Sector movers: Food retailers and oil stocks lead rise
Geopolitical tensions moved markets on Wednesday, with worries about military action in Syria lifting oil prices but hitting the tourism sector, while the highest rising sector was food and drug retailers after Tesco's results impressed.
Tesco shares rose more than 6% to their highest level since spring 2015 as it declared its first year-end dividend in four years as it reported a 28% rise in underlying operating profits thanks to improved margins and surging cash generation. Chief executive Dave Lewis, who has led the turnaround of the grocer since its accounting scandal in 2014, said margin was "well on track" to reach his target of 3.5-4.0% in 2019/20, a year ahead of schedule.
Analysts at Societe Generale said a highlight of the results was the "solid operating performance", with UK and Ireland earnings before interest, tax and exceptionals beating consensus by 5%, reflecting 0.5 percentage point margin improvement versus consensus of 0.4. "This is a robust performance given the challenging trading environment in the UK due to higher input costs and SG&A cost inflation, particularly wage increases."
Sainsbury's and Morrisons were both lifted a penny or two in Tesco's wake.
Oil-related companies were among the higher risers again as crude prices continued to rise amid the geopolitical tension around Syria. Brent was up another 2% to $72.54 around the time of the London close.
"Threats of military action have driven gold and oil higher this afternoon, as Trump takes to Twitter to engage in his usual delicate diplomacy," said Chris Beauchamp, chief market analyst at IG. "The world is now on notice for US, and potentially allied, military strikes in Syria, as the US attempts to take action for chemical warfare attacks. With Russia having pledged itself to the defence of Syrian bases, it looks like we have the makings of a confrontation. Even if no Russian response is forthcoming to any possible US strike, it looks like relations between the two powers have hit a new low."
Read across from Russia may also have been dragging on Coca-Cola HBC and the beverages sector, with a three-day fall in the rouble and Russia being an important market for the drinks bottler.
Tourism related stocks, including airlines IAG and easyJet and hotel operator InterContinental and cruise operator Carnival, were all lower from caution about the effect on the sector, with some flights said to be at risk from potential military action in Syria.
The weak rand was hitting companies with exposure to South Africa, including deal-Jo'burg listed Mondi and Mediclinic. The currency fell on the back of disappointing manufacturing figures and a warning from the central bank that 2017’s boom could fade.
Top performing sectors so far today
Food & Drug Retailers +4.14%
Oil Equipment, Services & Distribution +1.67%
Automobiles & Parts +1.34%
Software & Computer Services +0.57%
Industrial Metals & Mining +0.55%
Bottom performing sectors so far today
Forestry & Paper -1.31%
Health Care Equipment & Services -1.22%
Beverages -1.14%
Electronic & Electrical Equipment -0.81%
Tobacco -0.81%
Market Movers
FTSE 100 (UKX) 7,255.66 -0.15%
FTSE 250 (MCX) 19,650.38 -0.13%
techMARK (TASX) 3,353.25 -0.34%
FTSE 100 - Risers
Tesco (TSCO) 223.50p 6.28%
Fresnillo (FRES) 1,287.50p 3.79%
Randgold Resources Ltd. (RRS) 5,882.00p 2.72%
Evraz (EVR) 397.30p 1.95%
Morrison (Wm) Supermarkets (MRW) 229.70p 1.91%
Intertek Group (ITRK) 4,794.00p 1.57%
Paddy Power Betfair (PPB) 7,215.00p 1.55%
GKN (GKN) 432.20p 1.46%
Whitbread (WTB) 3,746.00p 1.19%
Scottish Mortgage Inv Trust (SMT) 447.80p 1.08%
FTSE 100 - Fallers
Coca-Cola HBC AG (CDI) (CCH) 2,520.00p -4.04%
Centrica (CNA) 138.95p -2.53%
Carnival (CCL) 4,489.00p -2.41%
International Consolidated Airlines Group SA (CDI) (IAG) 615.20p -1.91%
easyJet (EZJ) 1,608.50p -1.86%
Mondi (MNDI) 1,884.00p -1.64%
NMC Health (NMC) 3,378.00p -1.57%
Mediclinic International (MDC) 571.20p -1.55%
InterContinental Hotels Group (IHG) 4,257.00p -1.53%
Shire Plc (SHP) 3,597.50p -1.52%