London shares opened lower on Thursday, as investors analysed a bounty of annual earnings reports and awaited US jobs figures later Thursday and on Friday.
The FTSE 100 index was weighed down by mining stocks, with the drop triggered by a poor annual report from Endeavour Mining.
The large-cap measure opened down 37.04 points, or 0.5% at 7,892.88. The FTSE 250 was down 108.19 points, or 0.5%, at 19,743.78, and the AIM All-Share was down 2.33 points, or 0.3%, at 852.40.
The Cboe UK 100 was down 0.5% at 789.92, the Cboe UK 250 was down 0.5% at 17,310.07, and the Cboe Small Companies was down 0.5% at 13,832.94.
The pound was quoted at $1.1849 at early on Thursday in London, lower compared to $1.1859 at the equities close on Wednesday.
‘Today, investors will mostly spend the session digesting Powell’s hawkish testimony, the major shift in US rate expectations, and the strong jobs data. They will also watch the US weekly jobless claims and pray that the February [nonfarm payrolls] print [on Friday at 1330 GMT] doesn’t surprise to the upside as did the ADP report,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The US labour market remained strong last month, figures from payroll processing firm ADP showed on Wednesday, strengthening the case for faster interest rate hikes.
On Thursday, the weekly unemployment claims report will be published at 1330 GMT, providing further insight into the health of the US economy.
Wall Street ended largely higher on Wednesday, with the Dow Jones Industrial Average down 0.2%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.4%.
In London early Thursday, Endeavour Mining dropped 6.2%, the worst performer in the FTSE 100 index in early morning trade.
The gold miner reported a steep drop in pretax profit in 2022, with the figure falling to $145 million from $448 million the previous year. The fall in profit was unexpected, with UBS in late January forecasting Endeavour’s pretax profit at $610 million.
Revenue dipped to $2.51 billion from $2.64 billion, as gold sold fell 3% to 1.4 million ounces from 1.5 million ounces year-on-year.
In a negative read-across, Rio Tinto, Antofagasta and Anglo American fell 4.4%, 2.1%, and 1.4%, respectively.
Aviva rose 3.4%, making the insurer the best blue-chip performer in early morning trade. Aviva announced a £300 million share buyback as it unveiled its full-year results.
In 2022, Aviva swung to an IFRS loss of £1.14 billion from a profit of £2.04 billion the year prior. Its adjusted operating profit from continuing operations, rose to £2.21 billion from £1.63 billion.
The company’s solvency II return on equity was 16.4%, up from 10.7% last year, while its solvency II shareholder cover ratio was 212%, down from 244%.
Looking forward, Aviva said the ‘positive momentum’ seen in 2022 has continued, reinforcing its confidence in its financial targets in 2023.
Informa climbed 2.5% after it announced the acquisition of business-to-business events group Tarsus for $940 million, as it confirmed strong full-year performances across all its businesses.
In 2022, the publishing and events firm reported a pretax profit of £168.8 million, up sharply from £78.4 million in 2021. Revenue jumped 43% to £2.26 billion from £1.58 billion.
Chief Executive Stephen Carter said Informa was ‘firmly back in growth’.
In the FTSE 250, Domino’s Pizza Group plunged 6.9% as it reported a drop in annual profit.
In the financial year that ended December 25, pretax profit dropped to £98.9 million from £109.7 million the previous year.
Domino’s explained that underlying profit before tax was affected by an additional £2.4 million in accelerated amortisation and impairment relating to its technology platforms and an increase in interest cost of £4.9 million.
It added its earnings were also hurt by the accounting treatment of investment in cloud-based technology platforms and a lower contribution from an unspecified German associate.
Elsewhere in London, Alpha Financial Markets Consulting jumped 7.5%, after it said it was ‘delighted’ with its continuing strong performance and now expects to report full-year results ‘significantly’ ahead of current market expectations, which it did not specify.
On AIM, WANdisco requested its shares be suspended from trading on AIM while it conducts an investigation into its true financial position.
The company explained that, following investigations by its chief financial officer and chief executive officer, it has discovered ‘significant, sophisticated and potentially fraudulent irregularities’ with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee.
Consequently, WANdisco said the irregularities will ‘significantly impact’ its cash position and lead to ‘material uncertainty’ regarding its overall financial position.
The firm now expects that financial 2022 revenue could be as low as $9 million, and not $24 million as previously expected. In addition, the company said it has ‘no confidence’ in its announced financial 2022 bookings expectations.
Only on Monday, WANdisco had said it was in the early stages of exploring an additional listing in the US, but said it remains committed to its listing on London’s AIM.
In European equities on Thursday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.2%.
European Central Bank President Christine Lagarde echoed Fed Chair Jerome Powell’s hawkish comments on Wednesday, saying she will do whatever it takes to bring down high inflation and restore price stability.
Speaking at the World Trade Organization in Geneva, Lagarde said the ECB will spare no efforts to combat the inflation lashing most of the countries in the eurozone.
The euro stood at $1.0551 on Thursday morning, flat against $1.0553 at the London equities close on Wednesday. Against the yen, the dollar was trading at JP¥136.68, lower compared to JP¥137.14.
In Tokyo on Thursday, the Nikkei 225 index closed up 0.6%.
Japan’s economic growth at the end of 2022 was weaker than initially estimated, official figures showed.
According to the Cabinet Office, Japan’s gross domestic product rose by just 0.1% annually in October from December, revised downwards from an initial estimate of 0.6%.
On Friday, the Bank of Japan will have its last meeting under the leadership of departing Governor Haruhiko Kuroda. Analysts at Lloyds Bank said that Kuroda is not expected to surprise the markets with major changes to the yield curve control policy.
‘The big question is whether and when the policy stance will change under his successor,’ Lloyds Bank said.
Duncan Wringley, chief China economist at Pantheon Macroeconomics, said incoming Governor Kazuo Ueda is ‘unlikely to make abrupt policy changes’ as Ueda told the legislature in Japan that he views ‘easy monetary policy as appropriate for current economic conditions’.
In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong finished down 0.6%.
China’s consumer price inflation last month fell to its lowest level in a year, as the country emerged from strict pandemic controls and a Lunar New Year spending binge.
February’s consumer price index - the main gauge of inflation - rose one percent, down from a 2.1% annual rise in the first month of the year, according to the country’s National Bureau of Statistics.
The latest figure is the lowest since February 2022. While a drop was expected, FXStreet-cited consensus had predicted the CPI to hit 1.9%.
The S&P/ASX 200 in Sydney closed marginally higher.
Brent oil was quoted at $82.68 a barrel early in London on Thursday, firm on $82.60 late Wednesday. Gold was quoted at $1,814.14 an ounce, lower against $1,818.62.
Still to come on Thursday’s economic calendar, US President Joe Biden will announce his budget for the 2024 financial year.
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