UK stocks went into reverse on Wednesday as consumer price inflation more than doubled in April to 1.5% compared with a 0.7% rise in March.
Higher prices for clothing and footwear helped lift the CPI, along with rising petrol costs due to higher oil prices and higher household energy bills.
That overshadowed a generally positive day for company reports with several firms raising their full-year guidance on better than expected sales growth.
By 9am the FTSE 100 index was down 58 points or 0.8% to 6,976 points, demonstrating yet again its inability to put the 7,000 barrier definitively behind it and regain its pre-pandemic levels.
Miners were the major fallers as commodity prices dropped. Energy prices also fell, with Brent crude futures dipping 0.4% to $64.80, while on the currency markets sterling held its ground against the dollar at $1.418.
COMPANY NEWS
Continuing the theme of recent weeks, a raft of companies across various sectors reported stronger than expected trading year-to-date leading them to raise their outlooks.
FTSE 100 plumbing supplies firm Ferguson (FERG) brought forward its third quarter trading update after a better than expected three months to the start of May.
Based on current trading the firm expects to outperform its end markets again in the fourth quarter, therefore it raised its forecast for full-year group trading profits to between $2 billion and $2.1 billion.
The current analyst consensus for trading profits is $1.86 billion, with a top estimate of $1.9 billion. Shares climbed 4% to a new high of £96.48.
Homewares retailer Dunelm (DNLM) raised its forecast for full year pre-tax profits thanks to ‘very strong’ sales growth since its stores re-opened last month.
Citing sales which were ‘significantly ahead of the market’, the firm told investors to expect pre-tax earnings ‘in excess of £148 million’ compared with the current estimate range of £128 million to £134 million. Shares popped 7% to a post-pandemic high of £15.61.
Media firm Future (FUTR) raised its full year guidance for the second time this year after posting exceptionally strong first half results, with sales up 89% to a record £272.6 million and adjusted operating profits up 142% to a record £59.7 million.
The firm said the third quarter had started well and it now expected its full year results to be ‘materially ahead of expectations’. Shares jumped 10% to a new high of £26.38.
Industrial thread-maker Coats Group (COA) was another firm to raise its full year outlook, although more modestly than some, after it experienced positive trading in the first four months of this year.
With like-for-like sales up 26% on the same period last year, and up 1% on the same period in 2019, the firm said it anticipated full year trading would be ‘slightly ahead’ of its expectations. That was still enough to lift the shares 5% to 62p.
Peer-to-peer lending platform Funding Circle (FCH) joined the chorus of companies raising guidance after enjoying stronger than expected trading since the start of the year.
Chief executive Samir Desai raised the firm’s outlook for total income to no lower than £120 million and for adjusted operating profits to no less than £40 million, which he said were ‘well ahead of previous expectations’. Shares jumped 11% to 164.5p in response.
Finally, AIM-listed building materials company SigmaRoc (SRC:AIM) noted trading in the first four months of the year had been ahead of management expectations, with like-for-like sales up 12% in the first quarter and 20% in April.
Without formally raising guidance, the firm said ‘building on this positive start to the year, the outlook for the group remains favourable across all products and platforms’. Investors got the message clearly enough, lifting the shares 1.3% to 83.5p.
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