The theme of declining newsflow was reversed this morning thanks to interim figures from Sainsbury’s and some airline news, which has taken the attention away from the lacklustre volumes that have bedevilled this market. Figures from the middle-class supermarket of choice were well received by investors, despite a second consecutive quarterly fall in sales. When compared to the generally overcast outlook for the sector, it has not been such a bad performance, and it seems that Sainsbury’s lead over its competitors is holding up for now.
News of a sudden order cancellation knocked back Airbus and Rolls-Royce, and a second bolt from the blue came from Lufthansa, which issued a surprise downgrade to forecasts, knocking back UK-listed airlines too. Ex-dividend moves for Vodafone and Johnson Matthey also weighed on the index, although for now it seems to be holding above yesterday’s lows, suggesting the beginnings of a possible move back towards 6880.
Rangebound trading continues to prevail across the Atlantic, but we can expect the Lufthansa news to have some impact on US airlines as well, which will keep investors cautious for the time being. However there still aren’t many reasons to actually buy into the market, with the lack of economic news being an obvious culprit. As a result, it seems the existing holding pattern is likely to be repeated this afternoon.
Ahead of the open, we expect the Dow Jones to start 22 points lower at 16,923.