Must read: oil price, Apple, AB Foods, Unilever, UK retail sales

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

After closing in the red on Monday, the FTSE 100 is trading slightly lower, dropping below 7,600. Markets await the latest UK construction PMI figures for May at 930am BST. 

The CBI begins its extraordinary meeting at midday where proposals will be put forward for a refocused CBI as it attempts to move forward from recent events. 

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The Reserve Bank of Australia (RBA) unexpectedly raised rates again by 25 basis points to 4.1% after carrying out the same increase last month. The Aussie dollar is rallying against the greenback by over 0.8%. 

Oil prices are under pressure, reversing some of yesterday’s gains as the glow from Saudi’s supply cut fades and the reality of the sluggish demand backdrop sets in.

Apple Inc (NASDAQ:AAPL) shares hit an all-time high ahead of the unveiling of its $3,499 ‘mixed reality’ headset, although shares fell back afterwards. Shares in the tech giant are up by over 45% so far this year, thanks to the rebound in technology after last year’s tech wreck.

UK RETAIL SALES 

The British Retail Consortium’s measure of annual retail sales grew by 3.9% in May, falling from 5.2% in April to a seven-month low. However, the figure is still sharply higher than the 1.1% drop logged in May last year. 

The retail sales figure remains supported by inflation, with higher prices flattering the reading. This masks the fact that the volume of goods purchased is under pressure, with consumers forced to spend more pounds to acquire fewer items. Food price inflation remains particularly elevated, and given the essential nature of this category, individuals and households are unable to make significant cutbacks in this area.

The cost-of-living crisis, rising mortgage rates, food inflation and falling real wages are squeezing household budgets and constraining spending in shops and online. The hope is that inflation will continue to fall this year, which would alleviate some of the pressures on the consumer and allow the Bank of England to put the brakes on its cycle of monetary policy tightening.

AB FOODS 

Associated British Foods (LSE:ABF) has announced plans to acquire National Milk Records, a dairy technology business for £48 million. It has proposed a deal for 215p in cash per NMR share. AB Foods said NMR’s business ‘is well aligned with AB Agri’s objective of supporting customers across the dairy industry, helping to drive efficiency and increase productivity.’ 

Aside from Primark, AB Foods also has a range of food and ingredients businesses. It is one of the largest marketers of co-products for dairy farmers. NMR’s cow productivity technology will complement AB Agri’s dairy business. 

Shares in AB Foods are up by almost 13% so far this year versus the FTSE 100 and FTSE 250 which are both roughly flat as cost-conscious consumers trade down to cheaper alternatives like Primark.

UNILEVER 

Unilever (LSE:ULVR) has reportedly hired executive search firm Spencer Stuart to help with the appointment of a new chair to replace Nils Andersen. According to Bloomberg, the consumer goods giant is revamping its leadership team ‘after a series of missteps in recent years.’ Hein Schumacher will become the company’s new CEO in July, taking over from Alan Jope and CFO Graeme Pitkethly is retiring in 2024. Activist investor Nelson Peltz is understood to have been instrumental in terms of driving the C-suite shake-up. 

Nils Anderson has been chairman since November 2019, with shares down under his tenure, underperforming the FTSE 100. A new leadership team could help offset recent criticism of profiteering and put its failed acquisition of GSK’s consumer healthcare division to the past.