FTSE 100 analysis: Tesco share price rises as it picks new chairman

FTSE 100 falls after poor first half

The FTSE 100 is down 0.2% this morning.

The blue-chip index booked a mild 0.3% loss in the first half of 2023, having underperformed versus indices over in Europe, the US and Asia.

We have a wave of manufacturing PMI data covering June out of Spain, Italy, France, Germany and the wider euro area this morning. European Central Bank member and the president of Germany’s Bundesbank Joachim Nagel is making a speech at 1300 BST.

UK manufacturing PMIs will come out at 0930 BST and US figures will follow this afternoon alongside manufacturing employment data.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, has this morning tested the falling trendline that can be traced back over two months before facing some resistance, suggesting this is now the main trend to watch.

If the trendline proves too difficult to break then we could see the index drift back toward the 7,454 floor that has held firm over the past three months. Any break below here would risk the index falling back toward the 2023-lows we saw back in March.

On the upside, a sustained break above the trendline could open the door to a return toward 7,650.

Top UK stock news

Tesco is up 0.7% in early trade after choosing Gerry Murphy, the chairman of Burberry and Tate & Lyle, to take on its most senior boardroom position of non-executive chair to replace John Allan, who recently left following several personal misconduct allegations. Murphy will stand down from ingredients maker Tate & Lyle at the start of September as a result, prompting a search for his successor.

Rio Tinto’s iron ore shipments are likely to disappoint in the second quarter, according to analysts at Citigroup. This will be partly down to the derailment of one of its trains in Australia, but analysts also said that shipping data shows Rio Tinto’s shipments were ‘weaker’ prior to the incident and facing a high run-rate during the previous quarter. Analysts also said production costs are likely to come in at the upper end of its target range. The miner reports production figures on July 19. The miner is up 1.3% this morning.

AstraZeneca is down 3.6%. The pharmaceutical giant said the first Phase III trial results from its antibody drug named datopotamab deruxtecan showed it provided a ‘statistically significant improvement’ in progression-free survival compared to the current chemotherapy standard named docetaxel in patients with advanced or metastatic non-small cell lung cancer that have already been treated with at least one therapy. ‘Thesefirst Phase III trial results from the datopotamab deruxtecan clinical programme provide compelling evidence for the potential role this TROP2-directed antibody drug conjugate can play in treating patients with lung cancer,’ said the executive vice president of the company’s oncology R&D, Susan Galbraith.

Anglo American’s diamond unit De Beers has signed an agreement in principle with the government of Botswana for a new 10-year sales agreement covering the rough diamonds coming out of the Debswana project, while the mining licenses have been extended for another 25 years. The project is made up of four mines that are owned 50:50 between De Beers and the government. Anglo American is up 1.8% today.

ME Group is down 1% after it said its Japanese subsidiary has signed a binding agreement to buy an automated photo booth business that is currently operated by FUJIFILM Corp. The deal is worth around £5.5 million but could be less. ME Group said it hopes to fund the deal using a new debt facility in Japan on ‘commercially advantageous terms’, or existing cash if this is unavailable. The deal should be completed by the end of September. ‘We are delighted to announce the significant expansion of our operations in Japan from our current installed estate of approximately 10,500 photobooths in the region today. The transaction fully aligns with our strategy of further consolidating our leading market position in our core markets, as well as making selective bolt-on acquisitions,’ said CEO Serge Crasnianski.

Kainos Group is trading marginally higher after announcing it has acquired RapidIT-Cloudbera, the maker of a Workday-focused automated testing product named Genie that can ‘rapidly auto-generate test cases’ and allow customers to swiftly launch their automated testing efforts. Genie is currently used by over 100 organisations to streamline their testing abilities and will be combined with the company’s own automated testing product named Smart Test. Kainos Group is currently aiming to grow annual recurring revenue from its Smart products suite to £100 million by 2026 from just £49 million in the last financial year. The terms of the deal were not disclosed.

Aston Martin is up 0.1% after it said 3.68 million shares have been issued after warrants that were dished out in late 2020 were exercised. They will be admitted to trading when markets open tomorrow and leave Aston Martin with 731.76 million shares in issue.

John Wood Group has won a two-year extension to a contract from Brunei Shell Petroleum worth some $250 million. The extension is in relation to work on an offshore energy project to help maximise production and efficiency. The oilfield services provider is trading marginally lower in early trade.

Spirent Communications is up 0.6% after announcing it will today launch the second and final tranche of £28 million of its current £56 million share buyback programme that was previously announced on June 23. The final tranche will be completed no later than November 3.

Capita is up 1.6% after extending the maturity date of its revolving credit facility that was due to expire at the end of 2024 to the end of 2026. The facility currently provides £284 million of funding but this will decline to £250 million at the start of 2025.

Cruise line operator Carnival has been upgraded to Buy by Jefferies, which said it still has room to climb higher despite its stellar run in 2023 as it set the highest target price on its US-listed shares among all brokers at $25. ‘Despite the strong year-to-date performance, we believe the journey from a good trade to long-term investment case remains ahead,’ said analyst David Katz. Carnival shares in London are up 1.8% at 1,324.33p.

Broker Goodbody has initiated coverage on WH Smith with a Hold recommendation and a price target of 1,640p. The retailer is down 0.5% at 1,540p this morning.