An unusually busy Friday was bringing a rush of company earnings before the month-end and a string of economic data points for Europe in particular, leaving London shares mixed at midday.
Attention now shifts to a key US inflation reading to round out the week, ahead of the Federal Reserve’s next interest rate decision on Wednesday next week.
The FTSE 100 was down 22.34 points, or 0.3%, at 7,809.24.The FTSE 250 index was down 26.90 points, up 0.1%, at 19,274.91, and the AIM All-Share was up 4.13 points, or 0.5%, at 826.76.
The pound was quoted at $1.2469 at midday on Friday in London, lower compared to $1.2492 at the stock market close on Thursday.
The Cboe UK 100 was down 0.3% at 780.92, the Cboe UK 250 was flat at 16,893.88, and the Cboe Small Companies was down 0.2% at 13,654.71.
In London, Pearson was the top blue-chip performer at midday, up 3.2%.
The education publisher said it performed ahead of expectations in the first quarter of 2023 and also launched a £300 million share buyback.
Looking ahead, Pearson said it remains on track to achieve its 2023 guidance, which includes achieving underlying sales growth of low to mid-single digits. Pearson reported underlying sales growth of 6% for the first quarter of the year.
NatWest remained the FTSE 100’s worst performing stock, down 4.9%.
Russ Mould, investment director at AJ Bell, said a drop in customer deposits, though ‘nothing like on the scale seen at other crisis-ridden banks’, has helped ‘put the wind up’ investors in the bank.
‘The gap between the amount NatWest charges for loans compared to what it pays out for deposits, also known as the net interest margin, is also tighter than many had hoped. This runs counter to Barclays’ own first-quarter numbers which showed higher base interest rates were feeding into a strong net interest margin.’
NatWest reported a net interest margin of 2.25%. This compares to a net interest margin of 3.18% for Barclays, which reported on Thursday.
NatWest had been expected to achieve a net interest margin of 2.34% for the first quarter, according to company-compiled consensus.
In the FTSE 250, Renishaw fell 4.1% as it suffered a slight profit slip in the nine months ended March 31.
Pretax profit was down 2.4% to £117.3 million from £120.2 million the year prior, as adjusted pretax profit fell 10% to £111.8 million from £124.0 million. Revenue rose to 6.0% to £522.0 million from £492.4 million.
The company explained that its measurement business had continued to see subdued demand from the semiconductor and electronics sectors in the third quarter.
Rotork shares rose 2.6% after it said it expects annual profit to top expectations, thanks to volume and price increases in its first-quarter.
The industrial valve manufacturer said revenue in the quarter that ended April 2 surged 18% year-on-year on an organic constant currency basis. By the same measure, order intake was up by a ‘mid-teen percentage’.
It added its three divisions, Oil & Gas, Water & Power, and Chemical, Process & Industrial, all made ‘encouraging progress’.
‘Sales benefited from both volume and selling price increases, with all divisions and regions ahead year-on-year and with particularly strong growth in the Americas,’ Rotork said.
Elsewhere in London, Mears Group climbed 7.6% after it reported a strong financial performance in 2022 and announced a £20 million share buyback.
The housing and social care provider posted pretax profit of £34.9 million, up sharply from £16.3 million the year prior. Its sales revenue climbed to £959.6 million from £878.4 million.
Mears added it successfully mitigated most of the problems caused by cost inflation, skill shortages and supply chain issues that affected the wider industry in 2022.
On AIM, Numis surged 67% to 341.10 pence after the London-based broker and investment bank agreed to a takeover offer from Deutsche Bank.
Deutsche Bank will pay 350p per share, giving Numis a value of £410 million. The price represents a 72% premium to Numis’s closing price of 204p on Thursday.
The price comprises 339p in cash, an interim dividend of 6p per share for the six months ended March 31, and an additional interim dividend of 5p per share.
Numis directors intend to unanimously recommend the takeover offer.
Shares in Deutsche Bank were 0.3% higher in Frankfurt.
In European equities on Friday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.2%.
The eurozone economy eked out some marginal growth at the beginning of 2023, according to official estimates, but slowed on an annual basis.
According to Eurostat, the eurozone economy is estimated to have grown by 0.1% in the first quarter from the previous quarter, picking up from no growth recorded in the final quarter of 2022.
However, the reading was less robust than anticipated, as market analysts had been expecting growth of 0.2%, as cited by FXStreet.
The euro stood at $1.0990 at midday on Friday in London, lower against $1.1024 at the close on Thursday.
Stocks in New York were called to start lower on Friday, after ending sharply higher on Thursday as strong tech earnings helped offset disappointing economic growth data in the US.
The Dow Jones Industrial Average was called to open down 0.4%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.3%.
A report on Thursday showed US economic growth slowed markedly and came in below market expectations in the first quarter.
Numbers from the Bureau of Economic Analysis showed that US gross domestic product grew by 1.1% on an annualised basis in the first three months of 2023, compared to the last three months of 2022, slowing from a 2.6% rise on the same basis in the fourth quarter of 2022. Economic growth fell short of FXStreet-cited consensus of a 1.9% annualised climb.
On Friday, the US personal consumption expenditures price index will be released at 1330 BST.
Core PCE is the US Federal Reserve’s preferred inflationary gauge, so market participants will be keeping a close eye on the figures ahead of the central bank’s interest rate decision next week.
Annual core PCE is expected to cool slightly to 4.5% in March from 4.6% in February.
‘While another 25bp move is widely expected from the Federal Reserve over the coming week, the path beyond its next meeting remains unclear,’ commented Dutch bank ING. ‘Following the most aggressive tightening cycle seen in over 40 years, we expect the central bank to signal a pause moving forward.’
Against the yen, the dollar was trading at JP¥135.95, sharply higher compared to JP¥133.95. The yen slumped after the Bank of Japan concluded its first meeting under its new governor, Kazuo Ueda, and decided to leave its ultra-easy monetary policy unchanged.
Brent oil was quoted at $78.48 a barrel at midday in London on Friday, up from $78.08 late Thursday. Gold was quoted at $1,984.22 an ounce, slightly lower against $1,984.30.
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