London midday: Stocks stay down; Sainsbury's under the cosh

(Sharecast News) - London stocks were still in the red by midday on Tuesday as investors mulled eurozone inflation data and looked ahead to US jobs numbers. The FTSE 100 was down 0.3% at 8,145.47.

Russ Mould, investment director at AJ Bell, said: "Investors are eagerly awaiting new US jobs data and a speech from Federal Reserve chair Jerome Powell, two events which could provide the all-important clues on how the central bank might act with monetary policy.

"Markets' current thinking is that any sign of weakness in the American jobs market could encourage the Fed to make the long-awaited first cut in US interest rates from the 5.5% mark reached last summer. That would be seen as a move to boost US growth, by making credit cheaper and easing the pressure on US government finances in the process, to the benefit of company earnings, thanks to higher demand and lower interest bills.

"The theory is that lower returns on cash and lower bond yields will persuade investors to see a higher return in different, albeit riskier, asset classes, including equities."

On the macro front, preliminary data from Eurostat showed that inflation across the eurozone slowed slightly in June, while the region's unemployment rate held steady.

The harmonised index of consumer prices was 2.5% higher than last year, with annual inflation easing from the 2.6% rate seen in May. This was in line with the consensus forecast.

However, the annual rate of core inflation - which excludes volatile items such as food, energy, alcohol, and tobacco - held steady at 2.9%, despite expectations for a drop to 2.8%.

Services inflation stayed elevated at 4.1% in June, while non-energy industrial goods also remained steady at 0.7%, while energy price growth eased to 0.2% from 0.3% and food, alcohol and tobacco inflation slowed to 2.5% from 2.6%.

Separate figures from Eurostat also showed the unemployment rate for the eurozone remained at 6.4% in May, matching economists' predictions and remaining at an all-time low for the region.

On home shores, the latest shop price index from the British Retail Consortium and NielsenIQ showed that annual growth in prices at tills slowed significantly in June.

Shop price inflation eased to a year-on-year rate of just 0.2% last month, down from 0.6% in May and the lowest rate of price growth since October 2021.

Non-food prices were down 1% on last year, with deflation accelerating from the -0.8% level reported in May, while food inflation slowed to 2.5% from 3.2% a month earlier.

Slowdowns were reported in both fresh food (1.5%, down from 2.0%) and ambient food (3.9%, down from 4.8%).

The BRC said the deceleration in price growth was a result of heavy investments by retailers to improve operations and supply chains during the height of the cost-of-living crisis, to mitigate the impact of input cost pressures.

"This is clearly paying off, with shop prices having risen just 0.2% over the past 12 months," said the BRC's chief executive Helen Dickinson.

"Whoever wins Thursday's election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households.

"The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too. The next government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy."

In equity markets, Sainsbury's was under the cosh as it reported a slowdown in first-quarter like-for-like sales growth on the back of declines in general merchandise sales and at its Argos division.

Total retail sales excluding fuel increased by 2.6% year-on-year in the 16 weeks to 22 June, with like-for-like sales rising by 2.7%. That's down from the 4.8% LFL growth seen in the fourth quarter of the previous financial year and 7.4% growth in the third.

GSK also lost ground ground after a Delaware judge rejected a request by the pharma giant and others to appeal a ruling allowing more than 70,000 lawsuits claiming that the heartburn drug Zantac had caused cancer to go ahead.

Beazley, Hiscox and Lancashire Holdings all fell amid worries about the impact of Hurricane Beryl.

On the upside, National Grid rose after JPMorgan Cazenove added the stock its 'analyst focus list'. It said the company is well positioned to benefit from value-accretive networks growth at an attractive valuation, and with questions around the balance sheet answered after a £7bn equity raise.

Outside the FTSE 350, Shoe Zone tumbled as it warned on profits, hit by rising shipping costs and bad weather.

Market Movers

FTSE 100 (UKX) 8,145.47 -0.26% FTSE 250 (MCX) 20,193.12 -0.14% techMARK (TASX) 4,683.22 -0.36%

FTSE 100 - Risers

BP (BP.) 488.75p 2.14% Persimmon (PSN) 1,391.00p 1.38% National Grid (NG.) 896.80p 1.29% International Consolidated Airlines Group SA (CDI) (IAG) 166.00p 1.28% 3i Group (III) 3,022.00p 1.21% Shell (SHEL) 2,885.50p 0.98% NATWEST GROUP (NWG) 317.20p 0.70% Taylor Wimpey (TW.) 144.70p 0.63% Darktrace (DARK) 580.20p 0.59% Barratt Developments (BDEV) 480.20p 0.50%

FTSE 100 - Fallers

Beazley (BEZ) 651.50p -5.10% BT Group (BT.A) 138.40p -2.05% Anglo American (AAL) 2,383.00p -2.03% CRH (CDI) (CRH) 5,656.00p -1.98% Smurfit Kappa Group (CDI) (SKG) 3,476.00p -1.86% Frasers Group (FRAS) 859.50p -1.83% Marks & Spencer Group (MKS) 283.80p -1.60% Burberry Group (BRBY) 849.00p -1.58% Compass Group (CPG) 2,140.00p -1.52% Mondi (MNDI) 1,504.00p -1.47%

FTSE 250 - Risers

Foresight Group Holdings Limited NPV (FSG) 498.00p 4.18% Tritax Eurobox (GBP) (EBOX) 65.30p 3.32% PZ Cussons (PZC) 103.20p 2.38% Ascential (ASCL) 351.60p 1.91% Bridgepoint Group (Reg S) (BPT) 218.60p 1.77% OSB Group (OSB) 439.00p 1.76% PureTech Health (PRTC) 185.60p 1.64% Ocado Group (OCDO) 292.30p 1.46% The Renewables Infrastructure Group Limited (TRIG) 96.30p 1.37% Vietnam Enterprise Investments (DI) (VEIL) 595.00p 1.36%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 125.20p -3.25% Auction Technology Group (ATG) 463.50p -2.73% Trainline (TRN) 312.40p -2.56% Currys (CURY) 72.65p -2.55% Hiscox Limited (DI) (HSX) 1,109.00p -2.20% Lancashire Holdings Limited (LRE) 588.00p -2.16% RHI Magnesita N.V. (DI) (RHIM) 3,395.00p -2.16% Moonpig Group (MOON) 182.40p -2.15% Jupiter Fund Management (JUP) 76.40p -1.93% Morgan Advanced Materials (MGAM) 306.00p -1.92%