WM Morrison, the fourth-largest grocer in the UK, said it would invest aggressively to cut costs and up spend in stores after it swung to a statutory loss of £176m in the year ended February 2nd. The company’s guidance for the new financial year came in well below analysts’ expectations, causing the stock to drop as much as 10% early on.

The FTSE 100 was trading 0.06% lower at 6,617 shortly after the open. The index fell 1% to 6,620.9 on Wednesday, its worst closing price since February 10th.

In addition to a pick-up in corporate newsflow today, investors were also digesting yet more disappointing economic data from China after industrial production, retail sales and fixed asset investments growth all eased.

Market Strategist Ishaq Siddiqi from ETX Capital said that the economic slowdown in China is still “far more pronounced” that markets had expected at the start of the year.

“China’s policymakers are unlikely to intervene just yet, comfortable with faltering growth as to them, it’s symptomatic of an evolving economy; but it doesn’t spell good news for China’s neighbours in Asia who are all exposed heavily to the country’s growth prospects,” he said.

Geopolitical developments in Ukraine and ongoing protests in Turkey were also limiting upside in markets today amid a light economic data calendar in Europe. This afternoon, traders are likely to focus on US retail sales, jobless claims and the monthly budget statement.

WM Morrison plunges after poor guidance

WM Morrison’s share price dropped this morning after guiding to an underlying pre-tax profit of £325-375m this year, some 30-40% below what the market was expecting, as it unveiled a £1bn investment programme. Chairman Sir Ian Gibson said last year’s performance was “disappointing” with like-for-like sales falling 2.8% as he admitted that the company has been slow to adapt to the changing UK grocery market.

Larger supermarket groups J Sainsbury and Tesco declined sharply after the statement along with Morrison’s online joint venture partner Ocado, which extended losses after disappointing the market with its own results yesterday. Department store Marks & Spencer, which has a large food offering, also fell.

Home Retail was bucking the trend after the Argos and Homebase owner said that annual profits would come in ahead of the top end of market expectations.

Mining stocks were holding up well today in spite of the gloomy data from top metals consumer China as commodity prices climbed. Gold prices were at a six-month high early on. Rio Tinto, BHP Billiton and Fresnillo were making gains.

FTSE 100 – Risers
Barclays (BARC) 237.05p +1.41%
Centrica (CNA) 332.40p +1.37%
Rio Tinto (RIO) 3,215.50p +1.32%
Kingfisher (KGF) 407.30p +1.09%
BG Group (BG.) 1,080.00p +0.98%
easyJet (EZJ) 1,661.00p +0.85%
Petrofac Ltd. (PFC) 1,363.00p +0.81%
Fresnillo (FRES) 907.00p +0.78%
Randgold Resources Ltd. (RRS) 4,965.00p +0.77%
HSBC Holdings (HSBA) 603.40p +0.70%

FTSE 100 – Fallers
Morrison (Wm) Supermarkets (MRW) 214.80p -7.81%
Sainsbury (J) (SBRY) 311.20p -6.60%
Tesco (TSCO) 302.50p -3.79%
G4S (GFS) 228.10p -1.89%
Marks & Spencer Group (MKS) 464.70p -1.88%
Persimmon (PSN) 1,303.00p -0.99%
SSE (SSE) 1,413.00p -0.84%
National Grid (NG.) 826.00p -0.84%
Burberry Group (BRBY) 1,441.00p -0.83%
Prudential (PRU) 1,387.00p -0.79%

Source: ShareCast