26th Apr 2023 07:55
(Alliance News) - Stocks in London were set to open lower on Wednesday as worries about the US banking sector returned.
Concern around the banking sector came to the fore again on Tuesday as shares in First Republic Bank collapsed by 49% in New York after it revealed customers pulled out more than USD100 billion of deposits last month.
The California-based lender said withdrawals had stabilised this month, but added that deposits continued to fall slightly.
The news brought back nervousness about the sector, having calmed recently following the chaos caused by the collapse of Silicon Valley Bank.
Other major US banks such as JPMorgan and Wells Fargo closed lower in response.
In London, pharmaceutical firm GSK reported lower turnover in the first quarter, due to lower Covid-19 related sales. Mexican miner Fresnillo said it made a solid start to 2023 as silver and gold production increased.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 17.23 points, or 0.2%, at 7,873.90
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Hang Seng: up 0.9% at 19,791.52
Nikkei 225: closed down 0.7% at 28,416.47
S&P/ASX 200: closed down 0.1% at 7,316.30
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DJIA: closed down 344.57 points, 1.0%, at 33,530.83
S&P 500: closed down 1.6% at 4,071.63
Nasdaq Composite: closed down 2.0% at 11,799.16
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EUR: higher at USD1.0995 (USD1.0983)
GBP: higher at USD1.2428 (USD1.2404)
USD: lower at JPY133.74 (JPY133.98)
Gold: higher at USD1,997.77 per ounce (USD1,987.63)
(Brent): higher at USD81.20 a barrel (USD80.52)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 BST UK CBI distributive trades survey
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German consumer morale rose sharply heading into May, a key survey showed, as concerns eased about the impact of high inflation on Europe's top economy. Pollster GfK said its forward-looking survey of around 2,000 people climbed 3.6 points to reach minus 25.7 points, the seventh consecutive monthly increase. Improving sentiment was driven by lower energy prices, government relief measures aimed at tackling high costs, and recent wage deals struck between various industries and workers, GfK said. "More and more households are assuming that feared losses in purchasing power due to inflation will turn out to be much milder," the pollster said.
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BROKER RATING CHANGES
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JPMorgan raises Associated British Foods price target to 1,850 (1,760) pence - 'neutral'
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Bernstein raises Whitbread price target to 3,150 (2,985) pence - 'market-perform'
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JPMorgan raises Travis Perkins price target to 850 (820) pence - 'underweight'
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COMPANIES - FTSE 100
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Pharmaceutical firm GSK said its sales performance in the first quarter of 2023 reflected lower Covid-19 solution sales compared to the previous year. When excluding this Covid-related business, sales grew 10% at constant exchange rates. In the quarter, turnover totalled GBP6.95 billion, down from GBP7.19 billion the previous year. Pretax profit was GBP1.91 billion, down from GBP2.29 billion the year prior. Adjusted operating profit rose by 8% on a year before to GBP2.09 billion, and adjusted operating profit margin was 30.1%, up 3.1 percentage points. Despite, the fall in turnover and pretax profit, GSK affirmed its full-year guidance, expecting turnover growth of between 6% and 8%. It declared a quarterly dividend of 14 pence per share. It said it expects to payout 56.5p per share in dividends in 2023.
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Fresnillo reported a "solid" start to 2023, noting silver and gold production were both up on the previous quarter thanks to an increasing contribution from its new Juanicipio mine. Quarterly attributable silver production totalled 13.1 million ounces, up 5.1% against the previous quarter but down 0.9% against the previous year as a result of lower ore grade and decreased volume of ore processed at San Julian. Quarterly attributable gold production totalled 173,000 ounces, up 3.0% against the previous quarter and up 16% against the previous year due to the higher volume of ore processed. Looking forward, the miner kept its full-year guidance unchanged. It sees attributable silver production in the range of 57.0 million to 64.0 million ounces and attributable gold production in the range of 590,000 to 640,000 ounces.
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COMPANIES - FTSE 250
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Drax said it delivered a "strong" system support and generation performance in the first three months of 2023, as it announced a GBP150 million share buyback programme. The renewable energy company said it expects 2023 adjusted earnings before interest, tax, depreciation and amortisation to be in-line with analyst consensus estimates, which it placed at GBP1.16 billion in a range of GBP1.1 billion to GBP1.2 billion. Drax noted that at the end of March it formally closed its two remaining coal units at the Drax Power Station.
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Harbour Energy announced that the Kan-1 exploration well has made an oil discovery in Block 30, offshore Mexico. The oil company holds a 30% interest in the block. The Block 30 partners will now evaluate the well data collected and put together a proposed plan to appraise the discovery, Harbour said.
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Specialty chemicals company Elementis said overall trading in the first quarter of 2023 has been "resilient" against subdued market demand conditions. It reported that revenue was flat on an underlying basis in the quarter as benefits from prior year pricing actions and improved mix broadly offset weaker volumes. In its Performance Specialties division, Elementis said its underlying performance was below the prior year period due to continued challenging demand conditions across coatings markets. In its Personal Care division, its underlying performance improved on the prior year as volumes were broadly stable due to new product launches and new business success, which helped to offset market weakness in Asia. Chief Executive Paul Waterman said: "We have made a solid start to the year and will continue to maintain our focus on self-help actions and effectively managing the challenging demand environment. We remain on-track to deliver over USD50 million of new business opportunities, 15 new products and progress towards USD10 million of additional efficiency savings by year end."
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OTHER COMPANIES
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Unikmind Holdings said it bought 12.0 million more shares in Kape Technologies, representing a further 2.8% of its shares. The acquisition means that Unikmind now holds or has acceptances for its takeover offer totalling 79% of Kape shares. Unikmind's offer is USD3.60 per Kape share.
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Breedon said that trading during the first quarter of 2023 has been "positive", with "encouraging" levels of enquiries. Revenue in the quarter is expected to be 10% ahead of the same period last year, or 7% ahead on a like-for-like basis. As a result, the construction materials firm said it is trading in-line with expectations, which it did not specify. Chief Executive Rob Wood said: "Our teams have stayed close to their customers and we continue to manage our cost base prudently, enabling us to grow revenue while fully recovering input cost increases. Longer term, our end-market exposure remains underpinned by structural growth dynamics."
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By Heather Rydings, Alliance News senior economics reporter
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