Stocks in Europe opened in the green on Wednesday, with FTSE 100’s Tesco edging up as it announced a new share buyback programme on the back of surging annual profit.
The FTSE 100 index opened up 46.08 points, 0.6%, at 7,980.87. The FTSE 250 was up 130.70 points, 0.7%, at 19,894.05, and the AIM All-Share was up 3.15 points, 0.4%, at 754.13.
The Cboe UK 100 was up 0.6% at 797.85, the Cboe UK 250 was up 0.6% at 17,312.28, and the Cboe Small Companies was down 0.4% at 14,695.69.
In European equities on Wednesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.6%.
All eyes are on a key US inflation reading, which is out at 1330 BST.
Wednesday’s US inflation data is expected to show the rate of year-on-year consumer price growth picked up to 3.4% last month, from 3.2% in February, according to FXStreet cited consensus.
If the rate of consumer price inflation picks up by more than expected, it could mean the Federal Reserve will re-think its interest rate outlook. In its last set of economic projections, the dot-plot showed three rate cuts were still the best bet for 2023.
‘There’s a palpable sense of nervousness among investors as they exercise a modicum of restraint, concerned about the possibility of hotter-than-expected inflation figures. Such data could spark intense speculation, potentially shifting market expectations towards a scenario where the Federal Reserve refrains from implementing rate cuts in 2024. At the very least, it might dampen expectations regarding the magnitude of future rate cuts this year,’ said SPI Asset Management’s Stephen Innes.
In the US on Tuesday, Wall Street ended mixed, with investors shaking of nerves ahead of the reading. The Dow Jones Industrial Average closed down slightly, whilst the S&P 500 was up 0.1% and the Nasdaq Composite up 0.3%.
As well as the US CPI data, there are the latest Fed minutes at 1900 BST.
Commenting on the minutes, analysts at Lloyds said: ‘These are likely to be seen as dated and so may have little impact but it will be interesting to see if anything more specific is said about the developments policymakers want to see if they are to cut rates.’
The pound was quoted at $1.2681 early on Wednesday in London, higher compared to $1.2672 at the equities close on Tuesday. The euro stood at $1.0854, slightly lower against $1.0856. Against the yen, the dollar was trading at JP¥151.79, up compared to JP¥151.65.
In the FTSE 100, Tesco rose by 0.8%.
Tesco reported that revenue increased by 4.4% to £68.19 billion in the 52 weeks ended February 24, from £65.32 billion a year earlier. Pretax profit shot up to £2.29 billion from £882 million.
On the back of the results, announced a new £1.0 billion share buyback programme to be conducted over the next 12 months.
Tesco noted that it has bought back shares worth £1.8 billion so far since launching its capital return programme in October 2021, including £750 million in the 12 months to April 2024.
Further, Tesco upped its dividend by 11% to 12.10p from 10.90p.
Chief Executive Ken Murphy said: ‘Inflationary pressures have lessened substantially, however we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year. We have continued to invest in helping customers where it matters most, cutting prices on more than 4,000 products and doubling down on our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices.’
In the FTSE 250, Direct Line lost 0.1%, after it named Jane Poole as its new chief financial officer.
Poole will join the Bromley, England-based motor and home insurer in October, succeeding Neil Manser.
Manser has been in post since January 2021, and with the company since 2011. He will remain as CFO until Poole begins her role.
Since 2021, Poole has been CFO for Aviva’s UK and Ireland General Insurance business.
Amongst London’s small-caps, Treatt rose 8.3%.
In the six months ended March 31, pretax profit is expected to rise to £7.5 million from £7.3 million a year earlier.
Revenue, however, fell by 5.1% to £72.1 million from £76.0 million, reflecting a ‘subdued’ first quarter. Treatt noted that sales were ahead annually in the second quarter.
On the other hand, Speedy Hire lost 5.3%.
In the year ended March 31, revenue fell by 5% annually to £420 million. It said results were impacted by the underperformance of its Regional base, the reduction in wholesale fuel prices and the performance of its seasonal products, which were affected by the warmer winter period.
It noted that results look to be at the lower end of company expectations, but its outlook for financial 2025 remains positive given recent contract wins.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.5%. In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was up 1.8%. The S&P/ASX 200 in Sydney closed up 0.3%.
Brent oil was quoted at $89.77 a barrel early in London on Wednesday, down from $89.82 late Tuesday.
‘Oil fell early today with hope that the conflict in the Middle East will calm down with progress in the ceasefire negotiations in Gaza,’ said Samer Hasn at XS.com.
Gold was quoted at $2,356.20 an ounce, up against $2,347.44 on Tuesday. Gold hit a new record high earlier Tuesday, above $2,365 per ounce, before easing back.
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