Although losses weren’t overly severe, the FTSE 100 was lower again on Wednesday as investors await further insights into where interest rates will go in the near future and Sainsbury’s dragged on the index after a mixed Christmas trading update.

The FTSE 100 was down 0.2% at the time of writing.

“The FTSE 100 dipped on Wednesday off the back of downbeat sessions from Asia and the US last night,” said AJ Bell investment director Russ Mould.

“The market is still trying to work out if central banks are going to under-promise and over-deliver on interest rates cuts or if they really mean it when they say any such move is still some way off.”

Markets will digest the latest round of US CPI data tomorrow, which promises to set the tone for equity trading going forward. There is also an element of profit-taking in London’s leading index after a robust end to 2023 and a lack of fresh catalysts to send stocks higher.

News that the World Bank foresees slower growth due to geo-political influences didn’t help the bull case for London’s leading stocks as worries about global growth dented sentiment.

“With the World Bank forecasting that geo-political crises will drag global growth back to the slowest pace since the pandemic, there is little momentum for the internationally focused FTSE 100,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown

Sainsbury’s

This week is a busy one for festive trading updates with all major FTSE 100 grocers reporting festive trading. Sainsbury’s released their Christmas trading figures on Wednesday and disappointed shareholders with weak non-food sales.

The performance of food and grocery sales during the period is of paramount importance for investors. Sainsbury’s did well in this area. Food sales rose 9.3% in Q3 and 8.6% over the Christmas period.

However, it was the non-food sales that proved to be the headache for traders and shares fell over 5%. Christmas General Merchandise and Clothing declined, suggesting the group’s focus on food was at the expense of other areas of the business.

“Sainsbury’s has a ‘food first’ strategy and the big question from its Christmas trading update is whether management is guilty of neglecting the other parts of the group,” said AJ Bell’s Russ Mould.

“Non-food sales were very disappointing, implying that Sainsbury’s is either leaving areas like clothing and Argos’ general merchandise offering to wither away or it simply isn’t pushing the products that people want.

“Sainsbury’s partially blames tough comparative figures from the previous year, yet it does feel as if Argos, in particular, has been bumped down the list of priorities for the group since Simon Roberts took over as chief executive.

“One has to question if the Argos brand is still the right fit for the grocery seller over the long term. If food is the priority, would the shop floor space currently occupied by Argos concessions be put to better use?

“Many fashion retailers suffered from the wrong kind of weather in 2023 to support the stock on their shelves. The sector has also been awash with promotions to shift items, meaning retailers have had no choice but to cut their prices if rivals are offering similar goods more cheaply. Naturally this is bad for margins. Sainsbury’s has been exposed to both factors.

Greggs had a good year and a good fourth quarter. On Wednesday, Greggs shares jumped 6% as the company reported that full-year sales for 2023 were up 19.6%, while Q4 like-for-like sales were up 9.4%.

Full-year sales totalled £1.8 billion, with like-for-like full-year sales rising 13.7%.

The good news sent Greggs shares flying 6% higher at the time of writing on Wednesday.

“A solid final quarter means Greggs can tick off 2023 as a year of real progress. Double-digit growth in like-for-like sales was down to extended opening hours, more delivery options, improving supply chain capacity, and a fresh new suite of tasty treats. Festive Bakes and Chocolate Orange Muffins lead the way over Christmas, but bears may point to sales growth slowing over the year, and the fourth quarter was the lowest of 2023,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“That’s largely because Greggs was able to limit price hikes as inflation cooled. Longer-term, that’s a net positive. One of Greggs’ key strengths is offering a lower-value treat, and keeping that proposition intact is key, especially when consumer incomes are stretched. The most important thing is to see volumes trend higher, and that remains the case,” he added.

Greggs has also declared plans to open 140–160 net new shops in 2024.

“The job’s not done. Expect to see more progress over 2024 as investment continues into the digital offering, delivery partnerships, and expanding the store estate,” Britzman stated.

Reabold Resources shares were sharply higher on Wednesday after the oil and gas company announced that all resolutions at today’s Requisitioned General Meeting failed to pass and the current board of directors will remain in their posts.

Today’s result is the second failed attempt by the requisitioning shareholders to take control of Reabold Resources. The votes against the resolutions to appoint new directors were even greater this time round than the last attempt in 2022.

Reabold Resources shares were 16% higher at the time of writing.

Jeremy Edelman, Non-Executive Chairman of Reabold, commented:

“Today’s requisitioned General Meeting result represents the resounding support for the existing Board of Directors by its shareholders. The results represent an even greater margin of votes against the Requisitioning Shareholders’ resolutions than was the case at the last requisitioned general meeting in November 2022. The Requisitioning Shareholders, who own approximately 7.91% of the Company’s currently issued share capital, received average support for the proposed resolutions from shareholders representing approximately a further 5.77% of the Company’s issued share capital. I would like to thank our shareholders for their support of the Board.”

“This process has, once again, been a serious and costly distraction for Reabold, significantly delaying the management team’s ability to execute the Company’s strategy. The Board believes the Company is well positioned with its portfolio of strategic gas assets and strong cash position. The Company’s efforts can now be entirely directed towards unlocking this value for all shareholders.”

Persimmon shares gained on Wednesday after the housebuilder said completions fell by 33% to 9,922 in 2023 but saw sales rates increase at the beginning of 2024.

Persimmon shares were over 4% higher at the time of writing on Wednesday.

The last year was a terrible year for the housebuilder. Profits will be down substantially and dividend payouts were a shadow of the shareholder returns in prior years.

Persimmon’s cash as of 31st December 2023 had more than halved to £420m compared to a year ago.

“Despite the difficult and uncertain trading backdrop, Persimmon’s valuation’s been on the charge in recent months. New home completions came in ahead of group expectations in 2023 but were still down by a third on the previous year. Alongside an increased use of incentives, these lower volumes mean there’s much less cash coming in the door,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“In a bid to keep the cash coffers in reasonable shape, investment in new land has been reigned right back – something we expect to continue in the near term, given the group’s healthy land bank.

“Market forecasts are suggesting a 35% fall in revenue for 2023. Coupled with the effect of lower volumes and build cost inflation remaining more stubborn than the group had anticipated, operating profit margins look set to roughly halve year-on-year to around 14%. While that’s not ideal, it’s a picture that’s largely being repeated across the sector.”

However, today’s share price reaction suggests investors are starting to look to the future and the eventual recovery in the UK property market. Private forward sales rising to £499m is a reason to be optimistic.

Persimmon’s trading update is released amid falling mortgage rates which will buoy housing activity.

The FTSE 100 eased slightly on Tuesday as a strong session in the US failed to inspire a meaningful rally in European shares.

London’s leading index was finely poised for most of the session with weakness in Beazley, RS Group and Intermediate Capital offset by a recovery in commodity stocks.

As the session progressed, early gains turned to losses and the FTSE 100 was trading down 0.15% at 7,683 at the time of writing.

“The FTSE 100 benefitted from a small waft of the feelgood factor emanating from Wall Street in early trade, as investors hopes remain high that inflation will keep heading in the right direction,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The speculation has fuelled the value of tech stocks once again, with Nvidia given another boost, sending it to an all-time high. Investors cheered as the chip maker revealed new desktop graphics processors, aimed at the video game market, which will be capable of exploiting AI innovations.”

However, the benefits of a stronger session in the US faded through the session as investors looked forward to key inflation for further direction in markets.

“European markets didn’t share the excitement as all of the major indices were either flat or down on Tuesday morning, suggesting investors are in a holding pattern until we get the next round of inflation and jobs figures which provide the all-important clues as to central bank interest rate decisions,” said Russ Mould, investment director at AJ Bell.

US inflation data is due to be released on Thursday with economists predicting US core CPI inflation will tick marginally higher year-on-year while CPI is forecast to drop to 0.1% month-on-month.

Should these forecasts be met, it would fuel the view the US economy is heading for a soft landing. This would be supportive of equities.

The first full trading week is set to be a cracker for London’s largest companies as a raft of economic data accompanies a flurry of corporate updates.

Ahead of Marks & Spencer, Tesco and Sainsbury’s reporting later this week, B&M European Value said group revenue grew 5.0% year-on-year to £1,645m in the key Q3 festive trading period on Tuesday.

B&M shares were 0.6% higher at the time of writing.