UK stocks put in a solid opening in early trade on Wednesday after losses sustained over the previous sessions, with traders not initially put off by deflationary data from the Eurozone. Consumer prices on the continent fell 0.2% in December following a 0.3% increase a month earlier. Analysts had predicted a drop of 0.1%.
Brent crude - the European benchmark for oil - has slipped through the psychologically important $50 per barrel barrier for the first time in five-and-a-half years sparking further pain in the sector. But the decline exerts only a modest impact on sector share prices, led by the Cairn Energy (CNE), which slides 2.2% to 170.1p. Tullow Oil (TLW) is also off modestly at 394.7p.
However, Glasgow-based engineer Weir Group (WEIR), which derives a significant chunk of its revenues from the oil industry, is the top FTSE 100 faller down 1.1% at £17.52.
Overnight, the Dow Jones Industrial Average fell 0.7% to 17,372 while the Nasdaq-100 dropped 1.2% to 4,110.83 and the S&P 500 retreated 0.9% to 2,002.61. The FTSE 100 index is running roughly 34 pooints higher, or 0.5%, in early trade, at 6,402.
UK grocer Sainsbury (SBRY) loses early gains, the shares sliding 0.7% to 233p, despite posting better-than-expected sales in the Christmas run-in. Like-for-like third quarter retail sales still fall 1.7%, excluding fuel, although that's better than the 3.2% decline City analysts had expected. But the challenging outlook for the rest of year, thanks to food price deflation likely and still competition, leaves investors unwilling to back the shares. Rivals Tesco (TSCO), set to report tomorrow, and Morrisons (MRW), are marked up 3.16% to 184.45p and 3% to 178.9p respectively.
International online retailer Boohoo.com (BOO:AIM) puts frowns on faces, slumping 36.6% to 24.25p on a full-year profit warning. The pure play online fashion firm grew sales 25% for the four months to December, short of high expectations due to heavy UK promotions arising from warm autumn weather. Given slower top line growth, Boohoo's annual numbers will disappoint.
Elsewhere, Majestic Wine (MJW:AIM) cheapens 14.4% to 339.75p as a disappointing Christmas trading statement prompts downgrades. Though the wine warehouse chain delivered 1.1% like-for-like sales growth over 10 weeks to 5 January, an increasingly promotional market hit margins and is set to continue 'throughout much of 2015'.
Post offices retail software supplier Escher (ESCH:AIM) crashes 23% to 187.5p as a major contract moves to the right, prompting a sizeable profit warning. 'Overall Group revenues are expected to be down 15% year-on-year and adjusted EBITDA for the year ended 31 December 2014 will be materially below current market expectations,' the company spells out. That implies $21 million of revenue versus the $23.6 million forecast, and a large miss to the previous $4.6 million of EBITDA anticipated, which itself was slashed from $7.6 million as recently as 28 November.
Beowulf Mining (BEM:AIM) jumps 15.3% to 1.7p after concluding a cash-for-equity deal with financier Lanstead. Such 'equity swap' agreements have been out of favour with investors who feared lenders would loan the stock to third parties for short selling, so today's share price rise with Beowulf is probably its shareholders happy that Lanstead's deal has ended, although the latter remains its biggest investor with a 25.3% stake.
Cellular material technology specialist Zotefoams (ZTF) plunges 8.8% to 212.5p after the company revealed that it expects earnings to come in slightly below the bottom end of market expectations. Order delays in the fourth quarter and the impact of currencies are blamed.
White collar recruiter Robert Walters (RWA) reports net fee income, a key financial metric, increased 17% in the fourth quarter. It was driven by strong growth in the UK and emerging markets, where investments over the last five years are starting to bear fruit. Shares open almost 3% higher at 317p.
Keyword Studios (KWS:AIM), a provider of translation and test services to the gaming industry, is on the acquisition trail, buying Shawinigan, Canada-based Alchemic Dream and Brazilian outfit Reverb Localização. The deals total £1.1 million. Shares in Keywords open flat at 142p
Another on the acquisition trail is electronics distributor Acal (ACL). It rises 1.5% to 232p on a £10.1 million deal to buy Foss AS Fiberoptisk Systemsalg, based in Norway. The deal is immediately earnings enhancing and increases Acal’s presence in customised design and manufacturing of fibre optics.
Pub retailer and brewer Greene King (GNK) edges up 1.09% to 740.5p after Irish drinks maker C&C (CCR) confirms it has called off its pursuit of Spirit Pub (SPRT), paving the way for Greene King to complete its recommended takeover. Spirit adds 0.7% to 102.3p.
The market shrugs-off moves by Irish software provider First Derivatives (FDP:AIM) to expand its mainly financial data suite into the wider digital economy and big data space. Investors clearly want to see execution before attaching value, hence the shares remaining flat at £12.55. The stock has already rallied from 921p at the end of September.
Bacteria-focused therapeutics specialist 4D Pharma (DDDD:AIM) rises 2.3% to 445p on positive pre-clinical tests on its MicroRx platform to treat rheumatoid arthritis, allergic asthma and steroid resistant asthma.
Elsewhere in the civil engineering space, groundworks specialist Keller (KLR) nudges 10.5p higher to 886p on news that it has been awarded a major contract at Changi Airport in Singapore worth £28 million.