UK stock markets responds to new record highs for US shares overnight as trade tensions loosen between the US and China ease off ahead of the 4 July holiday in the States.

The S&P 500 finished the session up 0.3% at 2,973.01 while the technology heavy Nasdaq Composite closed 0.2% up at 8,109.09.

That mood leaks across the pond to UK stocks with the benchmark UK index FTSE 100 rallying around 27 points higher to a 2019 peak of 7,591.91, its highest since before the hefty sell-off at the start of the third quarter last year.

The mid cap FTSE 250, often considered to be more representative of the UK economy, continued its recent strong run, adding 0.3% to 19,714 having added around 900 points over the past month.

It’s a busy day for corporate news, given the time of year, with supermarket chain Sainsbury (SBRY) under the cash after reporting that like-for-like sales had fallen again in the first quarter.

Like-for-like sales slipped by 1.6% in the 16 weeks to 29 June, with clothing sales particularly under pressure, 4.5%.

Core grocery sales declined 0.5% and investors cannot shake the feeling that Sainsbury remains trapped in a ‘murky’ middle-market, as one commentator put it, wedged between discounters Lidl and Aldi  at one end and the higher end of the market, such as Waitrose and Marks & Spencer (MKS).

But investors seem to have been expecting worse, which may explain the fairly benign share price reaction on Wednesday. Sainsbury stock slips just 0.5% to 198.45p, recovering from earlier lows.

US RETHINK FOR PURPLEBRICKS

Online estate agent Purplebricks (PURP:AIM) saw operating losses soar to £52.3m for the year to 30 April, versus a £27.8m deficit the year before.

Yet shares in the one-time online estate agency star jumped nearly 4% to 96.5p after the company confirmed plans to pull out of the US and Australia.

Sportswear retailer JD Sports Fashion (JD.) said it remained on track to deliver annual headline pre-tax profit at least equal to current consensus market expectations amid ongoing like-for-like sales growth.

Forecasts for pre-tax profit are currently sat at £405.5m, according to Reuters consensus.

Investors like the news, sending the share price more than 3% higher to 622p.

FTSE 250 distribution business Electrocomponents (ECM) reported a 4% rise in like-for-like revenue growth for the first quarter, though said it expected first half margins to take hit from an expansion in inventory, but stabilise as the year progresses.

Shares in the group slide 2% to 621.8p

Outsourcing firm Serco (SRP) is facing a £19.2m plus £3.7m in investigation costs fine after its UK subsidiary struck a deal in principle with the UK Serious Fraud Office.

The proposed deferred prosecution agreement involving subsidiary Serco Geografix was subject to a final judicial approval, which would be sought in court by the parties on 4 July.

Serco shares are largely flat at 144.6p.

SMALLER COMPANY NEWS

London-focused housebuilder Telford Homes (TEF:AIM) has agreed a buyout from commercial property firm CBRE.

Pitched at 350p per share, the deal values Telford at £267.4m and has been recommended by the Telford board. This understandably sparks a jump in Telford’s share price on Wednesday, shooting 12% higher to 352.5p.

That suggest that the market believes the news could draw out rival buyers for Telford which could push the takeover premium far higher. Investors will be particularly keen on that outcome given that Telford’s share price has traded as high as 430p as recently as September.

Cut price books and gift shop chain TheWorks.co.uk (WRKS) has seen its revenues grow by 13% during the past year, compared with the previous 12 months. But pre-tax profit declined 10% to £2.3m as expansion costs weighed on the business.

The chain opened 50 new stores in the period, taking total store estate to 497.

TheWorks joined the stock market a year ago at 160p but has struggled to win investor support given the UK high street bloodbath. The shares are now changing hands for 61.5p, down another 2% today.

Topps Tiles (TPT) said like-for-like sales had risen 3.8% in the third quarter of its financial year. Topps shares stay flat at 67p.

Remote meetings company LoopUp (LOOP:AIM) has taken a massive share price bath today after warning  that it will miss profit expectations.

Shares in the company have tanked almost 50% to 120p as slowing business growth and capped confidence see demand slump just as the company pushes ahead with  expansion.

The company said it continued to see ‘strong’ demand for its products, but warned that it now expected revenue and earnings before interest, tax, depreciation and amortisation for the full year to be approximately 7% and 20%, respectively, below market consensus.

Forecasts for the year to 31 December 2019 had been pitched at £49.5m and £9m respectively.

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Issue Date: 03 Jul 2019