Early market focus in London on Thursday was on company updates, with the last big risk events of the year looming next week in the form of three key central bank decisions.
Retailers were particularly prominent, as Frasers reported half-year results and In The Style put itself up for sale and recalled its founder to the CEO hot seat.
The FTSE 100 index opened down 2.68 points at 7,486.51. The FTSE 250 was up 8.71 points at 18,939.28, but the AIM All-Share was down 1.67 points, 0.2%, at 832.86.
The Cboe UK 100 was down 0.2% at 749.41, the Cboe UK 250 down 0.1% at 16,362.39, and the Cboe Small Companies down 0.1% at 13,009.33.
In European equities early on Thursday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.1%.
‘Markets are leaning very much toward a risk-off bias amidst growing concern about the unhealthy state of the global economy,’ noted SPI Asset Management’s Stephen McInnes.
‘Inflation is running at multi-decade highs, central banks are pursuing their most aggressive tightening cycle in a generation, and a recession is increasingly expected in the US and the euro area, and that is the good news. The bad news is that traders are reactively concerned about the potential of an even more severe recession than previously anticipated.’
Trading was tentative ahead of three key central bank decisions next week. The US Federal Reserve will announce its latest interest decision on Wednesday next week, with the Bank of England and European Central Bank to follow on Thursday.
Sterling was quoted at $1.2189 early Thursday, mostly unchanged from $1.2194 at the London equities close on Wednesday. The euro traded at $1.0513 early Thursday, similarly flat from $1.0506 late Wednesday. Against the yen, the dollar was quoted at JP¥136.86, up slightly versus JP¥136.56.
In the FTSE 100, DS Smith added 1.9%, as the packaging maker reported a strong half-year ended October 31.
DS Smith said revenue rose 28% to £4.30 billion from £3.36 billion a year before, lifting pretax profit by 82% to £322 million from £177 million.
DS Smith said the performance was driven by focusing on its customers’ needs during a period of significant economic volatility. ‘This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios,’ said CEO Miles Roberts.
DS Smith now expects its full-year performance to be ahead of previous expectations, and the second half to be consistent with the first. It announced an interim dividend of 6.0 pence per share, up 25% from 4.8p a year before.
British American Tobacco shed 2.1%, despite a largely upbeat trading update.
The cigarette maker guided for 2022 revenue growth of between 2% and 4% in constant currency for 2022, and mid-single figure adjusted diluted earnings per share growth at constant currency.
It now expects global tobacco industry volume to be around 2% lower in the full year, compared to a previous estimate of a 3% decline, ‘driven by continued post-Covid recovery in emerging markets’. However, US industry volumes in combustibles will reflect ‘increasing macro-economic pressures’ seen in the second half, it said.
BAT said its New Category business is seeing strong growth in volume, revenue and market share, becoming a ‘significant contributor’ to the firm’s performance. It remains confident of hitting revenue targets of £5 billion and profitability for the business by 2025.
Sports Direct-owner Frasers Group fell 3.7%.
Frasers said revenue rose 13% to £2.64 billion in the six months to October 23, from £2.34 billion a year prior, largely due to acquisitions. Excluding acquisitions by the retailer, revenue fell 3.1%, mostly down to a reduction in Game UK and a strong comparator after shops reopened from lockdown in March 2021.
Pretax profit jumped 53% to £284.6 million from £186.0 million.
Frasers reiterated its guidance for adjusted pretax profit of £450 million to £500 million in its full year, noting ‘strong strategic and trading momentum’.
In the FTSE 250, Wizz Air added 5.5%, after Bank of America raised the stock to ’buy’, while Travis Perkins shed 3.9% after JPMorgan cut the stock to ’underweight’ and placed it on ’negative catalyst watch’.
Balfour Beatty rose 2.7%. The construction firm said it expects revenue in 2022 to be around 5% ahead of the £8.3 billion booked in 2021, mostly driven by foreign exchange tailwinds. Similarly, it expects its order book to be 5% ahead of £16.1 billion at the end of the year.
Balfour guided for annual profit ahead of market expectations. This is down to positive net interest income and a lower tax charge for the year.
Hipgnosis Songs Funds rose 2.9%, as it reported total revenue of $91.7 million in the six months to September 30, up 7.5% from $85.3 million a year before. Its pretax loss widened to $20.1 million from $19.2 million. It left its interim dividend of 1.3125p unchanged from the prior year.
The music intellectual property investment and song management company said it expects continued annual growth in the global music market, and will benefit from increasing revenue form social media, gaming and lifestyle channels.
Online greeting card and gifting company Moonpig clawed back 4.0%, having shed 8.9% on Wednesday after disappointing interim results.
On AIM, In The Style jumped 11%, as it launched a strategic review, in light of its low market capitalisation.
This may or may not results in a sale of the company, its businesses, or assets. The fashion retailer said it is not in takeover talks, and has not received any offer or approach.
ITS said its expectations for full-year adjusted earnings before interest, tax, depreciation and amortisation remain unchanged. It noted ‘uncertain’ consumer sentiment, and guided for direct-to-consumer revenue in the second half to be ‘similar’ to that of the first. Wholesale revenue, which plunged 45% in the first half, is likely to continue to be a challenge, ITS said.
In the six months to September, revenue fell 11% to GB26.6 million from £29.8 million, and ITS swung to a pretax loss of £3.1 million from a profit of £890,000.
In addition, CEO Sam Perkins will step down at the end of December, with founder & former CEO Adam Frisby to return to the helm. Frisby previously served as CEO for nine years until January 2022, when he became chief brand officer.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong closed up 3.3%. The S&P/ASX 200 in Sydney closed down 0.8%.
In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average marginally higher, the S&P 500 down 0.2%, and the Nasdaq Composite down 0.5%.
Gold was quoted at $1,783.20 an ounce early Thursday in London, little changed from $1,783.10 late on Wednesday, while Brent oil fetched $77.61 a barrel, a touch lower than $78.00.
Still to come on Thursday’s economic calendar, there’s the latest consumer price index reading from Ireland at 1100 GMT.
