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What to Watch: Poundland profits slide, UK grocery sales and PMI leap

Tom Belger
Finance and policy reporter
Poundland's owner reported falling revenue. (PA)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world:

Poundland owner sees profits slide 16.3%

The owner of UK high street discounter Poundland has taken a hit from the pandemic, reporting a 16.3% slide in profits in the six months to the end of March.

The falling earnings at Pepco Group come in spite of the half-year results covering only a short period of trading affected by the pandemic, with Britain going into lockdown in late March.

The company, which includes the Pepco and Dealz brands elsewhere in Europe, saw its pre-tax profits drop to €89m (£80m) on revenues of €1.9bn (£1.72bn). Revenues were up 9.7% in the six months to 31 March, but they had been up 14.4% in the five months to the end of February.

Pepco said 99% of all stores were now open, but it expected revenue to remain “below historical norms” for the rest of the year, with customers “reticent about visiting busy locations.”

PMI data shows ‘vastly improved picture’ for UK economy

New purchasing managers’ index data from the UK’s manufacturing sector suggests that the country’s economy stabilised in June, even as a further decline in the services sector raised the prospect of an extended recovery.

The composite purchasing managers’ index (PMI) reading from IHS Markit’s closely watched survey came in at 47.6 in June, up from 30.0 in May and just 13.8 in April.

IHS Markit said that a 47.0 figure from the services sector and a 50.1 figure from the manufacturing sector pointed to a “vastly improved” picture for the economy, with survey respondents noting that the easing of coronavirus restrictions had a favourable impact on activity.

Grocery sales soar as Ocado market share hits new high

Online shopping sales have increased by 91% over the past month, according to new figures from research firm Kantar.

Traditional take-home grocery sales, meanwhile, climbed by 12.7% in the 12 weeks to 14 June.

A 42% surge in sales at Ocado (OCDO.L) pushed the online supermarket’s market share to its highest-ever level over the past 12 weeks. The delivery juggernaut, which has benefited from a shift towards online shopping during the coronavirus pandemic, now has a 1.7% share of the UK market.

Online shopping sales have increased by 91% over the past month, Kantar said.

Markets rise on vaccine hopes and easing trade tensions

European stocks rose as markets opened on Tuesday, as hopes grew that a potential coronavirus vaccine could be available more swiftly than expected.

Britain’s FTSE 100 (^FTSE) was trading 0.7% higher, Germany’s DAX (^GDAXI) jumped 1.4%, and France’s CAC 40 (^FCHI) was up 1.2% at around 8.30am in London.

The leading French pharmaceutical giant Sanofi (SNY, SAN.PA) announced on Tuesday that a potential vaccine could be signed off by regulators in the first half of next year, according to Reuters. It is working alongside UK drugmaker GlaxoSmithKline (GSK.L), which has said any vaccine would be available from the second half of next year if trials are successful.

Asian stocks also closed higher overnight on a slight easing of global trade fears. It came after US president Donald Trump stated that the US-China trade deal was “fully intact,” contradicting his trade adviser Peter Navarro’s claim the deal was “over.”

China’s Shanghai Composite index (000001.SS) closed 0.2% higher, Japan’s Nikkei (^N225) was up 0.5% overnight, and the Hong Kong Hang Seng Index (^HSI) rose 1.3%.

What to expect in the US

US stock futures were also pointing to a higher open. S&P 500 (ES=F) and Nasdaq (NQ=F) futures were trading around 0.4% higher, and Dow Jones (YM=F) futures were up 0.5% at around 3.25am eastern time.