Tuesday’s Master Investor Market Report, featuring British American Tobacco, Merlin Entertainments and Tesco

Inflation has returned to the Eurozone, with official figures showing that the price level rose by 0.3% in the year to April. This acceleration was driven by services, food and drinks, whilst energy costs slowed their descent. Howard Archer, Chief European Economist at IHS Global Insight said that “renewed dips into deflation for the Eurozone are looking increasingly unlikely with the risks diluted by a firming in oil prices from their January lows, the weakness of the euro and improved Eurozone economic activity”.

Official data also showed that Eurozone GDP picked up during the first quarter, but while the rate of 0.4% was the strongest quarterly figure in the last 2 years, it was lower than analysts’ forecasts. In something of a turnaround, France and Spain performed strongly and Germany was weaker than expected. Greece contracted by 0.2% and returned to being officially in recession.

The FTSE 100 fell by 25.31 points to 6,928.27 points; the FTSE 250 grew by 0.11 points to 18,220.31; the FTSE All Share decreased by 10.85 points to 3,775.52 points; and the FTSE AIM All Share finished the day down by 0.43 points at 775.83 points.

British American Tobacco’s (BATS) subsidiary Imperial Tobacco Canada has been whacked with a C$10.4 billion (£5.45) fine by the Quebec Supreme Court following a class action lawsuit against it and other firms selling in the region. The company believes that there are strong legal grounds for an appeal and will seek a stay on the provisional payment order.

Nomura analysts said that if the bill was paid “there is the possibility that it bankrupts all of the tobacco majors in the market”, but markets were perhaps a little more sanguine as the company’s shares fell by 86.5p to 3,506p.

Shares in Merlin Entertainments (MERL) fell by 3.46% to 444.3p after a roller coaster crashed at its Alton Towers theme park. Four people were seriously injured as two carts collided with each other on the Smiler ride which opened in 2013 and cost £18 million to build.

X-Ray equipment manufacturer Image Scan (IGE) saw a significant drop in revenue through the six months ended 31st March, due to slow order intake and the delayed delivery of necessary supplies. Image Scans’ new X-Ray systems have now begun to be rolled out. Shares in Image Scan finished the day at 1.37p, down by 0.25p.

Rumours suggest that private equity outfits looking to buy Dunnhumby from Tesco (TSCO) have massively cut their valuation on the data service unit. The business’s renegotiation of its contract with Kroger to allow it to expand US operations appears to have backfired and reduced profitability.

Meanwhile, data from retail analysts Kantar Worldpanel also showed that Tesco continued to lose market share and saw its sales drop by 1.3% in the 12 months to 24th May. Tesco shares fell by 2.35p to 207.45p.

Shares in SeaEnergy (SEA) sank by a dramatic 27.1% to 15.13p after the company said that falling oil prices will prevent it from meeting full year revenue targets. It has also opted to scuttle its ship management and legacy assets arms. There was some light in the forensic software division, but SeaEnergy’s maiden results look like they will be tough reading.

Scancell Holdings (SCLP) shares have taken a turn for the worse, dropping by 3.75p to 34.5p despite an update on its current clinical trial for melanoma treatment that described current outcomes as “very encouraging”.

Wednesday’s news today

Tomorrow, there will be UK data on house prices, courtesy of Nationwide, and the latest services PMI survey will be posted.