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LONDON MARKET CLOSE: Stocks in the red; Ascential surges on spin-off

25th Jan 2023 17:09

(Alliance News) - Stocks in London were lower at the close on Wednesday amid a gloomy economic backdrop for the UK and mixed updates from UK-listed firms.

"Trading statements from UK PLC this week have been 'OK', but not of the kind to really fire up enthusiasm in investors to chase the index at its current levels," said Chris Beauchamp at IG.

The FTSE 100 index closed down 12.49 points, or 0.2% at 7,744.87 on Wednesday. The FTSE 250 ended down 51.27 points, or 0.3%, at 19,804.04. The AIM All-Share closed down 2.69 points, or 0.3%, at 860.78.

The Cboe UK 100 ended down 0.3% at 774.19, the Cboe UK 250 closed down 0.4% at 17,275.26, and the Cboe Small Companies ended down 0.3% at 13,586.82.

UK factory gate inflation eased at the end of 2022, according to the Office for National Statistics.

UK producer input prices rose by 16.5% annually in December, slowing from the revised figure of an 18.0% annual rise in November. On a monthly basis, input prices fell by 1.1% in December, compared to a revised monthly fall of 0.2% in November.

The pound was quoted at USD1.2354 at the London equities close on Wednesday, up from USD1.2320 at the close on Tuesday.

Though Wednesday's data offered a slightly improved picture, BBH said that sterling is likely to continue "underperforming" due to a "negative fundamental backdrop."

In the FTSE 100, Aviva rose 3.0% after it left returns guidance unchanged and the insurer put the cost of a UK cold snap late last year at GBP50 million.

It was the best blue-chip performer at the close on Wednesday.

Aviva expects a combined operating ratio of 94.6%, in line with guidance given back in November, but worsened slightly from 94.1% in 2021. A reading above 100% indicates a loss on underwriting, so the lower the better.

It said in November that it expects a 31.0 pence per share payout for 2022 and 32.5p for 2023.

Fresnillo was 2.8% lower after it reported a rise in quarterly gold output but a fall in silver production, and warned that costs are expected to have risen.

The Mexico City-based gold and silver miner said total silver production fell 3.0% year-on-year in the fourth quarter to 12.5 million ounces from 12.9 million ounces. Gold production was up 12% in the fourth quarter to 167,969 ounces from 159,205 a year earlier.

Additionally, Fresnillo said adjusted production costs for the second half of 2022 are expected to have increased by about 20% compared to the same period a year ago.

In the FTSE 250, easyJet soared 9.3% after it said it expects its annual outturn to top market expectations thanks to strong bookings and demand at the start of its financial year.

For the financial first quarter that ended December 31, easyJet said it made a headline pretax loss of GBP133 million, narrowed from GBP213 million a year earlier. Revenue improved 83% to GBP1.47 billion from GBP805 million.

JD Wetherspoon was down 6.0%. The pub chain said it is "cautiously optimistic" for the current financial year, with recent sales only fractionally short of their pre-pandemic level.

Like-for-like sales were up 13% on a year before in the 25 weeks to January 22 and only 0.7% below the same 25 weeks to January 2020, before the Covid-19 lockdowns in the UK.

Wetherspoon did not provide actual sales figures. Its full results for the six months ending on Sunday will be released on March 24.

Ascential rocketed 19%. The business-to-business media firm said it is proposing to separate its digital commerce assets into an independent US-listed company, as it emphasised a focus on events for its core business.

In addition, it said it plans to sell its WGSN consumer trends unit.

"Subject to shareholder approvals, it is the board's intention to pursue both a separation of its world-wide Digital Commerce assets into an independent, publicly traded company listed in the US as well as a process for the sale of WGSN, with our world-class Events businesses continuing with a UK listing as Ascential PLC," the company said.

Ascential said the moves will provide growth funds for the company. It said a "significant" amount of any WGSN proceeds will be returned to shareholders.

In European equities on Wednesday, the CAC 40 in Paris and the DAX 40 in Frankfurt both ended down 0.1%.

Germany is set to narrowly escape a recession this year, the government said Wednesday, as Europe's biggest economy weathers the fallout from the Ukraine war better than expected.

Industrial powerhouse Germany is forecast to eke out growth of 0.2% in 2023, the economy ministry said in its latest projections.

Back in October, when fears were running high about soaring energy costs in the wake of Russia's war in Ukraine, Berlin was bracing for a contraction of 0.4% in 2023.

The German economy already defied predictions by dodging a contraction in the final quarter of 2022, official data showed last week. But Europe's top economy is not out of the woods yet, analysts said.

"Not falling off the cliff is one thing, staging a strong rebound, however, is a different matter," ING bank economist Carsten Brzeski said.

The euro stood at USD1.0886 at the European equities close on Wednesday, higher against USD1.0881 at the same time on Tuesday.

Brzeski's ING colleague Francesco Pesole said that good data out of the eurozone was likely keeping most investors "on the bullish side of the euro for now", with downside risks for EURUSD appearing "contained".

Against the yen, the dollar was trading at JPY129.78 late on Wednesday, lower compared to JPY129.89 late Tuesday.

Stocks in New York were sharply lower at the London equities close, with the Dow Jones Industrial Average down 0.9%, the S&P 500 index down 1.1%, and the Nasdaq Composite down 1.4%.

Brent oil was quoted at USD86.11 a barrel at the London equities close on Wednesday, down from USD86.55 late Tuesday. Gold was quoted at USD1,933.82 an ounce, higher against USD1,930.76 at the close on Tuesday.

In Thursday's UK corporate calendar, there are trading statements from tonic, drinks and mixers maker Fevertree Drinks and estate agency Foxtons as well as third quarter results from low-cost airline Wizz Air.

In the economic calendar, the US will publish its weekly unemployment claims report at 1330 GMT.

By Heather Rydings, Alliance News senior economics reporter

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