FTSE up after strong US finish and Greggs commits to expansion despite first loss in 36 years

“A strong finish to trading in the US overnight and robust trading in Asia helped give the FTSE 100 a lift on Tuesday, shaking off any hangover from the day before and framing the day’s narrative around whether the index can regain the 6,800 mantle it briefly attained on Monday,” says AJ Bell Investment Director Russ Mould.

“For once words might speak louder than actions when the US Federal Reserve meets tomorrow. It seems unlikely there will be any move on interest rates immediately but, after the recent jump in bond yields amid growing fears over rising inflation, the market will be desperate for signals on the pace and direction rates are likely to take.

“Elsewhere, the decision by several European countries to suspend use of the AstraZeneca vaccine around disputed safety concerns is not helpful to sentiment and investors will be hoping the situation can be resolved sooner rather than later.”

Greggs

“The pandemic has brought to an end a proud record of profitability at food-on-the-go firm Greggs. The company has slumped to its first loss since it joined the stock market to the strains of Duran Duran’s The Reflex at number one in the UK music charts.

“The response of Greggs’ management to Covid-19 has been anything but knee-jerk, demonstrating an ability to take a longer-term view by opening 84 stores in 2020 and committing to the opening of 100 new outlets in 2021 – with a target to increase the size of the current estate to 3,000 from the current 2,000 over the medium term.

“To be fair Greggs was on a (vegan sausage) roll ahead of Covid as its expansion into meat-free products received a very encouraging response from customers.

“This reflected the transformation under CEO Roger Whiteside since 2013 – where Greggs was transformed from a straightforward discount baker to a business more in tune with the tastes of 21st century Britain.

“The breadth and diversity of the company’s estate as well as a strong balance sheet has shielded it from the worst of the coronavirus impact.

“It is also testament to the resilience of the company’s model that it has made a better-than-expected start to 2021 despite the persistence of lockdown conditions across the UK.

“However, it does seem likely that until and unless commuting returns to normal levels then the business, for all its innovations around delivery and click and collect, will struggle to offset a drop in footfall.

“Can Greggs ever be a destination dining option rather than just somewhere you go to grab a quick bite on your lunch hour or on your way to and from work?”

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