London share prices were mixed at midday on Tuesday, after a dismal set of PMI readings for the UK, though some mid-cap stocks were benefiting from positive trading updates.
The FTSE 100 index was down 35.43 points, 0.5%, at 7,749.24. The FTSE 250 was up 38.0 points, 0.2%, at 19,882.00, and the AIM All-Share was up 2.56 points, 0.3%, at 861.64.
The Cboe UK 100 was down 0.4% at 776.25, the Cboe UK 250 up 0.4% at 17,348.70, and the Cboe Small Companies down 0.1% at 13,984.21.
In European equities on Tuesday, the CAC 40 index in Paris was down 0.1%, and the DAX 40 in Frankfurt was down 0.4%.
There was a slew of flash purchasing managers’ index readings across Europe early Tuesday, with results mixed.
The UK private sector saw the sharpest drop in business activity in two years this month.
The S&P Global CIPS composite PMI fell to a 24-month low of 47.8 points in January, from 49.0 in December. Falling further beneath the 50-point no-change mark, it shows the contraction in the UK’s private sector has worsened at the start of 2023.
The deterioration was led by a fall in the services sector, with the flash services PMI falling to 48.0 in January from 49.9 in December. This was worse than FXStreet-cited consensus, which had expected the reading to remain the same as the previous month.
‘Weaker than expected PMI numbers in January underscore the risk of the UK slipping into recession. Industrial disputes, staff shortages, export losses, the rising cost of living and higher interest rates all meant the rate of economic decline gathered pace again at the start of the year,’ said Chris Williamson, chief business economist at S&P Global Market Intelligence.
By contrast, the eurozone’s private sector edged back into growth territory in January.
The composite PMI rose to a seven-month high of 50.2 points from 49.3 in December. The reading came in higher than the FXStreet-cited consensus of 49.8 points.
S&P Global said the steadying of the eurozone adds to evidence that the region might escape recession. Williamson said the survey suggested ‘a nadir was reached back in October, since when fears over the energy market in particular have been alleviated by falling prices, helped by the warmer than usual weather and generous government assistance’.
Stephen Innes of SPI Asset Management commented: ‘Following better data, lower gas prices and China’s reopening, the euro area’s growth prospects had thought to have improved significantly, and US investors slid huge blocks of risk outside the US, where Europe was a prime destination after the continent was supposed to have skirted recession thanks to Mother Nature.’
He added: ‘However, the mixed yet still soggy PMI data brings today’s EU feel-good into question. At least at the survey level, the China reopening hasn’t caught the European industrial heartland by...storm yet.’
The pound was quoted at $1.2319 at midday on Tuesday in London, down from $1.2368 at the close on Monday. The euro stood at $1.0864, down against $1.0870. Against the yen, the dollar was trading at JP¥130.19 down from JP¥130.62.
Stock market investors are looking ahead to a gross domestic product reading from the US on Thursday, as well as a US inflation reading on Friday. The personal consumption expenditures price index is the US Fed’s preferred inflation gauge. The December index is due on Friday.
Stocks in New York were called higher on Tuesday. The Dow Jones Industrial Average was called up 0.8%, the S&P 500 index up 1.2%, and the Nasdaq Composite up 2.0%.
Among US companies due to release earnings this week are Microsoft on Tuesday, Tesla on Wednesday, and Intel on Thursday. Out already before the open on Wall Street were GE, 3M, Johnson & Johnson, Verizon and Travelers. GE was up 0.5% in the New York pre-market and J&J up 1.0%.
In London, the FTSE 100’S Associated British Foods shed 1.6%.
AB Foods said its Primark high-street retail chain enjoyed a ‘very strong Christmas period’, bucking a consumer confidence malaise in the UK and beyond. However, it said things could sour as tough economic conditions may ‘weigh on consumer spending in the months ahead’.
In the 16 weeks to January 7, group revenue surged 20% to £6.70 billion, from £5.57 billion, as a strong dollar boosted dollar-denominated sales in pound terms. At constant currency, growth was slightly weaker at 16%.
By unit, Grocery revenue climbed 14% and Agriculture revenue by 19%. In Sugar and Ingredients, it rose 31% and 36%, respectively. Across the whole of its Food sub-group, revenue was up 23% to £3.55 billion.
In the Retail division, revenue was 18% higher at £3.15 billion from £2.67 billion a year earlier. Sales in the week leading up to Christmas Day ‘reached a new record’, AB Foods said.
Overall, AB Foods said its expectations for group annual results remain unchanged. It expects ‘significant’ sales growth, with adjusted operating profit and adjusted earnings per share to be lower than the previous financial year.
In the FTSE 250, Senior jumped 9.4%, as the engineering firm boasted of a rosy outlook, with profit expected to beat consensus.
The components and systems manufacturer expects adjusted pretax profit to beat market consensus. Senior said its company-compiled consensus range is £16.2 million to £18.0 million. In 2021, it had made a £1.9 million adjusted pretax loss, narrowing from £6.2 million in 2020.
Senior suffered from pandemic-driven supply chain weakness at an industry level last year. The Hertfordshire-based company’s fortunes improved in 2022, however.
Also in the FTSE 250s, Bridgepoint gained 6.7%.
The London-based private assets growth investor focused on the middle-market said it has launched a share buyback of up to £50 million. It noted that this will run from Tuesday, and expects it to be completed by September 30.
Bridgepoint said the buyback is part of its ‘growth agenda’ noting that it ‘reflects the board’s confidence in Bridgepoint’s fundamental value and long-term prospects’.
Among London small-caps, Saga added 7.0%.
Kent-based Saga is holding a capital markets event on Tuesday. It provides insurance, cruises and package holidays to people over 50.
Saga said it is on track for underlying pretax profit of £20 million to £30 million in the financial year ending on January 31, compared to a loss of £6.7 million the year before. The anticipated profit would still be far below the £109.9 million that Saga booked for financial 2020, which ended before Covid restrictions were enacted in many countries.
Saga expects revenue in financial 2023 to be 40% to 50% higher than the £377.2 million in financial 2022, as it hailed a recovery in cruise and travel following the easing of Covid restrictions. That would put revenue at £528 million to £566 million. Revenue of financial year 2022 was less than half of the £797.3 million recording for financial 2020.
Brent oil was quoted at $88.07 a barrel at midday in London on Tuesday down from $88.82 late Monday, whilst gold was quoted at $1,936.12 an ounce against $1,922.40.
Still to come on Tuesday’s economic calendar there is a PMI release from US at 1445 GMT.
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