Stocks in London closed higher on Tuesday, as investors turn their eyes onto a key inflation reading on Wednesday, which may indicate the Bank of England’s next move.
The FTSE 100 index closed up 47.27 points, or 0.6% at 7,453.69 on Tuesday. The FTSE 250 ended up 213.79 points, or 1.2%, at 18,618.22. The AIM All-Share closed up 4.22 points, or 0.6%, at 753.53.
The Cboe UK 100 ended up 0.6% at 743.75, the Cboe UK 250 closed up 1.2% at 16,349.42, and the Cboe Small Companies ended up 0.7% at 13,029.84.
In London, housebuilders were among the top-performing stocks in the FTSE 100 at the close on Tuesday. Persimmon, Taylor Wimpey, and Barratt Developments finished 4.0%, 4.6%, and 3.9% higher, respectively.
The stocks were boosted ahead of key UK inflation data, which may be indicative of the Bank of England’s next move. An upside surprise may prompt Threadneedle Street to hike by 50 basis points again, putting more pressure on mortgage rates.
Analysts at Davy commented: ‘Tomorrow’s UK [consumer price index] release is expected to show inflation falling back to 8.2% in June and core inflation steady at 7.1%. However, recent CPI out-turns have consistently beaten forecasts. Hence, June’s CPI data will likely bolster expectations that the Bank of England will hike by 50 basis points on August 3.’
Ocado was the best blue-chip performer by a mile at the close on Tuesday, surging 19% after the firm affirmed yearly guidance with both its grocery and warehouse technology arms seeing half-year revenue growth.
Revenue in the half-year ended May 28 increased 8.6% to £1.37 billion from £1.26 billion a year earlier. Ocado’s pretax loss widened to £289.5 million from £211.3 million.
Ocado reported earnings before interest, taxation, depreciation, amortisation, impairment and exceptional items of £16.6 million, swinging from a loss of £13.6 million a year prior, however.
‘Ocado’s results are extremely positive given the high level of growth, and increasing profitability, of its all important technology solutions division, which is the division we believe holds the majority of the group’s value,’ said Peel Hunt’s James Lockyer and Oliver Tippling.
The online grocer’s shares have also been supported recently by a report that a takeover attempt could be on the cards. In June, the Times reported that there had been chatter that Amazon was mulling an offer for Ocado.
In the FTSE 250, Darktrace jumped 27% after sharing that Ernst & Young completed its independent review.
The cybersecurity firm brought in the accountants to conduct a third-party probe into its financial processes in February, after falling under scrutiny from short-seller Quintessential Capital Management. Quintessential had criticised Darktrace’s management and said it was ‘sceptical’ about its growth figures.
‘Neither management, nor the board consider EY’s report to have any impact on Darktrace’s previously filed public company financial statements nor to change their belief that those financial statements fairly represent Darktrace’s financial position and results,’ Darktrace said on Tuesday.
Grant Thorton’s audit for its prior results remain unchanged.
Darktrace also updated on recent trading, reporting year-on-year revenue growth of at least 31% in the financial year to June 30.
Elsewhere in London, Zotefoams climbed 10% after it announced a joint development agreement with an unnamed ‘world-leading’ packager of beverages.
The agreement allows for the further development of Zotefoams’ ReZorce monomaterial beverage carton packaging and its planned use for a major European retailer. The company said the work will continue until early 2024.
On AIM, Pelatro plunged 48% after it said a key customer, which owes $550,000, will no longer meet a previously agreed payment deadline expected this month.
This delay in payment prompted the marketing software provider to undertake a wider review of its outstanding receivables, alongside its usual half-year procedures.
Following the review, Pelatro confirmed it is experiencing ‘unusual delays’ regarding receivables from four customers, worth an aggregate $1.1 million of $4.2 million in receivables.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.5% and the DAX 40 in Frankfurt ended 0.4% higher.
Stocks in New York were largely higher at the London equities close, despite mixed US bank results. The Dow Jones Industrial Average was up 1.0%, the S&P 500 index was up 0.4%, while the Nasdaq Composite was down 0.1%.
Morgan Stanley reported a better second-quarter than some had feared, while Bank of America’s second-quarter was solid.
BofA said total revenue in the three months ended June 30 surged 11% to $25.20 billion from $22.69 billion a year prior. Net income improved 19% year-on-year to $7.41 billion from $6.25 billion.
Morgan Stanley said revenue in the three months to June 30 rose just 2.5% to $13.46 billion from $13.13 billion a year prior. Net income, meanwhile, declined by 12% on-year to $2.22 billion from $2.54 billion.
Morgan Stanley was up 6.3% in New York at the time of the London equities close on Tuesday, while BofA was up 4.7%.
Fresh data from the US Census Bureau showed that US retail sales grew at a slower pace than expected last month.
Retail sales climbed 0.2% in June from May, falling short of the 0.5% growth predicted by FXStreet cited consensus.
Wael Makarem, senior market strategist at Exness, suggested that the weaker-than-expected data could fuel some concerns about the state of the US economy. Nonetheless, the print did not have much of an impact on the US dollar.
The pound was quoted at $1.3083 at the London equities close on Tuesday, up a touch from $1.3080 at the close on Monday. The euro stood at $1.1237, slightly higher against $1.1231. Against the yen, the dollar was trading at JP¥138.76, down from JP¥139.11 late Monday.
Brent oil was quoted at $79.67 a barrel at the London equities close on Tuesday, up from $79.11 late Monday. Gold was quoted at $1,982.17 an ounce, sharply higher against $1,952.33 at the close on Monday.
In Wednesday’s UK corporate calendar, there are trading statements from Antofagasta, BHP, Severn Trent and Hargreaves Lansdown.
The economic calendar has UK inflation data at 0700 BST followed by EU inflation data at 1000 BST.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
