Stocks in London were in the red at midday on Wednesday as market mood remained cautious ahead of an eagerly-awaited inflation print for the world’s largest economy.
The FTSE 100 index was down 14.01 points, 0.2%, at 7,750.08. The FTSE 250 was down 42.66 points, 0.2%, at 19,234.49, and the AIM All-Share was down 2.42 points, 0.3%, at 826.93.
The Cboe UK 100 was down marginally at 775.03 and the Cboe UK 250 down 0.2% at 16852.44, whilst the Cboe Small Companies up 0.4% at 13602.40.
Stocks in New York were called lower, ahead of the inflation data. The Dow Jones Industrial Average is called down 0.1%, while both the S&P 500 index the Nasdaq Composite are called down 0.2%.
US inflation data will be released at 1330 BST on Wednesday.
In March, the US inflation rate was cooler than expected, fading to 5.0% in March from 6.0% in February. Markets are expecting the annual inflation rate remain at 5.0% in April, according to FXStreet.
AJ Bell’s investment director Russ Mould said: ‘US inflation figures later today could easily turn markets upside down if inflation proves stickier than hoped. Investors are eager to see proof that inflation is easing as that is another reason for the Federal Reserve to stop raising interest rates.’
Inflation has also been a topic of discussion in Europe.
There was some good news for Germany, which saw consumer price inflation ease in April.
Germany’s annual rate of consumer price inflation slowed to 7.2% in April from 7.4% in March.
‘The rate of inflation has therefore slowed for the second month in a row but remains at a high level,’ said Ruth Brand, president of the Federal Statistical Office. ‘Looking at the basket of goods and services surveyed, food prices continued to be the biggest driver of inflation in April.’
Later in the week, the Bank of England will announce its latest interest rate decision at 1200 BST on Thursday.
The pound was quoted at $1.2617 at midday on Wednesday in London, flat compared to $1.2618 at the equities close on Tuesday. The euro stood at $1.0953, down against $1.0955. Against the yen, the dollar was trading at JP¥135.19, up compared to JP¥135.09.
In European equities on Wednesday, both the CAC 40 in Paris and the DAX 40 in Frankfurt were down 0.3%.
On the FTSE 100, Melrose Industries jumped 3.6%, making it the best performer in the index at Wednesday midday.
Melrose said it traded materially ahead of expectations in the four months to April 30, with ‘significant growth in revenue, profit and margin being achieved’.
Revenue was 19% higher year-on-year at constant currency, helped by a 28% improvement in its Engines divisions. The adjusted operating margin rose ‘substantially’ to 10%. The figures remove its recently demerged divisions from the comparative period.
Looking ahead to the rest of 2023, Melrose expects revenue between £3.35 billion and £3.45 billion. The higher end of that range would top company-compiled consensus of £3.4 billion. Melrose had reported revenue of £7.54 billion in 2022, though that included recent spin-off Dowlais Group.
Adjusted operating profit of between £340 million and £360 million is expected, before head office costs. Melrose expects adjusted earnings before interest, tax, depreciation and amortisation between £495 million and £515 million, also before head office costs.
Melrose also announced a departure from its industrial turnaround strategy, focusing on just aerospace instead for now. And it revealed the prospect of consistent share buybacks as a restructuring of its aerospace offering progresses.
On the FTSE 250 index Asos plummeted 16%, after the online reailer posted a markedly weaker half-year financial performance.
Asos, which said it is ‘prioritising order economics over top-line’, explained it is committed to ending the financial year with a better inventory position.
For the six months to February 28, revenue declined by 8.2% to £1.84 billion from £2.00 billion a year earlier. Its pretax loss widened to £290.9 million from £15.8 million a year ago.
The outcome reflects ‘both deliberate actions on capital allocation to improve profitability and a challenging trading backdrop’.
‘Asos’s half-year results are as ugly as sin,’ said AJ Bell’s Mould.
‘It’s all very well having a turnaround plan, but at some stage you have to show results and it feels like Asos should have been delivering the goods by now.’
Wetherspoons rose 6.9%, after it hailed its ‘highest-ever’ sales in the Easter period.
The Watford, Hertfordshire-based pub and hotel chain said like-for-like-sales in the 13-weeks to April 30 rose 12% from a year ago and were 9.1% higher than in the same period in the last full financial year before the pandemic.
Wetherspoon noted that the first weekend of May ‘was exceptionally strong’ over the bank holiday, though the second weekend including the May 8 Coronation bank holiday was slightly weaker.
Shares in Unbound crashed, after Marwyn Investment Management withdrew its offer of a £10 million equity investment in the footwear retailer. Marwyn cited concerns over Unbound’s current trading.
‘The board is continuing to work with the group’s advisers and banking partners with a view to raising additional funding or refinancing its existing borrowing facilities in order to provide the appropriate balance sheet structure and level of working capital headroom,’ the company added.
Separately, Unbound said the trading environment has remained challenging over the first quarter of the year.
Brent oil was quoted at $76.55 a barrel at midday in London on Wednesday, up from $74.94 late Tuesday. Gold was quoted at $2,031.98 an ounce, up against $2,025.96.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
