This week offered a timely insight into UK consumer confidence after Retailers and Housebuilders updated us on  recent performance. Whilst inflation continues to outpace wages, consumers clearly remain focused on value. This resulted in mixed messages from management, UK Index winners and losers, and some very surprising share price moves.

In Retail, the supermarkets started things well on Tuesday, taking the baton from Next last week (it beat forecast and upped guidance), extending a December sector recovery rally. This after Morrisons’ Christmas trading update easily beat City expectations, giving the grocery sector a fillip (MRW +4.8%, SBRY +3.8%, TSCO +1.3%), although Kantar grocery data quickly reminded us how the German discounters (Aldi, Lidl) continue to perform even better, stealing market share thanks to a cost conscious consumer, thus pulling incumbents’ shares prices from their best levels.

Sainsburys may have only marginally beaten expectations on Wednesday but it was at least in a position to increase full year profits guidance. And with outlook always king, this helped its shares close 3.1% to the good and hold a major breakout. Unlike peer Morrison which has already begun to give up its gains. Thursday saw Tesco crowned sector ugly duckling, missing expectations (too optimistic?) and its shares down 4.5%. Similarly, Marks & Spencer rounded off a volatile weak for grocers, reporting consistently weak growth, and its shares finishing 7% offside.  Grocers look set to close the week mixed with Tesco -2.5%, MRW +1.2% and Sainsbury out on top with gains of 4.6%.

Key takeaways are that food growth fared better than general merchandise and that the importance of online continues to rise. This was echoed by the fashion sector where Ted Baker, Boohoo, Superdry and Joules all posted 10-20% revenues growth, boosted by on-line, although differences in outlook/profitability meant TED shares rose 9.9%, JOUL jumped 5.3%, but SDRY fell 9.3% and BOO dropped 7.6%.

As for the much loved Housebuilders, results in themselves were OK. The problem was disappointing Halifax house price data on Monday at odds Nationwide last Thursday. And with the sector having rallied around 10% from Nov/Dec lows, it was all about the updates from management justifying further upside. Unfortunately there wasn’t quite enough for investors to get their teeth into, so shares in the likes of Berkeley Group, Barratt Developments, Taylor Wimpey, Persimmon and Bovis Homes have fallen foul of profit-taking and losses of between 2% and 6.5% this week.

Whether this offers a buying opportunity for the Housebuilders remains to be seen; several have already found long-term support. What can’t be argued is that strong demand for new homes remains supported by ever cheap financing, government initiatives and an obvious shortage of national supply. That said, this matters not if monthly house price data says that house prices are falling.

All of the above highlights the attractive share price moves on offer to both long term investors and the short term traders when companies publish trading updates and results. Our research and trading service is designed to prepare you for these, whether you have a position or are considering opening one, providing you with consensus expectations and the key points to look for.

We’ll send you broker previews as soon as we get them, so you know what the City is thinking. We’ll pass on quick reaction comments from 7am as soon as the update/results have been published. We’ll let you know opening indications for the shares from 7.50am, so you know how they might react and you can decide what you want to do.

We can be with you every step of the way. But only if you’ll allow us the privilege. There are plenty more companies left to report, including the Banks and Miners, and thus attractive share price moves to profit from.  To whet your appetite, some of the big names reporting next week include Rio Tinto, Burberry, Goldman Sachs, Citigroup and IBM.

For a fuller list contact us. What might the shares do? You’ll probably need a preview. If you’d like both, drop us a line.

Have a great weekend.

Mike van Dulken, Head of Research, 12 Jan 2018