FTSE 100 analysis: AB Foods shares rise as it lifts outlook

FTSE 100 is muted

The FTSE 100 is flat this morning after closing at its lowest level since the start of June on Friday, with the torrid week having wiped out all the gains booked in 2023.

The economic calendar is headlined by the Germany Ifo Business Climate Index at 0900 BST, followed by speeches from the European Central Bank’s Elizabeth McCaul at 1400 BST and president Christine Lagarde at 1830 BST.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, suffered last week and closed at its lowest level since the start of the month and is struggling to rebound today.

Friday’s close at 7,454, in-line with the lows we saw at the start of the month, appears to be holding as support. Any slip below here risks seeing the index fall down to the 2023-lows set in March.

The index needs to reclaim the 200-day moving average before it can try to break out of the downtrend that has been in play for the past two months, after which it can look to break above 7,650, marking the ceiling that has held firm over the past month.

Top UK stock news

Associated British Foods is up 0.4% after it said adjusted operating profit should be ‘moderately ahead’ of last year following a strong performance in the third quarter, when constant currency sales grew 16% to £4.73 billion. Its agriculture unit posted growth of 4%, ingredients by 10%, grocery by 13% and sugar led the way with 51% growth! Primark sales were up 13% at £1.99 billion, helped along by higher selling prices and extended opening hours – but that was short of the £2.22 billion estimate from analysts. It said its website has now been launched in Germany, Spain, Italy, the US and, most recently, France. It is also pushing ahead with new store openings and has its eyes on its first US outlet in Texas.

Aston Martin is up 1.7% this morning after signing a strategic supply deal with US electric carmaker Lucid Group to help the luxury carmaker to develop high-performance electric vehicle. Aston Martin will access Lucid’s technology such as its powertrain and batteries. Aston Martin is issuing 28.4 million shares to Lucid worth around £79 million, making it a 3.2% shareholder, and will also make cash payments to the US firm worth £182 million. Aston Martin has also agreed to buy at least £177 million worth of Lucid’s powertrain components. Separately, Aston Martin said it has amended its deal with shareholder and partner Mercedes-Benz, which will see it issue more shares to the German firm for access to more of its technology.

GSK is up 0.2% in early trade. The firm said Japan’s Ministry of Health, Labour and Welfare has approved the use of Shingrix for the prevention of shingles in at-risk adults. Separately, the pharmaceutical giant has received a positive recommendation from a committee of the European Medicines Agency for its drug named daprodustat to be used to treat symptomatic anaemia associated with chronic kidney disease in adults on chronic maintenance dialysis.

Capricorn Energy is down 0.5%. It said it continues to reduce costs and refocus on its Egyptian operations ahead of its annual general meeting today. It said it is looking to cut at least $35 million in general and administrative costs and that all of its operations outside of Egypt are set to be sold. That will help raise funds to drive its shareholder returns, with Capricorn aiming to dish out $575 million to investors, including the $450 million special dividend paid in May. Another $100 million should be paid out in the fourth quarter of 2023 and that will be followed by another buyback worth at least $25 million over the next 12 months.

Pets at Home is up 1.9% after it launched the first £25 million tranche of its share buyback programme that was announced when it released annual results. It should be completed by September 29 and be followed by the second £25 million tranche.

Watch cruise line operator Carnival today as it will report second quarter earnings later. While some forms of travel have returned to pre-pandemic levels, the cruise industry is still in recovery mode. Carnival has been recovering faster than expected this year and sales are pretty much back to 2019-levels and likely to surpass them considering bookings have hit all-time highs, bringing in record deposits and helping it to start generating cash again to remove the risks attached to cash burn. Earnings are taking longer to recover but Carnival is on the right path. Adjusted Ebitda, a key metric, is expected to turn to a $659.4 million profit from a hefty $928 million loss the year before – marking the second consecutive quarter of positive earnings. However, Carnival is still in the red at the bottom-line with analysts anticipating a net loss of $435.4 million, although that would still represent significant progress compared to the $1.8 billion loss seen the year before. Carnival has said it plans to operate at 100% occupancy and is expecting a bumper summer. The outlook for the third quarter will be influential and markets are expecting a big jump considering they are looking for adjusted Ebitda of $2.09 billion! Carnival is up 0.3% this morning.

BP and Shell are up 0.9% and 0.5%, respectively, after Brent rose 0.5% this morning in response to the revolt by Russian mercenaries over the weekend, prompting concerns about how it could impact oil supplies.

Lloyds Banking Group is down 0.9% after being downgraded to Underweight from Neutral by JPMorgan, which predicts earnings estimates for UK banks will fall and raise the risks attached to capital returns and asset quality. It kept Barclays at Overweight and NatWest at Neutral.

Cranswick has been upgraded to Outperform by RBC, which has a price target of 4,000p on the food maker. The stock is up 3.6% at 3,316p today.

On the Beach has been given a Buy rating as Shore Capital initiated coverage on the online holiday booking site. The stock is up 1% today.

Shipping stock Braemar is down 2.1% despite stating it still expects to deliver record revenue and profitability in the current financial year, with sales to rise to at least £150 million from the £101.3 million seen the year before and underlying operating profit to come in at least £20 million from £10.1 million. It also reconfirmed its final dividend will be around 8p per share, taking the total payout for the year to 12p. It said it is also investigating a particular transaction that saw it paid $3 million between 2013 and 2017, but said this should not impact its profit or cash position.

WANdisco has signed a new agreement with US giant Accenture to provide its Data Migrator tool in a deal worth $113,125. That revenue should be recognised from the second quarter of 2023.

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