UK stocks largely unchanged at midday on Tuesday attentions increasingly turns to budget hype, as investors await the appearance of the famous red briefcase tomorrow.
Britain could be on the cusp of “an exciting recovery”, according to the CBI, which has called for George Osborne to back businesses and support exports.
“This Budget really is make or break,” said John Cridland, CBI director-general. “One of the biggest challenges facing businesses is rising energy costs.
“We desperately need investment in energy, and British businesses are operating with one arm tied behind their backs.”
On the London Stock Exchange, the FTSE 100 was practically unchanged, trading just 2 points higher at 6,568.
This came as Sainsbury’s shook off the day’s earlier jitters and despite flagging its first quarter without sales growth for nine years the supermarket share was trading in positive territory.
As surmised by Toby Morris, CMC Markets senior sales trader, “it had to happen sometime”.
In a note, Morris said: “Having clearly outperformed its sector for the last 12 months, a 3.1% fall in sales for the 10 weeks to March 15 represents the kind of form that many had warned of from the turn of the year.”
After opening Tuesday’s trading on the back foot, down 2%, Sainsbury’s was up around 1% by midday.
Elsewhere, the day’s major faller also came from the retail sector, as online clothes merchant ASOS (LON:ASOS) slumped after warning margins will be squeezed by bigger-than-expected capital investments into warehousing capacity.
It expects to invest £68mln, rather than £55mln, in expanding its sales capacity (to £2.5bn versus £1bn currently). Consequently, margins are expected to reduce to around 6.5%.
At the same though ASOS said it expects to achieve £1bn of sales in the 2013/14 financial year, after a strong performance in the six months to February 28.
The trouble for the share is that it has long been a favourite in the market, and as a result its premium valuation left little room for manoeuvre.
Having shed as much as 20% off the share price in opening deals, ASOS share at lunchtime changed hands at £55.05 each – down 821p or 13% per share.
Whilst the rationale is not too clear – ASOS’s need for a bigger warehouse is quite a company specific issue – the likes of Next (LON:NXT) and newly listed BooHoo (LON:BOO) were also dealt a blow as ASOS shares tumbled.
BooHoo fell back 10%, whilst Next shares gave up around 2%.
In the natural resources sector, Antofagasta (LON:ANTO) made an early charge, up 4% to 881p even though the copper giant reported an 11.4% slide in annual revenues (US$5.97bn) and a 30% fall in underlying earnings (EBITDA).
It follows a decline in copper prices and higher costs. The final dividend however beat estimates at 86.1 cents per share, which works out at a payout ratio of 142% of earnings.
Later, however, the miner had rejoined its peers and was lit up red on stock market screens.
Trading at 839p Anto shares were down 1% at midday. Precious metal miners Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) were falling further, down 4.3% and 1.8% respectively.
In the small-cap universe, Stellar Diamonds (LON:STEL) sparkled 11% higher at 2.1p. The group, which has now seen its share price leap 100% in 2014, said it continued to recover high grades and ‘exceptional’ quality stones from its Tongo kimberlite dyke project in Sierra Leone.
So far the group has recovered 551.6 carats from its bulk sampling programme at an average grade of 126.3 carats per hundred tonnes, which is higher than the estimated grade 120 carats per hundred tonnes.
Also making gains was StratMin Global Resources (LON:STGR), up 3.2% to 8.9p, after it revealed an immediate uplift in the carbon content of graphite produced following the installation of a scrubber at its Loharano project in Madagascar.
The most recent trial production batch averaged a carbon content of 90%, with some samples as high as 92% - a significant increase on the percentages achieved before the scrubber was installed (around 78%) and will mean a higher price per tonne for StratMin.
Summit Corporation (LON:SUMM) shares were also marginally up at 9.05p after the drug developer was given the go-ahead by American regulators to begin its phase-two, proof-of-concept study on a new-generation antibiotic for C.difficile infection.
The Food & Drug Administration clearance paves the way for trials to start later this half and triggers a £1.9mln milestone payment from the medical charity, the Wellcome Trust.
Tuesday’s trading movers on AIM included video games programmer Frontier Developments (LON:FDEV) and Gulf Keystone Petroleum (LON:GKP), which rose 22% and 15% respectively, whilst gem stone miner Richland Resources (LON:RLD) fell 20%.