Stocks in London struggled on Thursday after weak performance on Wall Street, as investors consider the latest economic data ahead of the Bank of England interest rate decision.
The FTSE 100 index opened down 103.80 points, 1.4%, at 7,457.83. The FTSE 250 was down 91.06 points, 0.5%, at 18,721.82, and the AIM All-Share was down 0.75 of a point, 0.1%, at 757.34.
The Cboe UK 100 was down 1.2% at 744.21, the Cboe UK 250 was down 0.6% at 16,404.22, and the Cboe Small Companies was up 0.2% at 13,769.06.
‘The Bank of England takes center stage today as it faces yet another knife-edge decision,’ said ING.
The BoE announces its interest rate decision at 1200 BST on Thursday. A press conference with Governor Andrew Bailey follows at 1230 GMT. Market consensus is predicting a 25 basis point hike to interest rates, according to FXStreet. This will mark the fourteenth consecutive raise.
At the last meeting in June, the BoE raised UK interest rates by 50 basis points, taking the benchmark bank rate to 5.00% from 4.50% previously.
It had dug deep into its arsenal with a half-point hike after a hotter-than-expected May UK inflation reading.
At this meeting, however, the bank will be considering June’s cooler-than-expected inflation print. According to data from the Office for National Statistics last month, consumer prices rose by 7.9% in June, easing from an 8.7% jump in May.
‘The central bank still faces the familiar trade-off between inflation reduction and avoiding recession and, in our view, the [Monetary Policy Committee] may prefer slowing their hikes while staying explicitly vigilant on wages and services inflation. The guidance will likely emphasize the central bank‘s tightening bias, with the onus being on incoming economic data to justify any changes to the pace of rate hikes going forward,’ ING commented.
The pound was quoted at $1.2695 early on Thursday in London, down compared to $1.2707 at the equities close on Wednesday.
In Asia on Thursday, the Nikkei 225 index in Tokyo closed down 1.7%. In China, the Shanghai Composite closed up 0.6%, while the Hang Seng index in Hong Kong was down 0.4% in late trade. The S&P/ASX 200 in Sydney closed down 0.6%.
China’s services sector continued to see a strong expansion in July, according to survey data.
The Caixin services purchasing managers’ index rose to 54.1 points in July from June’s five-month low of 53.9. Rising further above the 50-point no-change mark, it shows the pace of growth accelerated slightly over the month.
The composite PMI - which measures the services and manufacturing sectors - edged down to 51.9 from 52.5.
Growth in Japan’s service sector slowed in July, survey data showed. The au Jibun Bank services PMI eased to 53.8 in July from 54.0. The composite PMI rose to 52.2 from 52.1.
Thursday’s economic calendar has more PMI readings, including the eurozone at 0900 BST, the UK at 0930 and the US at 1445. Other than the PMI readings, the latest US jobless claims reading is reported at 1330 BST.
In the US on Wednesday, equities in New York slumped after the downgrade to US debt. The Dow Jones Industrial Average closed down 1.0%, the S&P 500 closed down 1.4% and the Nasdaq Composite down closed 2.2%.
In the FTSE 100, London Stock Exchange lost 4.5%.
In addition to operating the London Stock Exchange, LSEG provides post-trade services, financial data, and stock indices.
It said pretax profit in the six months that ended June 30 fell by 18% to £662 million from £803 million a year before. However, adjusted earnings before tax, depreciation and amortisation grew by 4.1% to £1.87 billion from £1.80 billion, despite a narrowed adjusted Ebitda margin of 46.9% from 50.4%.
LSEG raised its dividend by 13% to 35.7p from 31.7p. Having completed a £400 million share buyback in the first half, the company said it expects to complete up to £750 million in buybacks by April 2024.
Smith & Nephew was down 3.3%.
Smith & Nephew said that revenue in the six months ended July 1 rose 5.2% to $2.73 billion from $2.60 billion a year ago. The London-based medical equipment maker said pretax profit in the half-year rose to $211 million from $204 million.
Smith & Nephew declares interim dividend of 14.4 US cents, in line with prior year.
In a separate announcement, Smith & Nephew said that its Chief Financial Officer Anne-Francoise Nesmes will step down during the second quarter of 2024, on a date to be agreed. The board has begun an external search for a new CFO.
In the FTSE 250, Wizz shed 7.0%.
Wizz Air said that in the three months ended June 20 revenue rose to €1.24 billion, up 53% from €808.8 million a year earlier. The low budget airline swung to a pretax profit of £67.1 million from a loss of £451.1 million a year earlier.
Chief Executive Jozsef Varadi said: ‘Summer is going well operationally and from a revenue perspective. We have made significant progress against our main objectives of reinstating best in class profitability at the back of delivering high-capacity growth and improving operational metrics during the quarter.’
Helios Towers was up 6.5%.
The independent telecommunications infrastructure company said revenue in the first half of 2023 rose to $350.2 million, up 32% annually from $265.4 million. It noted that this was ahead of its expectations.
Its pretax loss narrowed to $39.4 million from $122.2 million.
Looking ahead, Helios tightened 2023 guidance upwards.
On AIM, Kodal Minerals jumped 24%.
The Mali-focused mineral exploration and development company said it has received a prepayment of $3.5 million, as part of the funding package for the Bougouni Lithium project. The package was announced in January, it is for up to $117.8 million in total.
In European equities on Thursday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.8%.
In Frankfurt, Infineon Technologies lost 9.0%. In the company’s third quarter, ended June 30, revenue fell to €4.09 billion, down from €4.12 billion in the second quarter but up from €3.62 billion year-on-year.
‘We have strongly performed in the past quarter, while Semiconductor market trends continue to present a mixed picture with both light and shade,’ said Jochen Hanebeck, CEO of Infineon.
The euro stood at $1.0916, lower against $1.0940. Against the yen, the dollar was trading at JP¥143.72, higher compared to JP¥143.32.
Brent oil was quoted at $82.90 a barrel early in London on Thursday, lower from $83.09 late Wednesday. Gold was quoted at $1,931.92 an ounce, down against $1,934.77.
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