London share prices were firm at midday on Thursday, with investor sentiment supported by positive news from China, while the first estimate of US gross domestic product growth in the final quarter of 2022 is due in the early afternoon.
‘Today’s main market focus is the first estimate of US Q4 GDP. It is forecast to show a second successive quarter of growth after the decline in the first half of last year,’ Lloyds Banking Group said.
GDP and US unemployment insurance claims are due at 1330 GMT, while a new residential sales report is out at 1500 GMT.
The economic data could be influential on a US Federal Reserve policy-setting meeting that starts on Tuesday next week.
The FTSE 100 index was up 8.65 points, 0.1%, at 7,753.52. The FTSE 250 was up 105.73 points, 0.5%, at 19,909.77, and the AIM All-Share was up 4.06 points, 0.5%, at 864.84.
The Cboe UK 100 was up 0.1% at 775.00, the Cboe UK 250 up 0.5% at 17,354.75, and the Cboe Small Companies up 0.4% at 14,124.87.
The US Bureau of Economic Analysis will release its first estimate of fourth-quarter GDP on Thursday. Economists expect an annualised growth rate of 2.8% in the last quarter of 2022, according to market consensus cited by FXStreet.
In the third quarter, US GDP grew by 3.2% on a year before. GDP had shrunk at an annual pace of 0.6% in the second quarter.
The US Fed is expected to slow its pace of interest rate hikes to 25 basis points at its policy meeting next week. It hiked by half a percentage point in December, but enacted four successive 75 basis point lifts in the meetings prior.
Stocks in New York were called to open mixed. The Dow Jones Industrial Average and the S&P 500 index were called flat, whilst the Nasdaq Composite was called up 0.2%.
Away from US economic data, optimism about China’s re-opening from pandemic lockdowns has returned.
The number of daily Covid-19 deaths in China has fallen by nearly 80% since the start of the month, authorities have said, in a sign that the country’s unprecedented infection surge may have started to abate.
In European equities on Thursday, the CAC 40 index in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.2%.
German inflation is expected to average 6% this year, after reaching 7.9% in 2022, Economy Minister Robert Habeck told lawmakers on Thursday. Forecasts indicated that it would be possible to curb inflation and break the current trend during the course of this year, Habeck said.
Inflation in Germany has been at its highest levels since World War II, driven primarily by a surge in food and energy costs due to the war in Ukraine.
The government expects economic growth of just 0.2% this year. The prediction is up on the autumn forecast of a decline in gross domestic product for 2023 as a whole.
The pound was quoted at $1.2397 midday on Thursday in London, up compared to $1.2354 at the equities close on Wednesday. The euro stood at $1.0900, up against $1.0886. Against the yen, the dollar was trading at JP¥129.82, marginally higher against JP¥129.78.
In the FTSE 100, the best performing stock at midday was 3i Group, up 5.4%.
The company said it is on track for ‘good growth’ this financial year, despite pressure in its consumer discretionary sector investees amid tough economic conditions.
3i Group, whose investments range from infrastructure to retail, said its diluted net asset value per share at the end of its third quarter on December 31 grew 12% to 1,649p from 1,477p at the end of September.
‘The private equity and infrastructure portfolio continues to demonstrate its resilience in challenging trading conditions. Our strategy of investing in assets backed by long-term, through the cycle growth trends means we are well-equipped to mitigate macroeconomic headwinds that are impacting a small pocket of the portfolio, most notably the discretionary consumer segment,’ 3i said.
At the other end of the FTSE 100, Diageo lost 6.7%. The London-based brewer and distiller, which owns brands including Baileys, Tanqueray, Johnnie Walker, Smirnoff and Captain Morgan, gave a gloomy outlook.
Diageo said pretax profit in the six months to December 31 increased 12% to £3.06 billion versus £2.72 billion a year earlier.
Net sales rose 18% year-on-year to £9.42 billion from £7.96 billion. Diageo noted that organic growth was 10%, rising in all markets except in eastern Europe, which was hit by the company shutting down its operations in Russia. Diageo back in June announced it would wind down operations in from Russia following the country’s invasion of neighbour Ukraine in February 2022.
The company declared an interim dividend of 30.83 pence per share, up 5.0% from 29.36 pence a year ago.
Looking ahead, Diageo said it expects organic net sales growth in Europe to moderate in the second half of its current financial year to June 30. In the Asia Pacific, Latin America & Caribbean and Africa regions, it anticipates growth to slow due to a ‘strong’ sales comparison in financial 2022.
In the FTSE 250, Wizz Air shed 7.7%.
The budget airline reported a rise in passenger numbers and revenue in its third-quarter, though it still expects to make an annual loss.
Revenue in the three months to December more than doubled to €911.7 million from €408.4 million a year earlier. Wizz Air swung to a third-quarter reported profit of €33.5 million from a €267.5 million loss.
It said passengers carried jumped 59% to 12.4 million from 7.8 million a year prior.
Looking ahead, Wizz Air still expects a net loss this financial year, but is ‘confident’ the next one will be profitable. It made a €642.5 million net loss in financial 2022, widened from €576.0 million. Its last net profit was the €201.1 million achieved in financial 2020.
AJ Bell investment director Russ Mould said: ‘Where Jet2 deserves credit is in the way it has treated customers over the last 12 months - not cutting flights at the last minute, doing its best to look after travellers and taking on board extra costs itself. This should help make it a trusted brand in the travel space and one people return to again and again. While volatile costs and economic pressures could lead to turbulence in the short term, Jet2 has done a good job of setting itself on an upwards flight path for the long term.’
Also in the FTSE 250, Tate & Lyle jumped 5.8%, after it backed its outlook for the financial year ending March 31.
The London-based sweetener and food ingredients supplier said group revenue was up 16% in the three months to December 31.
It said Food & Beverage Solutions top-line momentum continued with revenue up 19%. ‘Revenue growth benefited from mix management, the pricing through of input cost inflation and acquisitions,’ Tate & Lyle explained.
However, revenue from its Sucralose arm was down 8%, reflecting the unwind of orders phased into the first half. Tate & Lyle added it expected this fall.
The company didn’t provide any actual figures on Thursday, just percentage changes.
Looking ahead, Tate & Lyle said its outlook for the financial year ending March 31 is unchanged. Adjusted profit before tax is to be in line with current market expectations. Tate & Lyle said it continues to expect revenue growth ‘reflecting current top-line momentum’.
Elsewhere in London, Eyewear company Inspecs surged 41%.
The Bath-England-bases company said full-year trading was in line with expectations, despite Covid-19 restrictions in China and Vietnam.
It expects revenue for to be $246.0 million, flat from $246.5 million in 2021. On a constant exchange rate basis, however, it said revenue increased by 9.5%.
Looking ahead, Inspecs said it has entered 2023 with a good order book, and it hopes to continue to seek operational efficiencies and reduce costs where appropriate.
Brent oil was quoted at $86.80 a barrel at early in London on Thursday, up from $86.11 late Wednesday. Gold was quoted at $1,936.22 an ounce, up against $1,933.82.
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