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London close: Stocks slip after mountain of broker notes

Tue, 28th Nov 2023 15:30

(Sharecast News) - London's stock markets finished in the red on Tuesday as investors deliberated over the latest shop price data, as well as a deluge of broker notes.

However, Rolls-Royce emerged as a noted exception to the trend after it unveiled its medium-term targets.

The FTSE 100 recorded a slight dip of 0.07%, closing at 7,455.24 points, while the FTSE 250 saw a more substantial decrease of 0.28%, ending the trading day at 18,387.00 points.

On the currency front, sterling was last up 0.66% on the dollar to trade at $1.2710, while it increased 0.19% against the euro, changing hands at €1.1551.

"We've seen another soft session for markets in Europe on the back of more light profit taking as we ease closer to month end and what has been a strong month for stock markets," said CMC Markets chief market analyst Michael Hewson.

"The FTSE 100 has struggled, slipping briefly to a 2-week low, with weakness in the luxury sector acting as the main drag after HSBC cut its outlook on the sector due to concerns that demand is likely to be subdued for the next five to six months, with Burberry sliding back, along with the likes of LVMH, Hermes and Kering.

"On the plus side, Rolls-Royce shares have seen another decent uplift, rising to a four-year high, after the engineering business upgraded its expectations for full year cash flow to £3.1bn by 2027."

Shop price inflation hits 17-month low

In economic news, fresh data released earlier showed that shop price inflation had reached its lowest point in 17 months as retailers intensified discounting efforts in preparation for the festive shopping season.

According to the British Retail Consortium (BRC) and Nielsen's widely monitored shop price index, year-on-year growth in retail prices slowed to 4.3% in November from October's 5.2%.

The figure fell below the three-month average of 5.3% and represented the lowest annual growth rate since June 2022.

Food inflation followed suit, slowing to 7.8% from 8.8%, with a notable decline in prices for dairy products.

The reduction in food prices was attributed to the decrease in domestic energy costs, which in turn lowered overall input expenses.

Meanwhile, non-food inflation dropped to 2.5% from 3.4%.

Prices remained stable throughout November, departing from the 0.3% month-on-month growth recorded in October.

"Shop price inflation eased for the sixth month in a row as retailers competed fiercely to bring prices down for customers ahead of Christmas," said Helen Dickinson, chief executive of the BRC.

"Retailers are committed to delivering an affordable Christmas for their customers.

"They face new headwinds in 2024 - from government-imposed increases in business rates bills, to the hidden costs of complying with new regulations."

Mixed performance for equities as Rolls-Royce jumps

On London's equity markets, Rolls-Royce Holdings surged 6.72% after it unveiled its medium-term targets during a capital markets day.

The engine manufacturer outlined ambitious plans, including aiming for an operating profit between £2.5bn and £2.8bn, an operating margin of 13% to 15%, free cash flow ranging from £2.8bn to £3.1bn, and a return on capital of 16% to 18%.

Budget airline easyJet reported a profit in its annual results, resulting in a 4.94% increase in its stock price.

The positive performance followed a robust second-half financial performance, as the company also provided a positive outlook for the coming year while reinstating its dividend.

Pets at Home Group gained 2.72% after it reaffirmed its full-year guidance.

The retailer reported increased interim revenues, although profits fell due to ongoing investments in its digital platform and a relocation to a new distribution centre.

IT infrastructure technology and services provider Softcat rose 3.07% due to a solid first-quarter performance, marked by double-digit gross profit growth driven by high demand.

On the downside, Barclays slipped 0.27% following a report in the Financial Times suggesting that the bank was considering dropping thousands of clients from its investment bank as part of a strategic overhaul aimed at boosting profits and cutting costs by £1bn.

Digital 9 Infrastructure tumbled 8.6% after announcing a strategic review following the sale of its entire stake in Verne Global for up to $575m.

In broker note action, Frasers Group was started at 'overweight' at Barclays, resulting in a 0.34% increase in its stock price.

The bank pointed out that investors often overlooked Frasers due to its low free float and diverse operations.

Citi upgraded its stance on B&M European Value Retail to 'buy' from 'neutral,' resulting in a 1.96% gain in its stock price.

It noted the value-led proposition and the company's growth potential with a 5% per annum space expansion in a category with a 10-year trailing compound annual growth rate of 10%.

Watches of Switzerland Group closed 3.67% firmer after HSBC analysts revised their target price upwards from 630p to 759p.

Goldman Sachs initiated coverage of M&G with a 'buy' rating, contributing to a 0.34% increase in its shares as the bank emphasised that the shares were attractively valued.

Meanwhile, Lloyds Banking Group received an upgrade to 'overweight' from Morgan Stanley, resulting in a 0.82% rise in its stock price.

Man Group fell by 4.46% after Morgan Stanley cut its stance on the shares to 'equalweight.'

Burberry Group declined 2.86% as HSBC slashed its price target on the 'hold'-rated stock.

HSBC noted concerns about the pricing of the new collection, which is 20% higher, and the evolving dynamics of the luxury market.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,455.24 -0.07%

FTSE 250 (MCX) 18,387.00 -0.28%

techMARK (TASX) 4,084.87 -0.21%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 258.30p 6.21%

Smurfit Kappa Group (CDI) (SKG) 2,790.00p 3.10%

B&M European Value Retail S.A. (DI) (BME) 561.60p 2.51%

Endeavour Mining (EDV) 1,793.00p 2.16%

Mondi (MNDI) 1,381.00p 2.07%

Sainsbury (J) (SBRY) 281.30p 1.85%

Fresnillo (FRES) 559.00p 1.38%

Sage Group (SGE) 1,131.50p 1.12%

Coca-Cola HBC AG (CDI) (CCH) 2,201.00p 1.10%

Marks & Spencer Group (MKS) 252.10p 1.00%

FTSE 100 - Fallers

Pearson (PSON) 933.80p -3.69%

Burberry Group (BRBY) 1,454.00p -3.32%

Prudential (PRU) 885.40p -2.57%

Entain (ENT) 834.40p -2.09%

Phoenix Group Holdings (PHNX) 466.80p -1.86%

Land Securities Group (LAND) 622.00p -1.46%

St James's Place (STJ) 636.80p -1.39%

Rentokil Initial (RTO) 442.70p -1.34%

Ocado Group (OCDO) 567.00p -1.32%

Pershing Square Holdings Ltd NPV (PSH) 3,148.00p -1.32%

FTSE 250 - Risers

easyJet (EZJ) 421.20p 4.00%

Watches of Switzerland Group (WOSG) 623.00p 3.83%

Centamin (DI) (CEY) 95.55p 3.58%

Softcat (SCT) 1,278.00p 3.15%

Mitie Group (MTO) 102.20p 2.92%

Mobico Group (MCG) 68.10p 2.64%

Energean (ENOG) 992.00p 2.32%

Pets at Home Group (PETS) 293.80p 2.30%

Chemring Group (CHG) 316.00p 1.94%

Apax Global Alpha Limited (APAX) 153.00p 1.86%

FTSE 250 - Fallers

Digital 9 Infrastructure NPV (DGI9) 39.45p -8.60%

Discoverie Group (DSCV) 648.00p -5.04%

Darktrace (DARK) 341.70p -4.85%

Man Group (EMG) 207.00p -4.74%

Future (FUTR) 966.00p -2.82%

ITV (ITV) 59.86p -2.73%

Ceres Power Holdings (CWR) 183.20p -2.50%

International Distributions Services (IDS) 244.20p -2.48%

IP Group (IPO) 51.40p -2.28%

PureTech Health (PRTC) 156.40p -2.25%

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