UK stocks opened lower after Iranian forces fired ballistic missiles at two US air bases in neighbouring Iraq, increasing the threat of direct conflict. The FTSE 100 index of leading stocks dropped 36 points or 0.5% to 7,538 while the FTSE 250 mid-cap index also lost 0.5% to 21,720.
Once again the only sectors in the black were Mobile Telecoms, Oil Producers, Oil Services and Tobacco. The worst-performing sectors were Electrical & Electronic Goods, Industrial Engineering, Personal Goods and Technology Hardware.
Brent crude prices stayed close to $70 as investors fretted over the potential for an escalation of hostilities in the region while news of the Iranian rocket attack initially sent gold prices above $1,600/oz, their highest level in seven years.
After an under-whelming Christmas trading update yesterday from Wm Morrison (MRW), today it was the turn of the UK’s second-largest supermarket firm Sainsbury’s (SBRY) to update the market.
While grocery sales were slightly ahead of market estimates, up 0.4% on a like-for-like basis over the 15 weeks to 4 January, sales of general merchandise were disappointing down 3.9% like-for-like due to a mixed performance at Argos.
That left group like-for-like sales excluding fuel down 0.7% for the period, better than Morrison but below market expectations. Sainsbury shares traded sideways at 231p.
Vegan sausage roll purveyor Greggs (GRG) pleased the market with its Christmas trading update however. Total sales were up 13.5% while pre-tax profits for the full year are now seen ‘slightly higher’ than market estimates of £112m after what chief executive Roger Whiteside called ‘a phenomenal year’.
Whiteside was mindful of the high bar the firm has set itself for this year but remained upbeat about its prospects. ‘Looking to the year ahead, we face strong sales comparatives and cost inflation headwinds present a challenge.’
However, with strong momentum in the business we see further growth opportunities across a number of channels as we invest in new ways to make Greggs more accessible and convenient for customers.’
Greggs shares dipped 1.2% to £23.74 although they had gained nearly 5% yesterday in anticipation of a positive update.
In one of the UK’s first M&A deals of the year, mining giant Anglo American (AAL) proposed to pay £385m for potash producer Sirius Minerals (SXX). The approach values Sirius shares at 5.5p each, a premium of 34% over Monday’s closing price and 62% over the weighted average price of the last three months.
The offer comes two months after Sirius said it was re-assessing its options over its polyhalite project in North Yorkshire. Sirius shares jumped 32% to 5.4p while Anglo American shares slid 2.1% to £21.15.
There was positive news from foreign-exchange specialist Alpha FX (AFX) which reported strong trading for the year to 31 December said it saw revenues and earnings slightly ahead of expectations despite a high level of investment throughout the year. Shares added 4.5% to a new all-time high of £12.70.
Shares in biotech firm Avacta Group (AVCT:AIM) jumped 7.8% to 18.8p on the news that it had established a joint venture with Korea's Daewoong Pharma for the development of next-generation cell and gene therapies.
