London share prices opened lower on Tuesday, as a big week for company earnings and economic indicators stepped up a gear with UK government debt figures and some blue-chip results.
The FTSE 100 index opened down 39.74 points, or 0.5%, at 7,872.46. The FTSE 250 was down 98.14 points, or 0.5%, at 19,128.80, and the AIM All-Share was down 4.01 points, or 0.5%, at 824.84.
The Cboe UK 100 was down 0.5% at 787.54, the Cboe UK 250 was down 0.7% at 16,767.74, and the Cboe Small Companies was down 0.5% at 13,746.75.
UK public sector net borrowing, excluding public sector banks, totalled £21.5 billion, £16.3 billion more than in March last year. According to the Office for National Statistics, this was the second-highest March borrowing since monthly records began in 1993.
The pound was quoted at $1.2462 at early on Tuesday in London, higher compared to $1.2457 at the close on Monday.
Francesco Pesole at ING said, as key central bank meetings draw closer, markets appear to favour European currencies to the detriment of the dollar, whose rate advantage is being ‘eroded’.
Next week, the US Federal Reserve and the European Central Bank both will announce interest rate decisions.
‘This is probably the key thread to follow today: should there be fresh instability in US banking stocks, dovish Fed bets may gather more momentum, and despite its safe-haven status, the dollar could stay on the back foot to the benefit of European currencies backed by hawkish central banks and without an excessively high-beta to sentiment - like CHF, EUR, GBP,’ the ING analyst continued.
The euro stood at $1.1028 early Tuesday in London, unchanged against $1.1026 late Wednesday. Against the yen, the dollar was trading at JP¥134.12, lower compared to JP¥134.38.
In London, Whitbread was the top blue-chip stock in early morning trade, up 4.2%, as it delivered a strong set of results amid recovering demand and announced a £300 million share buyback programme.
In the financial year that ended March 2, the Premier Inn-owner posted a pretax profit of £374.9 million, multiplied from £58.2 million the year before. Whitbread said this was above pre-pandemic levels, driven primarily by its Premier Inn UK division. Revenue surged to £2.63 billion from £1.70 billion.
Associated British Foods fell 5.4% to the bottom of the FTSE 100, as profit barely budged, despite a jump in revenue.
The Primark-owner said pretax profit in the 24 weeks ended March 4 edged up 1.4% to £644 million from £635 million the year prior. Revenue from continuing operations rose by 21% to £9.56 billion from £7.88 billion.
Chief Executive George Weston said the period was marked by ‘extreme and volatile’ inflation in all its business. He noted the company has taken ‘considerable’ action to mitigate these costs, however, through operational cost savings and pricing.
Looking forward, AB Foods said the continued recovery from customers of its rising input costs remains a ‘priority’.
Shore Capital was unperturbed. It kept its ’buy’ recommendation on AB Foods shares. ‘ABF has issued interim FY23 results that confirm delivery ahead of our expectations at the group level (driven by Ingredients) with Retail delivery (Primark) bang in line with our recently upgraded forecast,’ the broker said.
Shore expects to leave its recently upgraded full-year forecasts for AB Foods unchanged.
In the FTSE 250, IWG fell 1.9% despite reporting a strong rise in quarterly revenue in the first quarter of 2023.
The flexible workspace provider posted revenue of £760 million, up 20% from £609 million the previous year in constant currency. IWG said the growth was driven by continuing global demand for hybrid working solutions and by the acquisition of Instant Group in March 2022.
However, looking forward, IWG said: ‘Whilst we continue to see higher demand for hybrid working solutions globally with companies reducing their real estate costs and responding to the needs of their employees, there are also macroeconomic headwinds which can impact demand.’
WAG Payment Solutions rose 3.4% as the road toll and fuel payments processor reported a strong first-quarter performance.
The company reported that first quarter net revenue grew 31% to €52.21 million, supported by continued organic growth. Organic revenue growth was 17%, in line with expectations.
EuroWag confirmed its medium-term guidance for the full-year based off the solid first quarter.
Elsewhere in London, Superdry climbed 1.2% after it agreed amendments to its financing facility. Its lender, Bantry Bay, agreed to increase the borrowing availability level under its asset-backed facility until the completion of the previously announced sale of its APAC business.
In European equities on Tuesday, the CAC 40 index in Paris was down 0.8%, while the DAX 40 in Frankfurt was down 0.3%.
In Tokyo on Tuesday, the Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong closed down 1.9%.
Financial markets in Sydney were closed for the Anzac Day holiday.
In the US on Monday, Wall Street ended largely higher, with the Dow Jones Industrial Average ending up 0.2% and the S&P 500 up 0.1% but the Nasdaq Composite down 0.3%.
Earnings continued to roll-in on Monday, with Coca-Cola posting consensus-topping revenue. Eyes were also on the media sector, following big-name departures at Comcast and Fox units.
In focus Tuesday will be earnings from Alphabet, Microsoft, Visa and McDonald’s.
Brent oil was quoted at $82.75 a barrel at early in London on Tuesday, up from $82.10 late Monday. Gold was quoted at $1,994.30 an ounce, higher against $1,982.78.
‘May 1st holiday in Asia is the equivalent of the start of the US travel season, so a bounce in air travel is good news for oil bulls, especially if this holiday bonanza does mean the return of Chinese travellers, which would boost aviation fuel demand globally,’ said Stephen Innes, managing director at SPI Asset Management.
Still to come in Tuesday’s economic calendar, the US house price index will be published at 1500 BST.
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