Market Report: Sugar looks likely to sour ABF success

Flogging cheap clothes has been keeping punters in Primark owner Associated British Foods happy, but City scribblers think the shares are no longer quite so sweet. The Primark to Twinings tea group could be facing bitter times at its European sugar business.

Analysts at Exane BNP Paribas think ABF could be hit by weak sugar prices at its Silver Spoon sugar business and food ingredients arm. Exane's Jeff Stent and his team said: "ABF has been the best performer within the sector … but the EU sugar market is turning". They think "the mood has quickly darkened" for sugar prices.

The Exane team thinks investors will now start to look at the "extent of the EU sugar negatives" alongside the "positives at Primark" and may want to look elsewhere. They took the red pen to the stock and now rate it underperform, with a 1,870p price target. The shares have soured 21p to 1,845p.

Primark's march on Europe has helped it to report consistent strong growth, but now some industry insiders have even raised concerns that the fashion retailer's growth in the UK could be plateauing.

From sugar to supermarkets: Tesco's shares have shaken off the horse-meat scandal, and Shore Capital and Credit Suisse are backing the retailer as its "self-improvement and corporate surgery" over the past two years is now paying off. Both analysts rate the shares a buy. Shore Capital's Clive Black and Darren Shirley say "stabilisation of the core chain appears to be under way". Shore gives the shares a 367p price target, while Credit Suisse ups its to 430p as the shares put on 5.95p to 378.15p.

The engineering turnaround specialist Melrose Industries reported a 38 per cent increase in full-year pre-tax profit and the shares rose 7.1p to 267.1p. Trevor Green, a fund manager at Aviva Investors and a shareholder in the group, said: "Management has been able to bring forward guidance on the margin potential at their recent acquisition of Elster by one year – evidence again of their ability to turn acquisitions they make into performers quickly."

A spate of analyst notes on Vodafone followed Tuesday's Bloomberg report that suggested the telecom and its US joint venture partner Verizon held merger discussions as recently as December. As the chatter was absorbed by the market, investors decided it was time again to pile into the stock and the shares dialled up a rise for a second day – up 11.2p to 179.7p – taking them to the top of the leader board. But analysts at Bernstein think "Vodafone is a very reluctant seller". They say: "As a failure to do a deal and disappointing numbers come in we expect the Vodafone share price to drift down."

Vodafone being the second-largest stock in the UK blue-chip index, its rise helped lift the overall index. The benchmark started the day well – after Wall Street's rally – and reached a five-year high.

Christopher Beauchamp, a market analyst at IG Group, said: "This has long been denounced as the 'sucker's rally'. If you look hard enough there's still plenty to be worried about."

The bulls couldn't maintain their run into the afternoon and the FTSE 100 lost 4.31 points to 6,427.64.

Two stocks expected to be relegated to the FTSE 250 were saved by a surge in their share prices on Tuesday. Serco, down 3.5p to 627p, and John Wood Group, up 35.5p to 853.5p, will now stay. Analysts at Shore Capital rated the outsourcer Serco a buy after its dividend surprise on Tuesday and gave it a 630p price target.

The Lakeside shopping centre owner Intu Properties, down 4.5p to 329.5p, and the miner Kazakhmys, down 17.5p to 555p, will be relegated.

Full-year earnings at International Personal Finance cheered investors and the shares banked a 67p rise to 473.4p.

Investors were betting on the news that Rank Group has completed its takeover of Gala Casinos and it put on 2.8p to 165.8p.

On Aim, the dating website Cupid's shares fell for a second day after results on Tuesday. Some traders speculated that the shares, down 21.5p to 110.5p, could begin to attract takeover interest again.

Mulberry, the Aim-listed purveyor of expensive handbags, saw its shares gain 8 per cent amid rumours of takeover interest. However, a denial of any interest from the French brand Hermès sent the shares back and they were static at 1,300p.

The Africa-focused oil and gas explorer Bowleven was lifted after an update on Cameroon, and the shares jetted 8.75p higher to 88.5p.

Suggested Topics
PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Extras
indybest
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Arts and Entertainment
Jamie Dornan stars as Christian Grey in the Fifty Shades of Grey movie
filmFirst look at Jamie Dornan in Fifty Shades of Grey trailor
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform