Must read: top UK stocks, Federal Reserve minutes, China PMI, Greggs, B&M

There's plenty of new data and corporate updates for investors to analyse today. Our head of investment runs through the highlights.

GLOBAL MARKETS 

European markets have opened lower with the FTSE 100 nursing lighter losses thanks to gains in the retail sector. Next (LSE:NXT) is trading at the top of the UK index after reporting forecast-topping Christmas sales while B&M European Value Retail SA (LSE:BME) also issued an upbeat trading update.

JD Sports Fashion (LSE:JD.) and Primark’s parent company Associated British Foods (LSE:ABF) are rallying in Next’s slipstream. 

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US futures are pointing lower after the Federal Reserve’s meeting minutes suggested ‘more evidence’ is needed to confirm inflation is under control. Consequently, the US central bank is expected to continue raising interest rates, with hawkish policy a continued headwind for equities into 2023. Later today, investors will be paying attention to the US ADP employment report for clues into the strength of the labour market and as a precursor to the first US nonfarm payrolls report of the year this Friday.  

Stocks in Asia rallied overnight, with the Hang Seng up more than 1% thanks to an improvement in China’s Caixin services PMI reading which climbed to 48 in December versus a six-month low of 46.7 in November. However, it remains below the 50 boom-bust-divide as service sector activity remains subdued under the weight of its Covid restrictions.

GREGGS 

In its fourth quarter trading update, Greggs (LSE:GRG) reported an 18.2% rise in like-for-like quarterly sales. Full-year total sales rose by 23% to £1.513 million, beating analysts’ estimates. Across the year it opened 186 new shops with 39 closures. Greggs said it expects its full-year outcome to meet its previous expectations, but warned that ‘market conditions in 2023 will remain challenging’ and said it expects continued ‘material cost inflation in the year ahead’.

Greggs’ fourth quarter year-on-year sales were flattered by base effects from the Omicron variant that negatively impacted the final quarter of 2021. This December, revenue was positively impacted by strong sales of seasonal products such as mince pies and its Festive Bake. Greggs also managed to grow well in digital and achieve strong early evening sales after work when most lunch spots close. Greggs’ low price point product range chimes with the pressures of the cost-of-living crisis as households look for ways to cut costs to deal with rising supermarket, energy and fuel bills.

Shares in Greggs have rebounded by around a third over the last six months after a difficult period for the stock between January and September 2022, caught up in the broader equity market volatility and UK economic uncertainty.

B&M EUROPEAN VALUE RETAIL 

B&M announced plans to return cash to shareholders through a special dividend of 20p per share in February as it reported like-for-like revenue up 6.4% over the festive quarter. Group Q3 revenue rose by 12.3% to £1.57 million with B&M France outperforming with revenue up almost 25% year-on-year. B&M expects full-year core earnings of £560-580 million, above analysts’ expectations for £557 million. 

Although the overall UK retail sector looks set to slow further amid the macroeconomic challenges of a looming recession and double-digit inflation, B&M’s is well positioned to navigate the downturn as consumers turn to its cheaper product range as lower disposable incomes spur customers to hunt for a bargain. B&M has also succeeded in terms of stock discipline, reducing its inventory levels while the retailer’s flexible sourcing model and supply chains performed well during the quarter. 

Shares in B&M have regained strength over the last six months. Plus, shares are extending gains today with investors buying the stock on the back of its dividend, upbeat full-year outlook and defensive properties which should help to weather the macroeconomic storm.

RYANAIR 

Ryanair has raised its full-year profit guidance from 1-1.2 billion euros to 1.325-1.425 billion euros. Although it expects the fourth quarter to come in at a loss, it said it will report a strong third quarter. It comes after the airline reported December passenger traffic up by 21% to 11.5 million guests, operating over 65,500 flights across the month.