FTSE inches up despite Sainsbury’s glum update

BRITAIN’S top shares edged up higher yesterday, on a budget day that brought a mixed outlook for UK corporates.

J Sainsbury fell sharply after a downbeat trading update, while sector peers firmed after the budget, as did housebuilders which got a first-time property buyers boost, while North Sea-focused oil firms were hit by a tax rise.

The FTSE 100 closed up 33.17 points, or 0.6 per cent, at 5,795.88, having ended down 0.4 per cent on Tuesday.

Pre-budget, the spotlight fell on Sainsbury, the most traded stock across Europe at 421 per cent of its 30-day average, with the FTSE Eurofirst 300 trading only 84 per cent of its 30-day average.

The grocer topped the blue-chip fallers’ list, off 5.4 per cent, after it missed fourth-quarter sales forecasts, stoking fears of a downturn in consumer spending.

But money managers saw opportunities among UK consumer stocks, which have been poor performers in recent months.

Jeremy Thomas, chief investment officer UK equities at fund manager RCM, who oversees about £2bn, has been gradually adding new investments in selected companies such as Tesco, “which is now trading on a lower valuation than at any time in its history”.

Thomas said that while profit expectations for more cyclical retailers such as Next may continue to fall, “if their share prices decline much further, this will be a chance for long term investors to buy good franchises at terrific prices”.

Shares in Tesco firmed 0.3 per cent, while Next advanced 1.5 per cent ahead of its full-year results on Thursday, with traders optimistic about its online sales.