6th Jul 2021 12:00
(Alliance News) -Â The FTSE 100 gave up meagre early gains to trade the wrong side of 7,160 points at midday on Tuesday, though London's benchmark index was faring slightly better than European counterparts after some disappointing German factory data.
Amongst the best blue-chip performers at midday were food retailers J Sainsbury and Ocado, while property investors British Land and Land Securities were sat at the bottom of the FTSE 100.
The index was down 6.72 points, or 0.1%, at 7,158.19 midday Tuesday. The mid-cap FTSE 250 index was down 13.35 points, or 0.1%, at 23,009.05. The AIM All-Share index was down 0.1% at 1,263.85.
The Cboe UK 100 index was down 0.1% at 712.48. The Cboe 250 was flat at 20,718.21, and the Cboe Small Companies up 0.3% at 15,628.61.
"The FTSE 100 is an island of relative calm this morning as European markets take a knock in the wake of poor German economic data," commented Chris Beauchamp, chief market analyst at IG.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.3% in early afternoon trade.
According to German statistics body Destatis, new orders in manufacturing were 3.7% lower monthly in May, having risen 1.2% in April. According to consensus cited by FXStreet, a chunky 5% rise in new orders was expected in May, so the figure strikingly missed market forecasts.
The annual figure also disappointed consensus. New manufacturing orders rose 54% from May 2020, though a greater hike of 75% was expected. In April, they had risen 80% annually.
"This is a terrible number, even factoring-in the significant upward revision to the April data," said Pantheon Macroeconomics's Claus Vistesen, noting that auto sector weakness was a major driver behind the disappointing outturn.
The worst performer in Frankfurt's DAX was Continental, an automotive parts manufacturing company, falling 2.2%. Car maker Daimler and BMW fell 1.7% and 1.6% respectively.
More positively, eurozone retail sales growth beat expectations in May. Growth of 4.4% was expected for May, according to consensus cited by FXStreet, so the 4.6% surge topped expectations. In April, retail sales had fallen 3.9% monthly in the eurozone.
It was the bounciest monthly growth since a 5.5% jump in June 2020, a welcome reading for a sector which has struggled amid lockdowns and travel curbs.
French food retailer Carrefour topped the CAC 40 in Paris, up 1.1%.
Sitting atop London's own blue-chip index was online food retailing peer Ocado, rising 2.5% on a partnership with Auchan Retail to develop Alcampo's online business in Spain.
The online grocery fulfilment business said its new partner, Auchan Retail, has operations across 13 countries and operates the Alcampo brand in Spain via a network of 310 stores with revenue totalling EUR4.5 billion in 2020.
Ocado and Alcampo will initially build a customer fulfilment centre to serve the Madrid region from 2024, with additional automated warehouses to be announced at future dates. The fee structure with Alcampo is similar to that agreed with other international Ocado Solutions partners.
"While Ocado's new deal in Spain with Auchan Retail may not initially look like a big deal, there is a line in the statement which says the companies will explore the potential to expand the partnership into other geographies. Auchan operates in 13 countries including France, Portugal, Russia and Ukraine, which suggests that Ocado has got its foot in a very important door," commented AJ Bell investment director Russ Mould.
Separately, Ocado said revenue for the half-year to May 30 was GBP1.32 billion, up 21% from GBP1.09 billion a year ago, while the online grocer's pretax loss slimmed to GBP23.6 million from GBP40.6 million.
Bricks-and-mortar grocer J Sainsbury advanced 1.0%. The supermarket chain said its first quarter sales rose and lifted its annual profit forecast, despite injecting GBP50 million to lower supermarket prices and stave off competition.
In the 16 weeks to June 26, retail sales, excluding fuel, rose 1.6% yearly, and 10% on two years earlier before the onset of the pandemic. On a like-for-like basis, sales also were up 1.6%. Including fuel, total sales jumped 8.5% annually, or 8.4% on a like-for-like basis.
Sainsbury's now expects to report underlying pretax profit of at least GBP660 million in the financial year to March 2022. Back in April, alongside the release of its annual results, Sainsbury's said it expected underlying pretax profit in the 2022 financial year to exceed the GBP586 million reported in the 2020 financial year, and was "comfortable" with consensus of around GBP620 million.
Property investors were lower, with British Land and Land Securities both down 3.6%, after Jefferies cut the two stocks to Hold from Buy.
Oil majors were subdued at midday despite oil prices continuing to trade around their best levels since late 2018. BP was down 0.1% at midday while Royal Dutch Shell 'A' and 'B' shares were both up 0.4%.
The 23 members of the OPEC+ group of oil producers cancelled a meeting scheduled for Monday that was supposed to overcome an impasse over crude output levels.
The meeting "has been called off", an OPEC statement said, quoting Secretary General Mohammed Barkindo.
At stake is a proposal that would see the world's leading oil producers raise output by 400,000 barrels per day each month from August to December. But that plan risks being delayed or even failing over a further proposal to extend a deadline on capping output to the end of 2022. Holding out against the new deal is the United Arab Emirates.
"The markets are already nervous about rising inflationary pressures. Surging oil prices will only add to these concerns," commented Sophie Griffiths, market analyst at Oanda.
Another commodity advancing on Tuesday was gold, quoted at USD1,808.57 an ounce at midday, up from USD1,791.50 on Monday. Precious metals miners rose in step with gold, with Polymetal International up 1.1% and Fresnillo up 0.8%.
Sterling was quoted at USD1.3843, soft on USD1.3851 at the London equities close on Monday. The euro traded at USD1.1843 midday Tuesday, lower than USD1.1865 late Monday.
Against the yen, the dollar was quoted at JPY110.76, down on JPY110.84.
Wall Street is set for a subdued open on its return from the three-day Independence Day weekend. The Dow Jones and Nasdaq Composite were pointed flat and the S&P 500 down 0.1%.
Looking to the US session, Oanda's Griffiths said: "Attention will be firmly on ISM non-manufacturing PMI data, which is expected to show a slight easing in activity. That said, the employment sub-component is expected to reveal another firm rise in headcount."
US IHS Markit services PMI is at 1445 BST and ISM services PMI at 1500 BST.
By Lucy Heming;Â [email protected]
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