A strong hint that the pace of US interest rate increases is about to slow lent support to stock markets early Thursday, while sending the dollar lower.
The FTSE 100 index opened down 1.19 points at 7,464.05. The FTSE 250 was up 117.89 points, 0.6%, at 19,618.39 and the AIM All-Share was up 4.24 points, 0.5%, at 844.54.
The Cboe UK 100 was down 0.1% at 746.67, the Cboe UK 250 was up 0.8% at 16,984.17, and the Cboe Small Companies was up 0.2% at 12,986.17.
In European equities early Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.5%.
Released on Wednesday, the minutes from the US Federal Reserve’s November policy meeting suggested that the large interest hikes of late are set to slow.
‘A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,’ the minutes read.
They noted that a slower pace would better allow the Federal Open Market Committee to ‘assess progress toward its goals of maximum employment and price stability’.
The more dovish rhetoric from the Fed weakened the dollar.
Sterling was quoted at $1.2074 early Thursday, higher than $1.2062 at the London equities close on Wednesday. The euro traded at $1.0416 early Thursday, higher than $1.0362 late Wednesday. Against the yen, the dollar was quoted at JP¥138.93, down from JP¥139.64.
A weaker dollar boosted the price of gold. It was quoted at $1,755.95 an ounce early Thursday, up sharply from $1,743.02 on Wednesday.
Brent oil was trading at $84.81 a barrel, up slightly from $84.66.
Wall Street ended higher following the Fed meeting minutes, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.6%, and the Nasdaq Composite up 1.0%.
Market trading volumes globally are expected to be light on Thursday, given that US markets will be closed for the Thanksgiving holiday. Wall Street will hold a shortened trading day on Friday.
The key retail trading period of Black Friday and Cyber Monday officially kicks off in one day’s time.
In the FTSE 100, retailer Kingfisher shed 1.5%.
The DIY products seller said sales in the three months that ended October 31 were up 0.6% year-on-year to £3.26 billion, and it saw continued gains in market share during the period.
‘While the market backdrop remains challenging, DIY sales continue to be supported by new industry trends such as more working from home and a clear step-up in customer investment in energy saving and efficiency,’ Kingfisher said.
However, the B&Q owner said it expects annual adjusted pretax profit of between £730 million to £760 million, which is down from a previous estimate of around £770 million. It also will be below the financial 2022 and 2021 figures of £949 million and £786 million, respectively.
The fourth quarter has started well, Kingfisher said, with like-for-like sales in the three weeks to November 18 up 2.8% year-on-year.
Liberum said Kingfisher’s third quarter results ‘shine a positive light’ on fellow retailer Wickes, which the investment bank said is outperforming peers. Wickes shares were up 0.5% early Thursday.
In the FTSE 250, shares in Dr Martens plummeted 20%.
The bootmaker warned of pressure on margins, as well as slower-than-expected growth in its direct-to-consumer arm, due to a weaker consumer environment.
Dr Martens expects its annual earnings before interest, tax, depreciation and amortisation margin to be 100 to 250 basis points lower than the previous year, due to its investments as well as the appreciation of the dollar, which dilutes the margin.
However, the footwear company recorded strong revenue growth in the six months to September 30, as this rose 13% year-on-year to £418.6 million, compared to £369.9 million. Pretax profit declined by 5% to £57.9 million from £61.3 million, which it said was mostly due to higher depreciation and amortisation costs following investment in new stores and IT systems.
Dr Martens declared an increased interim dividend of 1.56 pence per share, up 28% from 1.22p.
Imperial Leather-maker PZ Cussons was 2.2% lower.
The consumer goods firm has hired David Tyler to be non-executive director from Thursday. Tyler is expected to be appointed as chair of the board, as Caroline Silver’s term at the business expires at the end of March next year.
Tyler currently serves as chair of Domestic & General, and has been chair of J Sainsbury, Hammerson, and Logica. He is a former Unilever executive.
At the other end of London’s midcap index, office space firm Workspace and lender Virgin Money were up 3.6% and 3.2%, after receiving broker upgrades.
Elsewhere, budget airline Jet2 rose 4.0%.
Jet2 said revenue in the half year ended September 30 leapt to £3.57 billion from £429.6 million the year before, which had been blighted by pandemic-related travel restrictions.
Jet2 swung to a pretax profit of £450.7 million from a loss of £205.8 million, and reinstated a dividend of 3.0 pence.
Due to the broader disruption in the aviation sector in the mid-summer, Jet2 paid out delay and compensation costs in excess of £50.0 million.
It warned that margins may come under pressure, due to input cost pressures from fuel, carbon, a stronger dollar, wage increases and investment. However, Jet2 said it is presently on track to exceed market expectations for profit before foreign exchange revaluation and taxation for its year ending March 31.
AIM-listed Michelmersh rose 9.6% in early trading.
The specialist brick maker announced the acquisition of Fabspeed Holdings, a manufacturer of off-site pre-built brick products for an initial £6.3 million. Fabspeed operates from three facilities, two in West Yorkshire and one in Oxfordshire.
‘The transaction is expected to be immediately accretive to earnings and, in our view, will bring cross-selling opportunities, enabling Michelmersh to capture a greater share of customer wallet and provide a wider distribution network for Fabspeed,’ Berenberg considered.
Michelmersh also reported strong trading, and now expects revenue and profit in 2022 to be ahead of market expectations. It intends to launch a share buyback for up to £3.0 million.
AIM’s DeepMatter plunged 38%, as it mulled delisting.
The digital chemistry data company said its board has concluded that de-listing from AIM and re-registering as a private company would provide better opportunities to raise additional capital. This comes after discussions with major shareholders over securing future working capital, it said.
Delisting will be conditional on shareholder approval in due course, and currently has the support of major shareholders. DeepMatter predicts it will need £1 million prior to any delisting, to fund its long-term growth ambitions.
In Asia on Thursday, the Nikkei 225 index in Tokyo closed up 1.0%, after reopening from Wednesday’s break for Labor Thanksgiving Day in Japan. The Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed up 0.1%.
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