London’s FTSE 100 underperformed European peers on Thursday, as traders digested events in a stacked corporate calendar that included expectation beats, misses and M&A impetus.
In New York, the S&P 500 was in focus, with the 5,000 point mark in its sights. It was lower in early afternoon dealings, however.
The FTSE 100 index fell 33.27 points, 0.4%, at 7,595.48. The FTSE 250 closed well off session highs, slipping 1.81 points to 19,102.72. The AIM All-Share closed down 0.36 of a point to 751.10.
The Cboe UK 100 ended down 0.5% at 759.41, the Cboe UK 250 edged up 0.1% at 16,537.00, and the Cboe Small Companies closed down 0.4% at 14,580.46.
In European equities on Thursday, the CAC 40 in Paris closed up 0.7%, while the DAX 40 in Frankfurt ended 0.3% higher.
In New York, the Dow Jones Industrial Average was down 0.3%, the S&P 500 was 0.1% lower so still off 5,000 points, while the Nasdaq Composite added 0.2%.
‘It seems inevitable that this key [5,000 points] psychological level could be coming. The question now is what happens after this level is potentially breached? There is a bit of market nervousness around the 5,000 level and the index is fluctuating ahead of this level,’ XTB analyst Kathleen Brooks commented.
Brooks noted that the S&P 500 has outpaced European peers so far this year so it could be hurt by ‘fatigue’ if it does breach the 5,000 mark, the analyst predicted.
Focus was also on words from US monetary policymakers.
Richmond Fed President Tom Barkin said he was ‘very supportive of being patient’ on announcing the first reduction. Fed Governor Adriana Kugler added that she wanted to wait until more data was available before moving.
The pound was quoted at $1.2609 late on Thursday afternoon in London, lower compared to $1.2623 at the equities close on Wednesday. The euro stood at $1.0763, flat against $1.0765. Against the yen, the dollar was trading at JP¥149.39, up compared to JP¥148.01.
In London, it was a busy day of earnings and corporate updates.
DS Smith topped the FTSE 100 index, rising by 9.8%, after announcing it received a preliminary takeover approach from peer Mondi. Mondi shares fell 0.2%.
Mondi talked up the idea of a possible bid for its packaging peer, but said an acquisition would need to fit its capital allocation policy.
Mondi said it is in the early stages of considering a bid for DS Smith. It believes a tie-up would be an ‘exciting opportunity to create an industry leader in European paper-based sustainable packaging solutions’.
The possible merger would create a company worth more than £10 billion.
Mondi added: ‘Mondi’s strategy is to deliver value accretive growth and, as noted above, adopts a disciplined approach to acquisitions and investment within its capital allocation framework. Any transaction with DS Smith would be assessed against this framework.
‘Mondi remains committed to maintaining a strong and stable financial position supported by a solid investment grade credit rating and a dividend policy aimed at offering shareholders long-term dividend growth within the context of its stated cover policy.’
British American Tobacco shares rose 7.1% as it reported weaker annual results, though there was still plenty for investors to cheer. It hinted at a possible sale of its stake in Indian holding ITC, and also announced progress in its New Categories offering.
The London-based maker of cigarettes and vapes said it regularly reviews its stake in ITC, ‘a significant shareholding which offers us the opportunity to release and reallocate some capital’.
‘We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding,’ BAT continued.
ITC is a Kolkata, India-based company. It is India’s biggest cigarette maker but has diversified into other businesses including luxury hotels. BAT owns a 29% stake valued at around £14 billion.
In addition, BAT said the company has hit profitability with its ’new categories’ products, sooner than forecast.
The comments came as BAT reported results for 2023 which showed revenue fell 1.3% to £27.28 billion from £27.66 billion in 2022. Revenue was shy of Vuma consensus of £27.60 billion
The company swung to a pretax loss of £17.06 billion from a profit of £9.32 billion a year prior.
A buyback helped support Unilever shares. The consumer goods company added 3.2%.
The London-based maker of food & drink, cleaning, toiletry, and personal care products said pretax profit fell 9.7% to €9.34 billion in 2023 from €10.34 billion in 2022, as revenue slipped 0.8% to €59.60 billion from €60.07 billion. Revenue fell short of company-compiled consensus of €60.04 billion.
The company also announced a new share buyback programme worth up to €1.5 billion, set to begin in the second quarter and be completed within 2024.
‘A return to volume growth and improved sales margins on a group basis would suggest Unilever is getting back in the groove. However, the journey still has some way to go as there are pockets of weakness which it needs to resolve,’ AJ Bell analyst Russ Mould commented.
Sliding, however, AstraZeneca gave back 6.4%. The Cambridge, England-based pharmaceutical company said that in the fourth quarter ending December, revenue increased to $12.02 billion from $11.21 billion the year before, up 7% on an actual basis and 8% at constant currency.
Revenue was shy of the $12.09 billion that was expected, according to LSEG-cited consensus.
Pretax profit climbed 15% or 18% at constant currency to $897 million from $778 million the year prior, while reported earnings per share rose 7% to $0.62 from $0.58.
Elsewhere in London, Digital 9 shares tumbled 24%.
Back in November, the investor had announced the sale of its stake in the Verne Group for up to $575 million. The disposal of the data group to funds managed by Ardian France SA comprises $440 million in cash, split between $415 million payable on closure of the deal and deferred consideration of $25 million.
On Thursday, Digital 9 said the Icelandic antitrust authority, the body responsible for providing the Icelandic regulatory approval, has decided to open a phase 2 investigation into the Verne transaction.
‘Under the relevant applicable law, the period for the Phase II investigation is up to 90 working days which can be extended to 125 working days. The Icelandic anti-trust authority is not obliged to use the full period to conclude its review,’ Digital 9 said.
Brent oil was quoted at $81.02 a barrel late Thursday in London, up from $78.98 late Wednesday. Gold was quoted at $2,029.31 an ounce, lower against $2,039.13.
On Friday, financial markets in Shanghai are closed for the Chinese New Year. Markets in Hong Kong will have an abbreviated session. There is a German inflation reading at 0700 GMT, and Irish industrial production at 1100 GMT.
The local corporate calendar has a trading statement from housebuilder Bellway.
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