FTSE falls for third straight session on inflation fears

UK shares registered a third straight day of losses on Wednesday as worries over inflation continued to undermine a strong economic recovery and pressure risk assets.

Cryptocurrencies saw heavy selling after China clamped down on payment companies from using them. Bitcoin hit its lowest level since February, falling below $30,000.

Meanwhile gold firmed 1% to $1,885 an ounce, hitting a three-month high.

That overshadowed a generally positive day for company reports with several firms raising their full-year guidance on better than expected sales growth.

The FTSE 100 index ended the day 1.2% lower at 6,950 points.


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. The shares climbed 2.2% to £94.72.

Homewares retailer Dunelm (DNLM) raised its forecast for full year pre-tax profits thanks to ‘very strong’ sales growth since its stores reopened 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. The shares popped 7.1% to £15.63.

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’. The shares jumped 11.5% to £26.70.

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 5.9% to 62.5p.

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’. The shares jumped 7.7% to 159.8p in response.

AIM-quoted 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, lifting the shares 0.2% to 82.7p.


Issue Date: 19 May 2021

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