The FTSE 100 made modest gains in London on Thursday morning, while the FTSE 250 slipped at the start of what should be a quieter day for traders as US markets close for the Thanksgiving break.
The FTSE 100 index opened up 19.77 points, 0.3%, at 7,489.28. The FTSE 250 was down 30.21 points, 0.2%, at 18,449.96, and the AIM All-Share was up 0.13 of a point at 717.03.
The Cboe UK 100 was up 0.2% at 746.93, the Cboe UK 250 was down 0.1% at 15,949.85, and the Cboe Small Companies was down 0.2% at 13,525.71.
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.1%.
As well as the day’s flash PMI prints, investors will be digesting the latest fiscal event in the UK, as well as hints that further tax cuts could lie ahead.
Chancellor Jeremy Hunt used the autumn statement on Wednesday to announce a national insurance cut worth £10 billion. In interviews after the fiscal event, Hunt said taxes had risen to pay for Covid-19 pandemic support and government intervention to help the public through the spike in energy prices triggered by the war in Ukraine.
But the chancellor said the UK economy had since ‘turned a corner’, a result he argued had provided him with the opportunity to ‘lighten the tax burden’ with national insurance reductions and savings for businesses.
The senior Conservative told Sky News: ‘We have made a start. I don’t pretend (and) I’ve never pretended that we were going to get there in one go.’
Meanwhile, in company news, Intertek rose 0.7%.
The quality assurance service provider confirmed its annual outlook as it updated on its year-to-date trading.
In 2023 so far, it said revenue grew 8.3% in constant currency, or 5.1% at actual rates. Constant currency growth was led by strong performances in Corporate Assurance, Health & Safety, Industry & Infrastructure and World of Energy, which helped to offset only a slight rise in Consumer Products.
It maintains its outlook for mid-single-digit like-for-like revenue growth at constant currency, and still expects margin progression and ‘strong’ free cash flow.
In the FTSE 250, Virgin Money UK fell 1.2%.
The banking and financial services firm said net interest income rose to £1.69 billion from £1.58 billion a year before, while non-interest income was unchanged at £140 million. Net interest margin improved to 1.91% from 1.85%. However, pretax profit dropped to £345 million from £595 million, mostly due to higher credit impairment losses, which climbed to £309 million from £52 million.
It declared a final dividend of 2 pence, down from 7.5p a year before, bringing the annual total to 5.3p, just over half of the 10p payout in the prior year. Virgin Money also announced a further £150 million share buyback programme, which brings total shareholder distributions for the year to £272 million, up around 2% from the prior year.
Virgin Money now guides for a statutory return on tangible equity of around 8%, compared to above 10% previously.
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Shore Capital questioned whether the results, which missed consensus expectations, indicated that it was time for a change of leadership.
‘The stock is undervalued, in our view, hence our ’buy’ stance, but the group’s poor track record of meeting expectations means it may struggle to re-rate in the near term without a change of leadership,’ the broker said.
On AIM, Jet2 fell 2.9%.
The airline and package holiday company said, in the half-year to September 30, revenue rose 24% year-on-year to £4.41 billion from £3.57 billion. Pretax profit jumped 47% to £660.5 million from £450.7 million. However, it noted around £14.0 million of lost profitability due to the National Air Traffic Services failure, Rhodes wildfires and flooding in Skiathos. The company said it is on track to deliver pretax profit before currency revaluation in line with its previous guidance for the financial year.
Current seat capacity for Summer 2024 is around 12% higher than 2024, with bookings and pricing ‘encouraging’. It raised its interim dividend to 4.0p from 3.0p.
Meanwhile, oil prices recovered slightly overnight to above the $80 mark, after falling as a key ministerial meeting of the Organization of the Petroleum Exporting Countries and its allies was pushed back from Sunday to November 30.
The Vienna-based organisation announced the postponement of the OPEC+ alliance gathering in a brief statement, without providing any explanation.
Brent oil was trading at $80.98 a barrel early Thursday, higher than $79.36 late Wednesday.
The dollar was slightly weaker against major currencies in early exchanges in Europe.
Sterling was quoted at $1.2517 early Thursday, higher than $1.2458 at the London equities close on Wednesday. The euro traded at $1.0911, higher than $1.0864. Against the yen, the dollar was quoted at JP¥149.22, down versus JP¥149.72.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%.
In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong added 1.0%.
Shares in heavily indebted Chinese developer Country Garden soared by double digits as signs emerged that Chinese officials are planning more concrete support for the troubled sector.
One of the biggest players in China’s property industry, Country Garden has racked up debts estimated in June at ¥1.36 trillion, or $191 billion. It is just one of many companies, including Evergrande, caught up in a sector-wide crisis that has seen a string of debt-laden builders either defaulting or threatening to do so, fuelling fears of a spillover into the wider economy.
Bloomberg News reported on Wednesday that Country Garden, which is listed in Hong Kong, was on a draft list of 50 developers that would be eligible for more financial support, citing sources with knowledge of the matter. Its shares closed up 24%.
The S&P/ASX 200 in Sydney closed down 0.6%. Financial markets in Japan were closed for Labor Thanksgiving Day.
Gold was quoted at $1,994.87 an ounce early Thursday, slightly higher than $1,993.04 on Wednesday.
On the economic calendar, flash PMI releases come out for the EU, Germany and the UK, while the European Central Bank releases its latest meeting minutes.
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