Must read: FTSE 100, oil, Aldi, Entain

GLOBAL MARKETS

European markets have opened mixed, with the FTSE 100 underperforming the CAC and the DAX.

Entain (LSE:ENT) has slumped to the bottom of the UK index after warning about weaker online gaming revenues, dragging shares in Flutter Entertainment (LSE:FLTR) down with it. Miners like Rio Tinto Registered Shares (LSE:RIO), Antofagasta (LSE:ANTO) and Anglo American (LSE:AAL) are also in the red after a weaker session for the Hang Seng and Shanghai Composite overnight in China. 

• Learn more: SIPP Portfolio Ideas | How SIPPs Work | Transfer a SIPP

Oil prices are staging gains with hedge funds adding to their bullish bets, fuelled by the expectation of ongoing weakness in supplies from Saudi Arabia and Russia. Analysts at JPMorgan have warned of an energy super cycle that could push oil prices back above the psychological $100 a barrel resistance level. 

ALDI 

Aldi is upping its investment in the UK to £1.4 billion. It comes after the budget supermarket reported operating profit of £178.7 million in 2022 versus £60.2 million in 2021 on sales of £15.5 billion. 

Aldi and Lidl have been growing market share in the UK as customers continue to prioritise their low prices amid the cost-of-living crisis. Their increased presence in the UK has intensified supermarket price competition, keeping larger rivals like Tesco (LSE:TSCO) and Sainsbury (J) (LSE:SBRY) on their toes. Last year Aldi overtook Morrisons to enter the big four. 

Increasingly price sensitive customers have been shifting towards own label products over branded more expensive alternatives. Analysis from Which? last week showed that some staple foods cost up to 910% more than their budget equivalents, highlighting the extreme price differentials on supermarket shelves between very similar products.

ENTAIN 

Entain warned that it expects online gaming revenues to drop in the third quarter and the full year. Its annual growth forecast has dropped from low to mid-single digit to a low single digit percentage. But it maintained its full-year EBITDA guidance of £1 billion - £1.05 billion. 

The update has sent shares in Ladbrokes’ parent company sharply lower to a more than one-year low. Increased regulatory headwinds in the UK are weighing on its revenues. The gambling firm has also been grappling with weakness in Italy and Australia as well as weaker sports margins because of adverse sporting results. It said its online business has also performed softer than expected in the third quarter. 

Shares in Entain have sharply underperformed UK markets in 2023, shedding over a quarter of their value year-to-date. Despite this, most analysts still retain their positive recommendations on the stock with 20 buys versus one hold and zero sells.