17th Jan 2023 16:53
(Alliance News) - A nervy day for markets in London on Tuesday put some distance between the FTSE 100 and its all-time high, with poor earnings from Goldman Sachs souring the mood.
The FTSE 100 index closed down 9.04 points, or 0.1%, at 7,851.03. The FTSE 250 ended down 134.29 points, or 0.7%, at 19,948.04, while the AIM All-Share closed down 3.40 points, or 0.4%, at 858.19.
The Cboe UK 100 closed down 0.2% at 785.08, the Cboe UK 250 fell 0.8% at 17,397.65, and the Cboe Small Companies closed down 0.4% at 14,025.88.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt closed 0.4% higher.
"Today's earnings from the Wall Street titan provided the double blow of falling revenues and rising expenses. Perhaps the initial round of bank earnings were the red herring – investors will certainly be worried that companies in other sectors will replicate today's miserable performance, putting pressure on the fragile rally in US stocks," IG analyst Chris Beauchamp commented.
Goldman Sachs slid 7.0% in New York. It said fourth quarter and 2022 performance was weaker.
The New York-based investment bank said total net revenue in the three months that ended December 31 was USD10.59 billion, down from USD12.64 billion a year earlier. Pretax earnings more than halved to USD1.53 billion from USD3.76 billion.
Across all of 2022, total net revenue was USD47.37 billion from USD59.34 billion a year earlier, while pretax earnings more than halved to USD13.49 billion from USD27.04 billion.
The Dow Jones Industrial Average was down 1.1% at the time of the London equities close. The S&P 500 and Nasdaq Composite were 0.2% lower. Markets in New York re-opened after a public holiday on Monday.
The pound was quoted at USD1.2278 at late on Tuesday in London, higher compared to USD1.2203 at the close on Monday.
The euro stood at USD1.0804, lower against USD1.0822. Against the yen, the dollar was trading at JPY128.18, lower compared to JPY128.55.
CMC Markets analyst Michael Hewson commented: "The pound has got a lift to the 1.2300 area after the latest weekly wages numbers showed a rise of 6.4% in the 3 months to November, a record high outside of the pandemic. The euro initially edged higher after ECB chief economist Philip Lane said that rates had some way to go before getting into restrictive territory. The upside proved somewhat limited on a report that the ECB was considering slowing the pace of any rate rises after a 50 [basis points] rate rise in February, to a slower pace of 25bps.
"The Japanese yen has undergone a relatively subdued session ahead of tomorrow's Bank of Japan rate decision, as caution takes over ahead of what could be a volatile session if markets don't like what the central bank has to say when it comes to the next move on monetary policy."
In London, Ocado shed 9.3%, the worst FTSE 100 performer. It said its joint venture with high-street retailer Marks & Spencer achieved annual revenue of GBP2.2 billion, down 3.8%.
This came despite revenue in the 13 weeks to November 27, its financial fourth quarter, rising by 0.3% against the previous year to GBP549.4 million.
Ocado Retail expects to be close to break-even earnings before interest, tax, depreciation and amortisation in financial 2022.
Looking ahead to financial 2023, it expects "marginally positive" Ebitda on mid-single-digit percentage revenue growth.
"Another year, another loss and another trading deficit is on the cards for 2023 from Ocado Retail food delivery joint-venture between Ocado and Marks & Spencer, even if the business’ new boss, Hannah Gibson, continues to put a positive spin on it by targeting positive earnings before interest, taxes, depreciation and amortisation (Ebitda, or, ultimately, earnings before bad stuff, Ebbs) for the coming year," AJ Bell analyst Russ Mould commented.
"The market does not seem impressed, judging by the share price reaction and just as Netflix is moving on from publishing net subscriber additions – not least because it’s no longer helpful for the share price to do so – Ocado is going to need to focus on turning customers into profits and cashflow."
Elsewhere in the FTSE 100, Unilever fell 1.5%. Bernstein cut the consumer goods firm to 'underperform' from 'market-perform'.
FTSE 250-listed Hays added 2.1%. It reported that net fees rose by a double-digit percentage in its second financial quarter, as its Germany-based business grew significantly higher than other regions.
In the three months ended December 31, the London-based recruitment company said net fees recorded 11% growth against the previous year, driven by increased fee margins and the targeting of higher-value markets. On a like-for-like basis, growth was 8%.
On AIM, BlueRock Diamonds plunged 33% on weaker output and as talks to settle financing with creditors hit a snag.
BlueRock said it has failed in attempts to reach an arrangement with Mark Poole and Tim Leslie over loan notes. The outstanding balance on the notes is GBP361,667.
"Mr Leslie notified his intention to present a winding-up petition should the amount outstanding on the Loan Note not be settled by 13th January 2023. BlueRock Diamonds has written to Mr Leslie's solicitor seeking further discussions and is waiting for a response," the company said.
In addition, it said the amount owed to Teichmann South Africa for a loan facility connected with Kareevlei has risen to over ZAR74 million, around GBP3.5 million.
"Discussions continue with TSA regarding its ongoing support to Kareevlei, however, no commitment has been received and it is unlikely that the company will be able to reduce the amount drawn under the facility to comply with the terms of the agreement," BlueRock added.
In addition, it said production at its Kareevlei mine in South Africa was "below target" as the asset was closed over Christmas and New Year.
"Arrangements were made for a diamond tender in December in order to facilitate the cash flow for the month. The previously reported decrease in diamond prices continued, however December revenue was not significantly lower than management forecast," BlueRock added.
On the up, Active Energy climbed 18%. The biomass-based renewable energy firm said 2022 was an "extremely productive year" for the company.
It lauded commercial interest in the future CoalSwitch production facility, with potential customers ranging from power generators to cement producers in the US.
Brent oil was quoted at USD85.56 a barrel in London late on Tuesday, up from USD84.20 late Monday. Gold was quoted at USD1,912.88 an ounce, lower against USD1,917.90.
Wednesday's economic calendar has a UK consumer price index reading at 0700 GMT, before eurozone inflation data at 1000 GMT. There is a US producer price index reading at 1330 GMT.
The local corporate calendar has trading statements from Primark owner Associated British Foods, retailers Currys and WH Smith, and third-quarter results from luxury goods firm Burberry.
By Eric Cunha, Alliance News news editor
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