukraine, alongside a net charge for expected credit losses and additional impairment charges across Q1 2022.
“HSBC has also been affected by the slowdown in investment banking – a year ago buoyant markets and surging M&A generated plenty of commission,” said Mould.
“Investors’ interest in HSBC is heavily linked to increased penetration of banking in less mature markets in Asia. With the impact of increased restrictions that growth outlook is clouded which negatively impacts sentiment towards the stock.”
Ocado shares fell 4.1% to 995p as the struggling online retailer was caught in the tide of falling grocery sales, which dropped on a two-year basis for the first time since the Covid-19 pandemic started on the back of 4.8% grocery inflation.
Research from Kantar reported a 5.9% fall in grocery sales in the 12 weeks to April 17 year-on-year to £29.73 billion from £31.60 billion, with sales sliding 0.6% on a two-year basis.
Sainsbury’s was also caught in the fallout of rising food inflation, with a share price decrease of 1.7% to 239p.
“The average household will now be exposed to a potential price increase of GBP271 per year,” said Kantar analyst Fraser McKevitt.
“A lot of this is going on non-discretionary, everyday essentials which will prove difficult to cut back on as budgets are squeezed. We’re seeing a clear flight to value as shoppers watch their pennies.”
