China moves boost markets as Bunzl lifts earnings guidance to prove boring can be beautiful

Tuesday, August 29, 2023 - 09:56

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“The market may have been underwhelmed by China’s initial efforts to restore confidence, but that doesn’t seem to be the case with the latest measures, which have given Chinese and global stocks a real boost,” says AJ Bell Investment Director Russ Mould.

“Whether the medicine Beijing is doling out will deal with the causes rather than just the symptoms of its economic challenges is debatable, but for the time being it is at least doing enough to restore sentiment.

“The lack of any big shocks in US Federal Reserve chair Jerome Powell’s Jackson Hole speech also seems to have helped create the conditions for a late summer rally.

“It all adds up to UK stocks returning from the August bank holiday with a lot more vim and vigour. Every stock in the FTSE 100 bar one – value retail play B&M –was in positive territory early on, with the list of gainers dominated by miners and other stocks with Chinese ties.

“News of easing shop price inflation in the UK is being taken as another positive sign.”

“Sometimes boring can be beautiful as far as investors are concerned. There’s certainly nothing racy or exciting about Bunzl as a business – it distributes a range of non-food consumable products to businesses, from lids and cups for coffee shops, to hand gels and towels for medical workers.

“These kind of background items are simple but essential parts of doing business for Bunzl’s client base and its track record of delivery means it retains customers and derives reliable and repeatable revenue from them.

“Bunzl has consistently raised its dividend over many years and the company has today boosted earnings guidance amid encouraging signs that inflationary pressures in its own cost base are starting to ease.

“The firm has also been the master of its own destiny through initiatives like driving higher sales of its own branded goods.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.