Retailers have taken the top spots among this Wednesday’s UK share prices to watch, following the latest UK grocery market data, and with investors mulling over the prospects of Marks & Spencer Group (LON:MKS) losing its spot in the benchmark FTSE 100 index. Broader market sentiment meanwhile has been downbeat amid the ongoing tensions between the US and China.
M&S underperforms in selloff
Marks & Spencer is underperforming the broader market selloff, pressured by worries that it might lose its spot for the first time in its history in the FTSE 100 at the benchmark index’s upcoming reshuffle. The shares came under pressure last week as the high street retailer unveiled a dividend cut and confirmed a rights issue to finance its joint venture deal with Ocado (LON:OCDO).
Sharecast quoted David Cheetham, chief market analyst at XTB, as commenting that despite a rise in the shares in the previous session, a look back at prior performance makes for ‘pretty grim viewing,’ with a six-month decline in the stock price of almost 20 percent and a near-40 percent drop seen in the past couple of years.
He elaborated that ‘a litany of mistakes’ was to blame for this poor performance and while a demotion from the FTSE 100 in the upcoming quarterly reshuffle would not materially impact business operations, “it would likely do more damage to its weary investors and their holdings”.
Proactive Investors meanwhile reports that the money which the retailer has raised from its rights issue is likely to keep the company among London’s blue-chips.
“While the fresh capital won’t actually be available until after the FTSE reshuffle calculation, we expect the index provider to give M&S the nod, on the basis the money’s in the post,” said Laith Khalaf, senior analyst at Hargreaves Lansdown, as quoted by the newswire. Marks & Spencer’s shares have given up about 5.6 percent in early afternoon trade, underperforming the broader London market selloff which has seen the benchmark FTSE 100 index give up about 1.3 percent.
Tesco (LON:TSCO) is also underperforming the broader market selloff after the latest Kantar Worldpanel data pointed to flat sales at Britain’s biggest grocer in the 12 weeks to May 19. Tesco’s shares are changing hands nearly three percent lower. FTSE 100 rivals Sainsbury’s (LON:SBRY), however, is outperforming the market with about a 0.3-percent gain while Morrisons (LON:MRW) has shed less than one percent.
Outside the FTSE 100 index, shares in Aveva (LON:AVV) have fallen deep into the red even as the company reported an 11.9-percent rise in revenue for the financial year ended March 31 and a 19.8-percent rise in adjusted EBIT. The group’s shares are about 2.6 percent down in early afternoon trade, compared with about a one-percent dip in the mid-cap FTSE 250 index.
Broader market sentiment meanwhile has suffered from the ongoing trade tensions between the US and China, as well as concerns over Italy’s budget. Reuters quoted London Capital Markets analyst Jasper Lawler as commenting risk aversion had “been on the rise as investors grow increasingly concerned over the impact that the ongoing trade dispute is having on the global economy”.
“Weakening macro data is heightening these concerns, fuelling fears of a global recession. An unresolved Brexit and rising tensions between Rome and the European Commission are adding to the gloomier outlook,” the analyst pointed out. Defensive stocks meanwhile have advanced, with water utility Severn Trent (LON:SVT) claiming the top spot in the blue-chip leaderboard with a 1.3-percent gain.
Thursday’s UK share prices to watch
Johnson Matthey (LON:JMAT) will provide some excitement tomorrow, with the specialty chemicals group set to post its finals. The update will come after the company said in its half-year report in November that it expects full-year operating performance towards the upper end of its guidance of mid to high single digit growth. Investors will also be eyeing an update over the company’s batteries business after Johnson Matthey announced that it was developing a new material for use in electric vehicle lithium-ion batteries.
“The electrification of the automotive sector has the potential to render JMAT’s core catalysts business redundant,” analysts at Hargreaves Lansdown commented, as quoted by Proactive Investors, adding that while investors should not “expect profits from batteries any time soon, updates will nonetheless be pawed over by for signs of potential”.
Non blue-chips reporting tomorrow include water utility Pennon (LON:PNN) and banknote maker De La Rue (LON:DLAR), while UK share prices to come under pressure include Marks & Spencer, National Grid (LON:NG), The Sage Group (LON:SGE) and Whitbread (LON:WTB), with the companies going ex-dividend.
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