Traders in London returned from the long Easter break on Tuesday in a downbeat mood after the IMF cast a long shadow over its economic outlook for the rest of the year.
The new forecast now pointed to global economic growth at 3.6% for 2022. That is another drastic reduction in the outlook, primarily due to unprecedented economic pressures. Already in January, the IMF had lowered its global economic forecast for 2022 by half a percentage point, to 4.4%.
The world was already facing inflation problems, on the one side due to loose monetary policy in many wealthy nations, on the other due to supply snarls exacerbated by lingering effects of the pandemic.
Russia's invasion worsened the situation because both it and Ukraine are responsible for major commodity supplies of food and fuel. Much of what Ukraine exports is now inaccessible due to the invasion and much of what Russia sells is off limits due to sanctions set up to punish it for the attack.
The FTSE 100 index ended down 15.10 points, or 0.2%, at 7,601.28. The mid-cap FTSE 250 index lost 159.44 points, or 0.8%, at 20,962.17. The AIM All-Share index closed down 4.16 points, or 0.4%. at 1,056.00.
The Cboe UK 100 index ended down 0.1% at 757.59. The Cboe 250 closed down 0.6% at 18,457.77, and the Cboe Small Companies lost 0.5% at 15,349.55.
In mainland Europe, the CAC 40 stock index in Paris shed 0.8%, while the DAX 40 in Frankfurt ended 0.1% lower.
In the FTSE 100, oil majors Shell and BP ended up 1.6% and 0.4% respectively, tracking spot oil prices higher.
Brent oil was quoted at $107.80 a barrel at the London equities close, up from $107.52 at the same time on Thursday.
At the other end of the large-caps, ITV closed down 3.6% after Berenberg downgraded the broadcaster to 'sell' from 'hold'.
In the FTSE 250, Spectris ended up 4.7% after unveiling a £300 million share buyback programme alongside the sale of its Omega Engineering subsidiary to Arcline Investment Management.
The precision instrumentation and controls supplier will net $525 million from the Omega disposal. Specialist sensors provider Omega generated sales of £129.0 million in 2021 and adjusted earnings before interest, tax, depreciation and amortisation of £19.7 million.
The buyback will consist of an initial £150 million, ‘to be launched shortly’, before a further £150 million tranche. The second instalment is subject to shareholder approval at the firm's annual general meeting on May 27.
At the bottom of the mid-caps, JTC lost 12% despite hiking its dividend after revenue and profit growth in 2021, with acquisitions helping to boost the fund manager's performance.
Revenue for 2021 grew 28% to £147.5 million from £115.1 million in 2020, and pretax profit jumped to £27.8 million from £11.2 million. Annualised new business wins totalled £20.9 million, up from £17.9 million in 2020.
The revenue growth reflected strong net organic growth of 9.6% plus inorganic growth of 19%, the firm said. JTC has been pleased with the integration and business performance of recent acquisitions, with all seven ‘on track’, it said.
SSP closed down 6.3% after Deutsche Bank cut the food and beverage concessions operator to 'hold' from 'buy'.
Elsewhere, Sensyne Health plunged 34% after the clinical artificial intelligence company proposed delisting from London's AIM junior market.
The company is seeking approval from its shareholders for the delisting of the shares, in accordance with AIM rules, Sensyne Health explained. It will hold a general meeting on May 20.
The dollar was higher across the board in the wake of hawkish comments from St Louis Federal Reserve President James Bullard, who said a 75 basis point US interest rate hike should not be ruled out, Bloomberg reported.
Bullard, in a virtual conference held by the Council on Foreign Relations think tank, said the Fed would need to move decisively as it eyes lifting interest rates to around 3.5% this year.
Moreover, Bullard noted a hike of more than 50 basis points at a single policy meeting is not his ‘base case at this point’, however. ‘I wouldn't rule it out, but it is not my base case here,’ he explained.
The next meeting of the policy-making Federal Open Market Committee is on May 4.
The pound was quoted at $1.2997 at the London equities close, down from $1.3060 at the close on Thursday.
The euro stood at $1.0785 at the European equities close, lower against $1.0797.
Against the yen, the dollar was trading at JP¥128.77, up sharply from JP¥125.91 late Thursday. The buck hit an intraday high of $128.92 - its highest level since May 2002.
New York was higher at the London equities close weighing mixed earnings and a weakening global growth outlook against bargain-hunting tendencies following recent losses.
The DJIA was up 1.1%, the S&P 500 index up 1.3% and the Nasdaq Composite up 1.6%.
On Wall Street, Johnson & Johnson was the best Dow performer, up 4.0%. The drugmaker reported a drop in first-quarter earnings, despite sales growth of 5%.
The New Brunswick, New Jersey-based firm said earnings fell 17% to $5.15 billion in the first three months of 2022 from $6.20 billion a year previous. Per share, earnings dropped to $1.93 from $2.32, also representing a 17% fall.
Sales rose 5.0% to $23.43 billion from $22.32 billion. In Consumer Health, sales declined 1.5%, but in Pharmaceuticals, sales grew 6.3%.
The company hiked its quarterly dividend by 6.6% to $1.13 per share from $1.06.
Streaming services provider and content producer Netflix will report first-quarter earnings after the closing bell.
Gold stood at $1,953.33 an ounce at the London equities close, lower against $1,964.54 late Thursday.
The economic events calendar on Wednesday has Germany producer prices at 0700 BST.
The UK corporate on Wednesday has trading statements from distribution company Bunzl, gambling firm 888 Holdings and gold miner Centamin.
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