London’s FTSE 100 underwhelmed on Thursday, hit by lingering interest rate worries and a host of the index’s heavyweights going ex-dividend.
Peers in Europe climbed, however, and smaller stocks in London had a decent day.
The FTSE 100 index closed down 22.91 points, 0.3%, at 7,907.72. However, the FTSE 250 ended up 110.20 points, 0.6%, at 19,790.49, and the AIM All-Share closed up 0.4%, or 3.23 points, at 855.51.
The Cboe UK 100 ended down 0.1% at 792.22, the Cboe UK 250 closed up 0.6% at 17,274.38, and the Cboe Small Companies ended up 0.4% at 13,987.18.
London’s blue-chip index struggled after minutes from the most recent Federal Open Market Committee meeting revealed that US central bank officials anticipate further increases in interest rates will be needed to ensure their inflation target is met. That is despite signs pricing pressures are easing.
In the UK, meanwhile, A Bank of England policymaker has said interest rates should be raised even further to control inflation, despite financial market expectations that the UK’s base rate may be nearing a peak.
Catherine Mann, an economist and external member of the Bank’s Monetary Policy Committee, gave a speech at an event held by think tank the Resolution Foundation.
Mann said she believes it is too soon to stop tightening monetary policy - or raising rates - because it risks inflation becoming too persistent and embedded into the economy.
The Bank of England hiked rates to 4.00% at the last MPC meeting, and hinted that it could be nearing the end of its rate hike cycle unless it sees signs of persistent inflationary pressure.
The pound was quoted at $1.2023 at the London equities close Thursday, down compared to $1.2066 at the equities close on Wednesday.
The euro stood at $1.0593 at the European equities close Thursday, down against $1.0629 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥134.72, up compared to JP¥134.67 late Wednesday.
Stocks in New York initially shrugged aside the renewed rate concerns and pushed higher, but fell back to trade in negative territory at the time of the London equities close. The Dow Jones Industrial Average was down 0.3%, the S&P 500 index down 0.2%, and the Nasdaq Composite down 0.3%.
In European equities on Thursday, the mood was brighter. The CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt closed up 0.5%.
Putting pressure on the FTSE 100 were share price falls for pharmaceutical firms GSK and AstraZeneca. The duo fell 1.6% and 2.5% after going ex-dividend, meaning new buyers would not qualify for their latest payout.
Lenders Barclays and Standard Chartered also went ex-dividend, each fell 0.1%. Consumer goods firm Unilever dropped 1.7%.
In London, Rolls-Royce topped the list of FTSE 100 risers, soaring 24%, after better-than-expected full-year results. New Chief Executive Tufan Erginbilgic unveiled a seven-pronged transformation plan to further improve performance and reduce debt.
Erginbilgic said: ‘While our performance improved in 2022, we are capable of much more. Our transformation programme will improve our efficiency and commercial outcomes, and deliver a sustainable reduction in working capital. This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt. Our success will enable us to reward investors for their support and invest in future growth.
‘Our transformation programme is already underway and is moving at pace. It will include a strategic review so that we can prioritise our investment towards the most profitable opportunities.’
Rolls-Royce posted 2022 statutory revenue of £12.52 billion, up 20% from £11.22 billion in 2021. The company said underlying revenue was £12.69 billion, up 16% from £10.95 billion a year ago, and ahead of the average market consensus of £11.59 billion.
The company said net debt was £3.25 billion, falling from £5.16 billion.
WPP climbed 3.4%. The London-based advertising and communications company said revenue in 2022 rose 13% to £14.43 billion from £12.80 billion in 2021. Pretax profit jumped 22% to £1.16 billion from £951 million.
Shares in John Wood Group soared 29% after it said after the market close Wednesday that it had rebuffed bid approaches from Apollo Global Management.
The FTSE 250 company said that it had turned down all unsolicited proposals from the US firm, with the most recent approach in late January valuing it at £1.59 billion. The cash offer for all of its shares was worth 230 pence each.
The company said: ‘The board carefully considered each of the proposals, together with its financial advisers, and has engaged on a limited basis with Apollo. The board unanimously rejected each of the proposals, having concluded that they each significantly undervalued the repositioned group‘??s prospects.’
Mondi shares fell 4.8% despite strong 2022 results. The paper and packaging firm reported a pretax profit of €1.56 billion in 2022, up from €712 million in 2021. Revenue jumped 28% to €8.90 billion from €6.97 billion.
But the FTSE 100 listed firm warned it continues to see softer demand and pricing, however, despite declining input costs.
Shares in SigmaRoc leapt 7.2% after the quarried materials group successfully raised £30 million through a placing of shares at 54 pence each.
The AIM-listed company’s management team actively participated in the structuring and allocation of the fundraising.
Proceeds from the placing will part fund 10 potential near-term strategic acquisition opportunities and four organic growth and carbon footprint reduction projects.
Taken together, the acquisitions and organic investment projects are anticipated, should they all complete, to generate approximately £42 million of net revenue.
Brent was quoted at $81.71 a barrel at the London equities close Thursday, up from $81.24 Wednesday. Gold was quoted at $1,821.05 an ounce, down against $1,825.00.
Friday’s economic calendar has a Japanese inflation reading overnight, before US core personal consumption expenditures data at 1330 GMT.
The local corporate calendar has annual results from British Airways parent International Consolidated Airlines Group and half-year numbers from veterinary services provider CVS Group.
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