Share prices opened mostly lower in London on Thursday, as investors monitored a steady stream of earnings reports in the UK and US, as well as a series of addresses by central bankers.
The FTSE 100 index opened down 18.10 points, 0.2%, at 7,880.67. The FTSE 250 was down 30.17 points, 0.2%, at 19,170.68. The AIM All-Share index was flat at 829.24.
The Cboe UK 100 index was down 0.2% at 788.54, the Cboe UK 250 was down 0.1% at 16,786.08, and the Cboe Small Companies was down 0.6% at 13,138.55.
In New York on Wednesday, the Dow Jones Industrial Average ended down 0.2%, and the S&P 500 and the Nasdaq Composite both closed flat.
In Asia on Thursday, Tokyo’s Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed flat.
Oil prices continued their downward trajectory, amid a weaker global demand outlook due to continued interest rate hikes. This dragged on London’s big oil shares.
Brent oil was trading at $82.27 a barrel early Thursday in London, down from $83.68 late on Wednesday. At the market close last Friday, it was quoted at $86.42.
Oil majors BP and Shell were down 1.0% and 0.7%, respectively.
Sterling was quoted at $1.2441, up from $1.2424 at London equities close on Wednesday. The euro traded at $1.0966, edging up from $1.0958. Against the yen, the dollar was quoted at JP¥134.52, down versus JP¥134.69.
In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.4%.
German producer inflation cooled faster than expected last month, thanks to lagged effect of government ‘price brakes’ on electricity and natural gas.
According to Destatis, German producer price inflation slowed to 7.5% on an annual basis in March from 15.8% in February. FXStreet-cited market consensus had expected a reading of 9.8%.
In the FTSE 100, GSK consumer healthcare spin-off Haleon rose 2.2%, as it updated on its first-quarter performance ahead of its annual general meeting.
Organic revenue grew 9.9%, with most of this - 7.1% - coming from price rises, with volume mix up 2.8%. ‘Growth was seen across Respiratory Health, Pain Relief, Oral Health and Digestive Health and Other,’ Haleon said.
Growth was strong across geographies, with Asia Pacific boosted by pain relief sales in China following the end of lockdowns and the outbreak of Covid, cold and flu.
Haleon now expects annual revenue at the upper end of guidance of 4% to 6% growth. All other annual guidance remains unchanged, it said.
Segro added 1.1%, as the property investor reported ‘favourable’ market dynamics, supporting strong rent roll growth in the first quarter.
‘Market data is showing signs of stabilisation in asset values, although investment activity remains subdued,’ Segro said.
Antofagasta fell 3.9% as the stock went ex-dividend.
In the FTSE 250, Babcock fell 2.1%.
The defence contractor said its cash flow in the financial year that ended March 31 was ‘significantly’ ahead of expectations, and now expects to reinstate dividend payments in financial 2024.
Underlying profit was in line with its expectations, excluding the potential one-off hit from a contract dispute.
The dispute relates to a Type 31 contract with the UK Ministry of Defence back in 2019 for five Inspiration Class frigates for the Royal Navy. Through the past year, Babcock said it has been in discussions with the MoD about additional costs, but the parties have been unable to reach an agreement on who is responsible for the costs under the contract.
Should the costs not be recovered, the contract would be loss-making, and Babcock estimates the need for a £50 to £100 million provision in its results for financial 2023. ‘Any settlement or arbitral award would reverse the provision in part or in full,’ it said.
‘The cash and trading performance achieved by Babcock is pleasing in the context of performance over the past few years. The contract provision comes as a major disappointment, though could perhaps have been anticipated,’ said Shore Capital’s Robin Speakman.
Iron pellet maker Ferrexpo rose 2%. It said the Supreme Court of Ukraine ruled in its favour in relation to a claim made to invalidate a share purchase agreement from 2002.
The claim was in respect of a 40% stake in local operating subsidiary Ferrexpo Poltava Mining, which was sold to companies that were, at the time, owned by a controlling shareholder of the company.
In September, Ferrexpo had received a negative judgment from an appeal court, before appealing the decision in the Supreme Court.
On AIM, IG Design Group fell 15%.
The gift packaging and stationery designer and manufacturer warned it expects to incur a one-off, non-cash write-down to the historic goodwill value for some businesses in the UK. This was the result of ‘recently deteriorated’ trading, and ‘very limited pricing expectations’ for Christmas in 2023.
The write-down is expected to significantly hit its annual results for the year ending March 31.
The economic calendar has a eurozone consumer confidence reading at 1500 BST, after the weekly US jobless claims report at 1330 BST.
Due to speak on Thursday are US Federal Reserve Governor Christopher Waller and Fed Cleveland President Loretta Mester, both at 1700 BST. Fed Atlanta President Raphael Bostic and Fed Philadelphia President Patrick Harker follow in the US evening. The next Fed interest rate announcement is on May 3.
‘Investors are now increasingly considering whether the Fed will pursue further rate hikes after the next decision in May, and the odds of a 25bp hike in June hit a post-[Silicon Valley Bank collapse] high of 29.4% yesterday,’ commented Deutsche Bank. ‘That’s partly because of the inflation data of late, but they’ve also been propelled by the persistent easing of financial conditions over recent days.’
Deutsche added: ‘Whilst that might be welcome news after the recent turmoil, one consequence of easier financial conditions is it puts more of the onus on the Fed to tighten policy to get inflation back to target, rather than relying on tighter financial conditions.’
Gold was quoted at $1,998.75 an ounce, up from $1,993.72.
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