Kingfisher and Hargreaves Lansdown bookended the FTSE 100 and typified a mixed day for corporate updates, keeping a lid on share price progress on the eve of the latest Federal Reserve interest rate decision.
There were a slew of guidance cuts, with B&Q owner Kingfisher and fashion retailer Quiz among those cautioning on their outlooks. It was slightly sunnier at tour operator Tui, which backed guidance.
The FTSE 100 index was up 18.13 points, 0.2%, at 7,671.07. The FTSE 250 was up 84.25 points, 0.5%, at 18,533.52. The AIM All-Share was down 1.24 points, 0.2%, at 740.82.
The Cboe UK 100 was up 0.2% at 763.76, the Cboe UK 250 was up 0.4% at 16,143.04, and the Cboe Small Companies was up 0.2% at 13,426.39.
In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.1%.
In August, the eurozone’s consumer price index rose by 5.2% on-year, slowing from a 5.3% rise in July. An earlier flash estimate had expected the figure to be unchanged from July’s 5.3%. A year earlier, the rate of annual inflation was 9.1%.
On a month-on-month basis, consumer prices rose by 0.5%, after falling 0.1% in July. The flash estimate had been for a 0.6% rise.
Oxford Economics said the data supports its view that ‘we have seen the last rate hike by the [European Central Bank].’
The pound was quoted at $1.2388 at midday on Tuesday in London, lower compared to $1.2393 at the equities close on Monday. The euro stood at $1.0698, higher against $1.0684. Against the yen, the dollar was trading at JP¥147.67, down slightly compared to JP¥147.70.
The overall mood in financial markets remained cautious, however. Investors are waiting for several central bank decisions.
The US Federal Reserve will be the first to announce its interest rate decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.
The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July. The Fed will begin its two-day crunch meeting on Tuesday.
‘This week, the US policymakers will certainly opt for a ’hawkish pause’. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth,’ said Swissquote Bank’s Ipek Ozkardeskaya.
Stocks in New York were called slightly higher, despite pre-Fed nerves. The Dow Jones Industrial Average and the Nasdaq Composite were both called up 0.1%. The S&P 500 index was called up 0.2%.
Though shares in London were largely higher, the cautious mood ahead of the central bank updates, as well as a slew of profit warnings, kept a lid on gains.
‘These profit warnings suggest investors need to be on their guard for the next earnings season,’ warned AJ Bell’s Russ Mould.
In the FTSE 100, Kingfisher lost 6.6%.
The DIY retailing company said sales in the first half ended July 31 edged up 1.1% to £6.88 billion from £6.81 billion a year before, but statutory pretax profit dropped by 33% to £317 million from £474 million.
The B&Q owner maintained its interim dividend at 3.80p, and announced a new share buyback programme of £300 million. However, the firm cut its guidance for adjusted pretax profit in 2023, now expecting around £590 million, compared to previous estimates of £634 million.
Meanwhile, on AIM, fashion company Quiz plunged 31%.
Quiz said revenue in the year beginning April 1 has continued to lag behind the prior year, sitting below management expectations, as inflationary cost pressures have hit consumer confidence and demand for its products.
In the five months to August 31, revenue was down 15% year-on-year to £37.0 million from £43.7 million. Quiz said that if the current trend continues, annual revenue is likely to be 6% to 7% behind current market expectations, which will have a knock-on effect on profit.
It said it would expect a pretax loss of no more than £1.5 million, swinging from profit of £2.3 million in the prior year.
AJ Bell’s Mould added: ‘Even alcohol seller Naked Wines couldn’t escape the doom and gloom, saying that its new financial year had started off slower than expected.’
Naked Wines shares were 9.3% lower.
In more positive news, Ocado rose 3.5%.
The Hertfordshire-based online grocer and warehouse technology firm reported that revenue in its third quarter totalled £569.6 million, increasing 7.2% from £531.5 million the year prior.
Average customers grew 1.5% to 961,000, from 946,000, while the average basket value rose 4.2% to £120.72, from £115.85.
Hargreaves Lansdown added 5.5%. The digital wealth management service said revenue climbed 26% to £735.1 million in the year to June 30 from £583.0 million a year before, as pretax profit surged 47% to £402.7 million from £269.2 million. The results beat MarketScreener-cited forecasts of revenue at £717 million and pretax profit of £380 million.
Net new business inflows fell 13% to £4.8 billion from £5.5 billion, however, although active clients increased by 67,000 to 1.8 million. The firm raised its dividend by 4.5% to 41.5 pence per share from 39.7p.
In the FTSE 250, Tui gained 6.3%.
The tour operator backed its guidance, after enjoying a strong summer for bookings and seeing ‘positive momentum’ going into the winter.
Tui reported a ‘strong pipeline’ of bookings for the summer 2023 period, rising 5% on-year to 13.7 million, taking it to 96% of pre-pandemic levels. Demand in the final month alone was robust, rising 8% year-on-year.
Amongst London’s small-caps, consumer reviews platform Trustpilot jumped 17%.
The Copenhagen-based firm said revenue in the first half ended June 30 rose 15% on-year to $84.6 million from $73.4 million. It narrowed its pretax loss to $4.0 million from $9.2 million a year prior.
Looking ahead, Trustpilot backed its annual top-line outlook, predicting mid-teens constant currency revenue growth. However, it now believes its adjusted Ebitda will beat the current range of market expectations.
On AIM, SpaceandPeople rose by 26%.
The retail, promotional and brand experience specialist announces another extension to its commercialisation agreement with Network Rail for providing exhibitions, events and distribution activity until September 30, 2024.
Brent oil was quoted at $95.04 a barrel at midday in London on Tuesday, up from $94.78 late Monday. Gold was quoted at $1,936.12 an ounce, higher against $1,927.22.
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