(Alliance News) - Big miners were dragging on the FTSE 100 index early Thursday, amid a raft of company earnings and trading updates, while later in the day attention will shift to speaking engagements by key central bankers.
Antofagasta was at the bottom of the list of London blue-chips, while Anglo American wasn't far behind.
Outside of corporate updates, focus on Thursday will lie on a remarks from central bank heads. US Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde will be panellists at an IMF seminar on the global economy. Meanwhile, Bank of England Governor Andrew Bailey will speak at the the Peterson Institute for International Economics as part of its annual Macro Week event.
Powell's comments will come after the Fed's latest Beige Book survey of business conditions showed US firms are seeing increased business as Covid-19 cases decline across the world's largest economy, even as they struggle with rising prices and scarce staff.
‘A striking pullback in US Treasury yields saw a near-15 [basis point] intraday reversal in the 10-year benchmark, as strong demand at a 20-year auction encouraged the dip buyers,’ noted UK broker Peel Hunt. ‘The move prompted some suggestions that the likely pace of Fed tightening may have been exaggerated, with US headline inflation now likely close to, or at, its peak.
‘Sentiment remains highly sensitive to central bankers' commentary.’
The FTSE 100 index was down 12.74 points, or 0.2%, at 7,616.48 early Thursday. The mid-cap FTSE 250 index was up 14.17 points, or 0.1%, at 21,098.17. The AIM All-Share index was down 1.84 points, or 0.2%, at 1,054.39.
The Cboe UK 100 index was down 0.1% at 758.10. The Cboe 250 was up 0.2% at 18,571.26, and the Cboe Small Companies up 0.1% at 15,364.60.
In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 40 in Frankfurt was up 0.2% early Thursday.
In London, Antofagasta shares were down 7.4% after the miner posted a 24% year-on-year decline in copper output in the first quarter, amounting to 138,800 tonnes, though the company said this was in line with expectations.
‘Production reflected the impact of the ongoing drought at Los Pelambres and the expected lower grades at Centinela Concentrates,’ said Chief Executive Ivan Arriagada.
Anglo American was the second worst performer in the FTSE 100, down 5.3%. The fellow miner reported a 10% decline in output in its ‘normally slower’ first quarter amid Covid-related absences, high rainfall in South Africa and Brazil, and operational challenges at metallurgical coal and iron ore operations.
‘This challenging start to the year highlights the importance of adhering to our operating model to stabilise performance after the necessary disruptions of the last two years as we adapted to - and now learn to live with - Covid. As a result, we are updating our platinum group metals, iron ore and metallurgical coal volume guidance for the full year, and our unit cost guidance for most product groups to also reflect up to date exchange rates and the inflationary pressure on many input prices, particularly diesel,’ said Chief Executive Mark Cutifani.
Copper production was down 13% year-on-year, platinum group metals production was down 6%, metallurgical coal production dropped by 32% and iron ore production decreased by 19%. The only category to see an increase was diamonds, with output up by a quarter.
Full year cost guidance has increased by 9%, with a 4% hit from stronger producer currencies and 3% from inflationary pressures. At the same time, Anglo America reduced output guidance for its PGM, iron ore and metallurgical coal operations.
Shares in peer BHP fell 2.1%. The miner cut annual guidance for copper production as well as nickel output, as it grapples with Covid-19-related labour market woes. Its outlook for iron ore, metallurgical coal and energy coal for the financial year ending June 30 were unchanged, however.
Rentokil Initial was up 2.3% after saying 2022 has started well, with first quarter revenue growth of 1.8%, or 12% when excluding the disinfection business that got a Covid-19 boost last year.
Organic growth, excluding disinfection, was 8.0%. The pest control and hygiene firm said it has experienced inflationary pressures in the period, but it has managed to mitigate this squeeze on margins via annual price increases.
‘Total price increases achieved in Q1 have entirely offset input cost inflation in the quarter and we remain confident that we will be able to continue to counter rising inflation through APIs during the course of the year,’ said Rentokil.
At the bottom of the FTSE 250 was Rank Group, down 8.6% after cutting earnings guidance following a soft end to financial third-quarter trading.
Like-for-like net gaming revenue in the three months to March 31 jumped to £156.4 million from just £48.7 million a year before. Rank noted its UK venues were closed for the entirety of the prior-year period. When compared against the most recent non-Covid-affected third quarter, Rank said Grosvenor venues NGR was down 14% and Mecca venues down 25%.
‘For both our UK venues businesses there was a softness in visits at the end of the quarter consistent with the rise in new Covid-19 cases reported across the UK,’ said Rank.
The company anticipates an improvement in performance after April, but cautioned it ‘remains to be seen how the trends in the rate of return of office workers to city centres and overseas customers to London will develop towards the summer.’ As such, it lowered its full-year earnings before interest and tax guided range to between £47 million and £55 million from a prior range of £55 million to £65 million.
Elsewhere in London, THG shares were up 4.3% after receiving indicative takeover proposals from ‘numerous parties’ in recent weeks, but rejected them all on the grounds the offers failed to reflect the full value of the firm. The online beauty products platform confirmed it is not currently in receipt of any approaches.
The update came alongside THG's annual results, which showed revenue in 2021 jumped 35% to £2.18 billion from £1.61 billion the year before. Its pretax loss slimmed to £186.3 million from £534.6 million.
Card Factory rallied 18% after successfully completing a refinancing, removing a commitment to raise funds. The greeting cards retailer has agreed revised terms on reduced facilities of £150 million, previously £225 million.
‘The best efforts commitment given by Card Factory to its banks, to raise net equity proceeds of £70 million by 30 July 2022 has been removed from the revised facilities. The board has no current intention of completing an equity raise,’ it added.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite ended down 2.3%, while the Hang Seng index in Hong Kong was down 1.5%. The S&P/ASX 200 in Sydney closed up 0.3%.
Gold was quoted at $1,950.99 an ounce early Thursday, soft from $1,952.11 on Wednesday. Brent oil was trading at $108.33 a barrel, higher than $107.55 late Wednesday.
Sterling was quoted at $1.3069 early Thursday, higher than $1.3045 at the London equities close on Wednesday.
The euro traded at $1.0913 early Thursday, up against $1.0860 late Wednesday. Against the yen, the dollar was quoted at JP¥127.96, up from JP¥127.70.
The economic events calendar on Thursday has eurozone inflation data at 1000 BST and the latest US jobless claims numbers at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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