London open: FTSE in the red as Ocado slumps on results

London stocks fell in early trade on Tuesday following solid gains in the previous session, as investors sifted through a raft of corporate news, with Ocado under pressure after disappointing results.

At 0840 GMT, the FTSE 100 was down 0.4% at 7,902.36.

Oanda market analyst Craig Erlam said: "In reality, the bumper start yesterday was simply a process of unwinding the losses from late last week which further suggests investors are in no mood to be discouraged.

"While bond markets have pivoted quite considerably from pricing in peak interest rates in the near future and rate cuts later in the year to multiple more hikes, perhaps even a reversion to 50 basis points, and no cuts this year, the message doesn't appear to have gotten through to equity markets.

"That may well change if the February data continues to point to red-hot labour markets, stubborn inflation, and healthy household spending. But I expect that won't be the case and investors may well be banking on that too. We all want to see resilience in the economy but if that leads to much higher interest rates, which are already now very high, that resilience won't last long and hopes of a soft landing will quickly fade."

Investors were still digesting the ‘Windsor Framework’ deal on Brexit announced by Prime Minister Rishi Sunak on Monday.

Sunak said the agreement was a "historic" and "decisive breakthrough" that "delivers smooth-flowing trade within the whole of the United Kingdom, protects Northern Ireland's place in our union and safeguards sovereignty for the people of Northern Ireland".

In equity markets, online grocer and technology company Ocado slid after it posted wider losses as the cost-of-living crisis and return to normal shopping habits after the Covid pandemic hammered its joint venture with Marks & Spencer.

The group posted a pre-tax loss of £501m for the year to 27 November 2022, compared with a loss of £179m a year earlier and worse than analyst forecasts of a £399m loss. Core losses were £74m compared with a profit of £61m a year earlier. Retail losses were £4m, down from a £150m profit in 2021.

Ocado retail revenue declined by 3.8% to £2.2bn in what the firm called a "challenging market" as the benefits of the trend towards online shopping sparked by Covid pandemic lockdowns wound down and customers bought fewer items "exacerbated by the cost-of-living crisis".

Croda International was also in the red even as it posted a rise in full-year sales and profit and hailed a strong performance in Asia, Western Europe and Latin America, and growth across consumer care and life sciences.

Travis Perkins fell as the builders’ merchant reported a drop in annual profit due to a tougher housing market and restructuring costs, which offset a rise in sales.

On the upside, asset manager Abrdn gained despite saying it swung to a full-year loss, citing volatile markets and surging investments in what the company called "one of the hardest investing years in living memory".

Man Group surged as it reported a rise in full-year pre-tax profit and assets under management amid industry-beating net inflows.

Outsourcer Serco was also higher as it hiked its dividend and posted a jump in full-year profit and revenue despite a decline in Covid-related work.

Outside the FTSE 350, online electrical retailer AO World racked up strong gains after it upgraded its profit guidance for the second time this year - and the third since November - citing the benefits of its cost-savings drive.

Market Movers

FTSE 100 (UKX) 7,902.36 -0.41%
FTSE 250 (MCX) 19,824.61 -0.31%
techMARK (TASX) 4,613.68 -0.71%

FTSE 100 - Risers

St James's Place (STJ) 1,276.50p 3.19%
Centrica (CNA) 105.50p 1.15%
Shell (SHEL) 2,557.50p 0.83%
Abrdn (ABDN) 214.60p 0.56%
Unite Group (UTG) 990.00p 0.51%
BP (BP.) 559.90p 0.30%
M&G (MNG) 208.30p 0.19%
Melrose Industries (MRO) 151.40p 0.10%
NATWEST GROUP (NWG) 288.00p -0.03%
Pearson (PSON) 925.00p -0.04%

FTSE 100 - Fallers

Ocado Group (OCDO) 576.80p -7.68%
Croda International (CRDA) 6,680.00p -3.58%
Mondi (MNDI) 1,390.50p -1.87%
Intertek Group (ITRK) 4,293.00p -1.85%
Airtel Africa (AAF) 119.60p -1.64%
Experian (EXPN) 2,813.00p -1.47%
Rentokil Initial (RTO) 511.80p -1.46%
Halma (HLMA) 2,162.00p -1.41%
RS Group (RS1) 989.50p -1.35%
Bunzl (BNZL) 3,047.00p -1.33%

FTSE 250 - Risers

Man Group (EMG) 263.60p 7.90%
IP Group (IPO) 68.30p 3.64%
Serco Group (SRP) 154.40p 3.62%
Ferrexpo (FXPO) 150.50p 2.38%
Indivior (INDV) 1,561.00p 2.03%
Currys (CURY) 80.85p 1.38%
TUI AG Reg Shs (DI) (TUI) 1,613.00p 1.28%
Blackrock Throgmorton Trust (THRG) 631.00p 1.12%
PureTech Health (PRTC) 227.00p 1.11%
TP Icap Group (TCAP) 187.90p 1.02%

FTSE 250 - Fallers

Travis Perkins (TPK) 992.40p -5.12%
Allianz Technology Trust (ATT) 219.50p -2.66%
Renishaw (RSW) 3,882.00p -2.66%
RHI Magnesita N.V. (DI) (RHIM) 2,554.00p -2.37%
Marshalls (MSLH) 333.20p -2.17%
Dechra Pharmaceuticals (DPH) 2,766.00p -1.85%
Watches of Switzerland Group (WOSG) 828.00p -1.84%
ITV (ITV) 88.12p -1.78%
Bakkavor Group (BAKK) 110.20p -1.78%
Target Healthcare Reit Ltd (THRL) 77.50p -1.77%