Stocks in London opened lower on Wednesday morning, amid steep falls for St James’s Place and Reckitt Benckiser, ahead of key US data.
The FTSE 100 index opened down 15.96 points, 0.2%, at 7,667.06. The FTSE 250 was down 74.73 points, 0.4%, at 19,087.93, and the AIM All-Share was down 2.18 points, 0.2%, at 743.47.
The Cboe UK 100 was down 0.3% at 767.49, the Cboe UK 250 was down 0.5% at 16,439.30, and the Cboe Small Companies was down 0.3%.
In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was up 0.1%.
In the FTSE 100, St James’s Place slumped 28%.
The fund manager and financial adviser swung to a pretax loss of £4.5 million in 2023 from £503.9 million profit in 2022. SJP established a £426.0 million provision for potential client refunds ‘linked to the historic evidence and delivery of ongoing servicing’.
‘A combination of the provision we have established and an expected decrease in the level of profit growth in the next few years as we transition to our new charging structure, reduces our ability to invest for long term growth in our business over the next few years,’ said CEO Mark FitzPatrick.
The firm slashed its final dividend to 8.00p from 37.19p, bringing the full-year total to 23.83p, down from 52.78p. Going forward, it plans total annual shareholder distributions to be 50% of its annual underlying cash results. It also said dividends will be fixed at 18.00p annually for the next three years.
Reckitt Benckiser shares dropped 9.9%.
The consumer goods firm said revenue in 2023 increased 1.1% to £14.61 billion from £14.45 billion a year before, missing company-compiled consensus estimates of £14.75 billion. Pretax profit dropped 22% to £2.40 billion from £3.07 billion, amid a £810 million goodwill impairment and other higher operating expenses.
In the FTSE 250, Aston Martin Lagonda Global shares fell 1.2%, after an initial jump.
The luxury carmaker said in 2023, revenue climbed 18% to £1.63 billion from £1.38 billion a year before. Its pretax loss halved to £239.8 million from £495.0 million.
The firm said it remained on track to substantially achieve its 2024/2025 targets, seeing ‘continued strong demand’ for its products, as well as noting some ‘exciting’ new next-generation launches planned for 2024. It left its medium-term outlook unchanged.
Among London’s small-caps, Halfords plunged 22% after a profit warning.
The retailer blamed ‘further material weakening’ in three of its four core markets, which resulted in a ‘significant’ drop in like-for-like revenue growth in its Retail business.
It now expects underlying profit before tax for the 52-week period to March 29 to be between £35 to £40 million, a downgrade from its guidance of £48 to £53 million last month.
Halfords explained Cycling and Retail Motoring were hit by ‘weak customer confidence and unusually mild and very wet weather’, which hit footfall and sales of categories such as winter and car cleaning products.
Liberum called the development ‘another disappointing update’ from Halfords, and maintains there are ‘no visible positive catalysts’ for the retailer at this stage.
‘The board could now come under increasing pressure to sell the business, but potentially at a much lower price than recent months’ bid speculation,’ the Liberum analysts predicted.
In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.3%, the S&P 500 up 0.2% and the Nasdaq Composite up 0.4%.
The main focus will be on the latest economic growth figures on Wednesday, with monthly personal consumption expenditures - which contains a key inflation metric - to follow on Thursday. The PCE reading is closely followed by the Federal Reserve when making decisions on interest rates.
In the meantime, investors will be reflecting on Tuesday’s US data, which revealed a sharper-than-expected drop in consumer confidence, and disappointing orders for durable goods.
The weaker data came as Goldman Sachs Chief Executive Officer David Solomon said softer spending by consumers calls into question expectations that the US economy will avoid a recession.
‘The world is set up for a soft landing,’ Solomon said at a UBS Group conference, reported by Bloomberg. ‘The market certainly perceives there’s a very, very high delta to a soft landing. My own view is it’s a little bit more uncertain than that’.
The dollar firmed against major currencies in early exchanges in Europe.
Sterling was quoted at $1.2651 early Wednesday, lower than $1.2693 at the London equities close on Tuesday. The euro traded at $1.0818, lower than $1.0854. Against the yen, the dollar was quoted at JP¥150.77, up versus JP¥150.41.
Gold was quoted at $2,028.04 an ounce early Wednesday, down slightly from $2,033.79 on Tuesday.
Brent oil was trading at $83.16 a barrel, higher than $82.25.
Oil prices rose following reports that Opec+ will consider extending voluntary oil output cuts into the second quarter. Reuters cited three Opec+ sources, who said the extension of cuts would provide further support for the oil market, and the cuts could remain in place until the end of the year.
‘Tuesday’s increase in oil prices was further bolstered by an announcement from Russian officials regarding a six-month ban on gasoline exports starting March 1,’ noted SPI Asset Management’s Stephen Innes.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.1%. In China, the Shanghai Composite closed down 1.9%, while the Hang Seng index in Hong Kong shed 1.5%.
Focus was on the property sector, after a petition to wind up debt-hit Chinese developer Country Garden was filed in a Hong Kong court. Meanwhile, Hong Kong’s finance minister announced the axing of all property transaction taxes in a bid to revive the finance hub’s depressed housing market.
The S&P/ASX 200 in Sydney closed marginally lower.
Wednesday’s economic diary has the US gross domestic product data at 1330 GMT. There is a eurozone consumer confidence reading at 1000 GMT.
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