Sainsbury's sales rise over Christmas, Persimmon beats guidance on home completions

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The FTSE 100 was expected to open 28 points lower on Wednesday, having closed down 0.13% on Tuesday at 7,683.96.

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Strong volume growth helped lift Christmas grocery sales at UK supermarket chain Sainsbury’s by 8.6%, offsetting the impact of inflation, as the company held full-year profit guidance. It expects underlying profit before tax in 2023/24 of between £670m - 700 million, with a strong grocery performance offsetting weaker general merchandise and financial services contributions. The company on Wednesday also expects to generate retail free cash flow in 2023/24 of at least £600m.

Persimmon was able to beat guidance with new home completions in 2023 after a decent fourth quarter, and said it has entered 2024 in a strong position with private forward sales ahead of last year. New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November. The current forward sales position stood at £1.06bn at the end of December, up 2% on 2022, with private forward sales rising 4%.

GSK has received approval in China for Nucala, or mepolizumab, as an additional maintenance treatment for severe eosinophilic asthma in adults and those aged 12 and older, it announced on Tuesday, making it the first anti-Interleukin-5-targeting treatment for the condition in China. It said the approval was based on positive data from a phase three trial in Chinese patients, demonstrating significant reductions in asthma exacerbations with mepolizumab compared to placebo, and marked the second approved indication for mepolizumab in the country after its approval for eosinophilic granulomatosis with polyangiitis (EGPA) in 2021.

Newspaper round-up

MPs have called in bosses from Fujitsu to answer questions in parliament about the company’s role in the Post Office scandal. The Commons business and trade select committee has asked the company to take part in an evidence session in a week’s time after an ITV drama helped put the miscarriage of justice back in the spotlight. – Guardian

The baby milk seller Danone has agreed to cut the wholesale price of its Aptamil infant powdered formula by 7% from Monday after the UK’s competition watchdog launched an investigation into high inflation in the market. The French company, which also owns the Cow & Gate brand, accounts for 71% of the baby formula market in the UK, where manufacturers have been found by the Competition and Markets Authority (CMA) to have raised prices by 25% in two years. – Guardian

Former chancellor George Osborne’s family wallpaper and fabric business has blamed inflation and soaring interest rates for a 98pc collapse in its pre-tax profits. Osborne & Little, a wallpaper and fabric business co-founded by the former chancellor’s father, saw its pre-tax profits slump to £30,000 in the year to March 31 2023, down from £1.5m the year before. – Telegraph

The Abu Dhabi investor bidding to take over the Telegraph broke promises of editorial independence at the Arabic business channel that it launched in partnership with CNN, it has been claimed. International Media Investments (IMI) is seeking to take control of the Telegraph titles in a bid fronted by Jeff Zucker, the former president of CNN, and has promised to maintain editorial freedoms to secure clearance from the UK government. – The Times

Michael O’Leary, chief executive of Ryanair, has warned that the airline’s profits will be hit and passenger fares will rise amid manufacturing woes at Boeing and Airbus. Both manufacturers are struggling to meet demand amid a worldwide shortage of planes. Boeing faces a further problem after a part fell off one of its 737-9 Max aircraft during an Alaska Airlines flight last week, while United Airlines discovered loose bolts on its 737-9 Max aircraft during subsequent inspections. – The Times

US close

US stocks finished mostly lower on Tuesday with the Dow falling for the first time in four sessions as investors took profits ahead of a crucial inflation report and the start of earnings season later in the week.

The Dow declined 0.4% but remains close to its record high, while the S&P 500 finished 0.2% lower, pulling back after its biggest one-day gain in two months. The Nasdaq, however, inched 0.1% higher.

The National Federation of Independent Business' small business optimism index hit 91.9 in December, its highest reading in five months, compared to 90.6 in November and beating consensus expectations for a reading of 90.7.

However, 23% of small business owners said inflation was still their single most important problem in operating their business, up one point from the prior month.

In other economic news, the US trade deficit unexpectedly fell by 2% to $63.2bn in November as imports slid, with the economy on track to register its smallest annual deficit in 2023 for three years.