Both the FTSE 100 index of leading shares and the mid-cap FTSE 250 Index ended Wednesday’s trading session in negative territory as concerns regarding UK inflationary pressures mounted.
The CPI (consumer price index) rose to a near 10 year high in October of 4.2% from 3.1% in September and is likely to increase further during the rest of the year.
Weakness in US equity markets also weighed as investors feared a spate of strong retail earnings may prompt an early rate rise.
At the London close, the Dow Jones Industrial Average was trading 0.55% lower at 35,943.50, and the NASDAQ Composite Index was trading down 0.05% at 15,965.62.
The FTSE 100 Index ended the day down 0.46% lower at 7292.90, and the FTSE 250 Index closed 0.32% weaker at 23,464.26.
IMMINENT RATE RISE
According to Shane O’Neill, Head of Interest Rate Trading for Validus Risk Management ‘This higher-than expected print will give the Bank of England incentive to increase interest rates at their next meeting in December.’
‘After yesterday’s strong employment data, the missing piece of the puzzle according to Governor Bailey, there is seemingly little reasons to expect the Bank not to hike’.
UK BANKS IN DEMAND
UK banks were in demand as investors anticipated an increase in interest rates at the next Bank of England policy meeting on Thursday 16th December. Banks are key beneficiaries of a rise in interest rates as it enables them to increase their net interest margins. This is the difference between the rate at which banks can borrow and lend money. NatWest Group (NWG) was 0.4% firmer at 224.3p and Lloyds Banking was 0.03% higher at 49.99p
Power network operator SSE (SSE) is among the leading FTSE 100 losers on Wednesday despite first-half profit more than doubling, as higher earnings at its distribution and transmission businesses offset losses at its renewables unit.
The utility group saw its share price slump 4.2% to £15.87.
SSE declared an interim dividend of 25.5p per share, up 4.5% from 24.4p year-on-year. It forecast full-year adjusted earnings per share ‘at least in line’ with the consensus forecast of 83p.
Thermal energy management and pumping specialist Spirax?Sarco (SPX) topped the FTSE 100 loser board, down 4.9% at £16.165. after it warned that supply-chain issues were hurting margins.
Spirax?Sarco said all three of its businesses had been impacted by shipment delays while also flagged forex headwinds. The company does still expect to report record annual profits though.
Miner and commodities trader Glencore (GLEN) rose 2.2% to 371.95p after it agreed to sell its stake in the Ernest Henry copper and gold mine in Australia to Evolution for A$1 billion.
Glencore also agreed to buy copper and gold from the mine as part of the deal.
CLOUD ADDS UP FOR SAGE
Enterprise software group Sage (SGE) topped the FTSE leader board on Wednesday after saying that it expects recurring revenue growth to accelerate after substantial cloud computing investment. Shares moved 9.7% higher to 800p.
Sage forecast organic revenue growth in the current financial year of between 8% and 9%. The company reported a 7% fall in annual profit owing to increased investment spending and lower sales.
Credit data company Experian (EXPN) lost 3.96% to £33.73, even as it reported a 43% jump in first-half profit, led by growth in its consumer services business.
Despite forecasting full-year revenue growth of 15% to 17% and ‘strong’ margin growth investors have been left unimpressed. Experian declared an interim dividend of $0.16 per share, up 10% year-on-year.
Publishing and exhibitions group Informa (INF) slumped 2.9% to 507p even as it reiterated its guidance amid 'strong' growth in subscriptions-led businesses and improving momentum across B2B.
Informa was still expecting full-year adjusted operating profit of about £375 million and revenue of about £1.8 billion.
Property developer and investor British Land (BLND) fell 1.95% to 523p even as it swung to a £373 million pre-tax profit in the first half, underpinned by gains in the underlying value of its portfolio.
British Land declared an interim dividend of 10.32p per share, up from a 8.4p year-on-year.
Online broker CMC Markets (CMCX) shed 10.5% to 243p after more subdued trading activity brought its first-half profits down 75%.
CMS Markets slashed its interim dividend to 3.5p per share, down from 9.2p year-on-year.
SMALLER CAP WRAP
Convenience store group McColl’s Retail (MCLS) plunged 18.6% to 14.65p, having downgraded its annual earnings guidance, blaming supply-chain challenges.
McColl’s adjusted operating earnings for the year through December were now expected in the range of £20 million-to-£22 million.
Construction components supplier Tyman (TYMN) slipped 1.6% to 398.5p after it downgraded its annual earnings guidance, citing global supply-chain challenges.
Tyma’s adjusted profit for the year through December was now expected to be 'marginally below' consensus, even as revenue in the 10 months through October jumped 12% year-on-year.
Office rental group Workspace (WKP) fell 2% to 844.5p as it swung to a modest first-half profit and reinstated its interim dividend, after an easing of pandemic lockdowns helped boost rental income.
Its pre-tax profit for the six months through September amounted to £3.4 million, compared to a year-on-year loss of £110.4 million. Workspace reinstated its interim dividend at 7p per share.
Storage group Safestore (SAFE) drifted -0.48%% to £12.55 despite nudging up its annual earnings guidance after it grew its fourth-quarter revenue by 19%.
Full-year earnings were anticipated to be slightly ahead of previous guidance of 39.5p to 40p of adjusted diluted EPRA earnings per share.
Tools and equipment rental group Speedy Hire (SDY) firmed 7% to 68.3p, having swung to a first-half profit and upgraded its annual guidance, as construction markets recovered following an easing of lockdowns.
Speedy Hire reinstated its interim dividend at 0.75p per share. It said its full-year results were expected to be ‘ahead’ of current market expectations.
