Interactive Investor

Must read: FTSE 100 leading the charge, UK BRC shop price inflation, Bunzl

The FTSE 100 is leading the charge across Europe after the bank holiday, writes Victoria Scholar.

29th August 2023 09:33

by Victoria Scholar from interactive investor

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GLOBAL MARKETS

European markets have opened in the green with the FTSE 100 leading the charge, reopening after the bank holiday on Monday. Bunzl (LSE:BNZL) is outperforming the UK blue-chip index after raising its full-year profit outlook.

Focus is on US jobs and inflation data out this week for clues into the resilience of the US economy as well as the Fed’s next move.

UK BRC SHOP PRICE INFLATION  

The British Retail Consortium’s annual shop price inflation hit 6.9% in August, down from 7.6% in July to touch the lowest level in 10 months.

Non-food inflation came in at 4.7% with toiletries and cosmetics price growth easing, partially offset by higher clothing and footwear inflation after summer sales ended. Food inflation cooled to 11.5% from 13.4% last month driven by meat, potatoes, and some cooking oils. Supermarkets have also been cutting prices in a bid to attract customers amid the weak macroeconomic backdrop and bad weather conditions, which have lowered consumers’ propensity to spend. However, increased alcohol duties from the government offset an even steeper drop. Plus, there are concerns about global supply with poor harvests across Europe and with Russia’s withdrawal from the Black Sea Grain Initiative, which could stand in the way of inflation’s continued path back down towards more normal levels.

BUNZL

Bunzl has upgraded its adjusted operating profit guidance for the full year, driven by a ‘meaningful increase in operating margin expectations.’ It expects adjusted operating profit to be moderately higher than in 2022 and forecasts group revenue to be slightly higher. The business distribution and outsourcing company has an active M&A pipeline with 12 acquisitions over the past year including two announced today which have helped to spearhead its bottom line. It has also benefited from improving inflation dynamics with moderating operating cost pressures such as a reduction in freight costs and wage growth in North America.

In another sign of confidence, analysts at Credit Suisse raised their price target on the stock on the back of today’s update.

Bunzl shares are enjoying a boost today, lifting the stock to the top of the FTSE 100. Today’s rally has helped to offset some of its recent slide from the April highs, landing the stock in modestly positive territory for the year.

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