The FTSE 100 index was higher early Wednesday, despite a negative outlook from retailing stalwart Next, as worries about a global banking crisis continue to be allayed.
The index of London large-cap stocks opened up 27.00 points, 0.4%, at 7,511.25. The mid-cap FTSE 250 was up 54.27 points, 0.3%, at 18,450.96 and the AIM All-Share was up 1.95 points, 0.3%, at 794.40.
The Cboe UK 100 was up 0.3% at 750.77, the Cboe UK 250 was up 0.3% at 16,040.75, and the Cboe Small Companies was up 0.2% at 13,227.87.
Stocks on Wall Street slid on Tuesday, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 down 0.2%, and the Nasdaq Composite down 0.5%.
In European equities on Wednesday, the CAC 40 in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.5%.
German consumer sentiment ‘painted a mixed picture’ in March, according to the latest Growth for Knowledge survey. Income expectations continued to improve, but the propensity to buy did not change much, GfK said.
GfK noted that while stable employment conditions would generally increase the propensity to buy, the indicator is being held back by the notable losses in purchasing power. ‘Accordingly, private consumption is unlikely to make a positive contribution to economic growth in Germany this year,’ GfK’s Rolf Burkl predicted.
In Zurich, UBS was up 1.4%, after it enlisted the help of its former chief executive officer, following its takeover of Credit Suisse. Sergio Ermotti, currently chair at reinsurer Swiss Re, will retake the helm of the Swiss bank next month.
Ermotti was previously CEO of UBS from late 2011 to October 2020, during which time he ‘successfully repositioned UBS following the severe challenges arising from the global financial crisis’, the bank asserted.
Incumbent UBS CEO Ralph Hamers has ‘agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country’, UBS said.
Swiss Re slipped 0.4%. Credit Suisse was up 1.6%.
The dollar was stronger early Wednesday in London
The pound was quoted at $1.2325, lower than $1.2339 at the London equities close on Tuesday. The euro traded at $1.0824, steady on $1.0839. Against the yen, the dollar was quoted at JP¥131.87, up versus JP¥130.98.
On the London Stock Exchange, shares in clothing and homewares retailer Next lost 6.1%.
Next hailed a ‘good year’ in 2022 despite various challenges, but expects a ‘difficult’ year ahead.
In the financial year that ended in January, revenue rose 8.8% to £5.03 billion from £4.63 billion the year before, as total trading sales rose 8.4% to £5.15 billion. Total pretax profit edged up 5.7% to £869.3 million from £823.1 million.
The board proposed a final dividend of 140 pence, taking the total payout for the year to 206p. Next said it intends to maintain the 206p payout for the new financial year, based on achieving its pretax profit guidance of £795 million.
It reiterated guidance of total full price sales to fall by 1.5% in financial 2024 from financial 2023, with the first half performance to be weaker than the second half. ‘Selling price inflation is forecast to be more benign that previously thought,’ Next said.
‘With profits set to decline, we question its prospects for longer-term growth,’ commented Shore Capital analysts.
‘Although the company is focusing on online growth, cost management, and investing in technology and infrastructure, we are not fully confident that these initiatives will deliver growth for shareholders.’
Added Russell Pointon, director of Consumer at research house Edison: ‘While historically, the clothing brand has tended towards conservatism in its forward guidance and subsequently over-delivered, Next has suggested such outperformance might not be possible in the coming year. Yet improved factory gate prices, reductions in freight costs, and a more benign price inflation for the coming months will be more helpful in the coming year.’
Elsewhere in the FTSE 100, broker ratings were moving some individual shares.
Tesco was up 2.0%, as Morgan Stanley raised the stock to ’overweight’. WPP added 1.8%, as it was upped to ’outperform’ by Exane BNP.
Meanwhile, Smith & Nephew fell 1.2%, as Barclays cut the stock to ’hold’.
Gold was quoted at $1,961.78 an ounce early Wednesday, edging lower from $1,967.14 on Tuesday.
Brent oil was trading at $79.03 a barrel, up slightly from $78.09
In the FTSE 250, Essentra rose 2.5%.
The components business said annual revenue in 2022 rose to £337.9 million from £301.7 million, as its pretax loss widened to £29.1 million from £7.1 million.
Essentra recommended an final ordinary dividend of 1.0p per share, bringing the total payout to 3.3p, just over half of the 6.0p paid out in 2021.
Essentra said it also will begin its £60 million buyback programme, to repurchase ordinary shares at 25p each. The programme returns the proceeds from its Packaging and Filters disposals, with the firm to pay out a special dividend of 29.8p.
Essentra said it outlook for 2023 remains unchanged. ‘Although we continue to see distributor destocking, trading in Europe continues to be robust and China’s reopening will increasingly benefit our business in Asia,’ Essentra said. In the year to date, like-for-like orders are 8% ahead of 2022 levels.
On AIM, Versarien fell 22%.
After the sudden resignation of CEO Neill Ricketts sent its shares plunging earlier this month, the engineering materials company revealed it is likely to need further funding, and is reviewing all appropriate options.
‘At this time it is not possible to be more specific on the type of funding that may be secured.’
This comes despite ‘significant cost reductions’, Versarien said, including reducing headcount and discretionary spending. The non-executive directors have waived remuneration indefinitely, with executive directors’ pay also under review.
‘Whilst we remain confident of the commercial benefits of our graphene technology and that it can bring significant returns to Versarien, the company continues to face a number of challenges that the board is working hard to overcome,’ it said.
Executive directors Chris Leigh and Steve Hodge have been leading the firm while it looks at options for recruiting a new CEO.
In Asia on Wednesday, the Nikkei 225 index closed up 1.3%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was up 1.8%. The S&P/ASX 200 in Sydney closed up 0.2%.
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