UK stocks extended losses at midday Tuesday following heavy overnight falls in the US and Asia as inflation concerns pummeled technology stocks.
US technology stocks looked set for a further sell-off with Nasdaq futures trading down over 1% prior to the opening. All eyes will be on US consumer price inflation data due to be reported tomorrow afternoon.
At 12pm the FTSE index of leading shares was down 2.2% at 6,966 points.
Contributing to the market weakness, shares in NatWest Group (NWG) dropped 2.2% to 192.6p after the UK government sold a 5% chunk of the shares at 190p, cutting its stake in the taxpayer-backed lender to below 55%.
The sale of 580 million shares raised £1.1 billion for the Treasury and is the first sale direct to outside investors since 2018. In March the bank repurchased a 4.86% stake at 190.5p with the intention of cancelling most of the shares.
Meanwhile, supermarket group Morrison (MRW) was one of the few gainers after it reported solid sales growth in its first quarter to 9 May with like-for-like group sales excluding fuel up 2.7% on the same period last year and up 8.7% on the same period in 2019.
The main drivers were online sales, which climbed 113%, and wholesale revenues which were 21% higher on a like-for-like basis thanks to increased distribution to McColl’s stores.
The company kept its full year pre-tax profit guidance of at least £431 million and said it expected ‘meaningful growth’ in earnings for the 2022-23 financial year. The shares added 1% to 185p.
The company announced late on Monday (10 May) that Japanese investor SoftBank had been granted an option to put $1.6 billion into its Ingenuity business on top of a capital raise of around $1 billion.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped from £0.7 million to £5.7 million and earnings per share were 3.33p compared with a prior-year loss of 2p.
The retailer also flagged a 54% rise in sales in the first quarter to April helped in no small measure by the re-opening of its stores with retail revenues up 75%. The shares added 1.3% to a post-pandemic high of 86.1p.
Continuing the trend of recent days, more small cap firms raised their full year outlook after better than expected trading since the start of the year.
Thanks to strong sales on its digital platform, combined with a stronger than expected contribution from its stores since re-opening and an ‘encouraging’ performance at the recently-acquired Garden Trading unit, sales and pre-tax profits are expected to top consensus forecasts of £187 million and £4.1 million respectively.
Despite only a third of its bars being open, shorter trading hours, and outdoor covers at those venues only making up 15% of their capacity, total sales were down just over 50% on the same period, reflecting strong pent-up demand.
Given the improvement in trading and continued tight cost control, the group now expects its results for the year to June to be ahead of management expectations. The shares surged 14.4% to 36.6p in response.