Stocks in Europe were in the green on Tuesday morning, with Premier Inn owner Whitbread leading the way among London’s large-caps, with a UK inflation reading and Bank of England decision to come later this week.
The FTSE 100 index traded 44.73 points higher, 0.6%, at 8,186.88. The FTSE 250 was up 105.39 points, 0.5%, at 20,265.11, and the AIM All-Share rose 2.97 points, 0.4%, at 777.90.
The Cboe UK 100 was up 0.6% at 815.65, the Cboe UK 250 was up 0.4% at 17,649.78, and the Cboe Small Companies was flat at 16,561.66.
In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was 0.6% higher.
The pound rose ever-so-slightly to $1.2688 early Tuesday, from $1.2685 at the time of the London equities close Monday. The euro climbed to $1.0729 from $1.0723. Against the yen, the dollar strengthened to JP¥158.08 from JP¥157.84.
In New York on Monday, the Dow Jones Industrial Average added 0.5%, the S&P 500 climbed 0.8%, while the Nasdaq Composite surged 1.0%. The S&P 500 and Nasdaq Composite notched record closing highs.
In Asia on Tuesday, shares were largely higher. The Shanghai Composite rose 0.5%, while the Hang Seng in Hong Kong was marginally higher in late trade. Tokyo’s Nikkei 225 and Sydney’s S&P/ASX 200 both surged 1.0%.
Inflation readings will be in focus on Tuesday and Wednesday. Eurostat reports consumer price index data for May, with the number expected to confirm the rate of inflation picked up to 2.6% last month, from 2.4% in April.
On Wednesday, the eve of the Bank of England decision, UK inflation data is released. According to consensus cited by Trading Economics, a return to the Bank of England’s 2% is expected, easing from a consumer price inflation rate of 2.3% in April.
The BoE is expected to leave rates unmoved on Thursday.
‘The Bank of England is expected to stay pat at Thursday’s policy meeting even though some think that we could see a surprise rate cut from the Brits because a last minute cut would hardly interfere with the election outcome,’ Swissquote analyst Ipek Ozkardeskaya commented.
On Tuesday, the Reserve Bank of Australia left its cash rate target unmoved, as it warned inflation ‘is proving persistent’.
The RBA left the cash rate target unchanged at 4.35%, and the interest rate paid on exchange settlement balances unchanged at 4.25%, in a decision widely expected by the market.
The central bank said: ‘Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. But the pace of decline has slowed in the most recent data, with inflation still some way above the midpoint of the 2–3% target range. Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.’
Wider data is also showing ‘excess demand in the economy’, the RBA added. It warned that the path to return inflation to target is ‘unlikely to be smooth’.
Still to come on Tuesday, there is a US retail sales reading at 1330 BST.
In London, Ashtead Group fell 4.1%, the worst FTSE 100 performer, as its guidance disappointed. The equipment hire company reported an annual revenue hike and it lifted its payout, though profit declined on a higher interest expense amid lofty central bank rates.
Revenue in the year ended April 30 improved 12% to $10.86 billion from $9.67 billion. Pretax profit, however, fell 2.1% to $2.11 billion from $2.16 billion. Interest expenses were 48% higher at $546.3 million, while operating costs rose 14% to $5.97 billion.
Ashtead proposed a final dividend of 89.25 cents per share, up 5.0% from 85.0 cents. Its annual dividend totalled 105.0 cents, also rising 5.0% from 100.0 cents.
Looking ahead, it said: ‘Our end markets in North America remain robust with healthy demand, supported in the US by the increasing number of mega projects and recent legislative acts. We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these market conditions and ongoing structural changes.’
For the new year, it expects rental revenue growth of 5% to 8% at constant exchange rates, slowing from a 10% rise in the year just ended.
Premier Inn owner Whitbread climbed 4.4%. It said its first-quarter sales nudged slightly higher, helped by ‘improved UK trading and continued progress in Germany’.
Sales in the 13 weeks to May 30 rose 1% to £739 million.
Chief Executive Dominic Paul said: ‘Our UK trading results strengthened during the quarter and we continued to grow accommodation sales ahead of the market. Underpinned by the favourable supply backdrop, total accommodation sales and [revenue per available room] remained significantly ahead of pre-pandemic levels. In Germany, we delivered another strong performance, led by the increasing maturity of our estate and continued room growth. Our cohort of more established hotels is continuing to outperform the M&E market and we remain on course to achieve the important milestone of reaching break-even on a run-rate basis during the second half of 2024.’
Whitbread said recent trading in the UK has been ‘more encouraging’ and the firm is confident in its full-year outlook.
Elsewhere in London, XP Power tumbled 16%. Suitor Advanced Energy Industries will not make a takeover offer for the power control systems maker. XP Power responded, noting it had no contact from Advanced Energy since rejecting an indicative proposal in mid-May, and reiterated its full-year trading expectations.
Advanced Energy noted a ‘lack of any progress’ when it sought to engage with the XP Power board. This meant it did not have access to the ‘due diligence necessary to make a firm offer’. Advanced Energy Industries is a maker of precision power conversion, measurement, and control solutions.
In May, it said it made three all-cash takeover approaches, each slightly higher than the last. The first offer in October valued XP Power’s equity at £339 million, a second roughly two weeks later in November valued it at £369 million and the most recent, in May, valued it at £468 million. Including debt, the latest proposal had a total value of £571 million.
On AIM, Crossword Cybersecurity jumped 34%. It has signed a three-year, exclusive partnership with the UK unit of a ‘global aerospace, defence and security company’. The duo will jointly market supply chain cyber platform Rizikon to sub sectors in the UK critical national infrastructure market.
‘This is a potentially transformational partnership for Crossword with a global scale, innovative defence and security partner with an outstanding reputation,’ the firm’s incoming CEO Stuart Jubb said.
Elsewhere, medical technology firm AOTI made its debut on the AIM market. It raised £15.6 million in its initial public offering, at 132p per share. It debuted with a £140 million market capitalisation.
The stock was up 3.8% at 136.99p in early trade.
Brent oil was quoted at $84.15 a barrel early Tuesday, rising from $83.45 late on Monday. Gold slipped to $2,318.04 an ounce from $2,321.50.
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