23rd Feb 2023 12:00
(Alliance News) - Stock prices in London were largely higher at midday on Thursday, though the FTSE 100 was in the red as the more globally-focused index lamented interest rates in the US will likely keep pushing higher.
The FTSE 100 index was down 26.40 points, or 0.3%, at 7,904.23.
Meanwhile, the FTSE 250 was up 152.56 points, or 0.8%, at 19,832.85, and the AIM All-Share was up 4.36 points, or 0.5%, at 856.64.
The Cboe UK 100 was down 0.3% at 791.29, the Cboe UK 250 was up 0.9% at 17,322.93, and the Cboe Small Companies was down 0.1% at 13,856.61.
On Wednesday, minutes from the most recent Federal Open Market Committee meeting revealed that US central bank officials anticipate further increases in interest rates will be needed to ensure their inflation target is met, despite signs pricing pressures are easing.
Craig Erlam, senior market analyst at Oanda, said that the "starkest" takeaway from the minutes was that some policymakers backed another 50 basis point increased, and all backed further tightening ahead.
"While that aligns with some commentary we've had recently, the meeting took place before the jobs and inflation reports, and the retail sales data for January, all of which were very strong. So either policymakers came to this judgement in anticipation of those reports, or they did it despite a series of softer prints that had convinced investors that the end of the tightening cycle was just around the corner," he explained.
Chris Turner at ING said that this hawkish backdrop should keep the dollar supported in the near term and potentially into the FOMC's next meeting on March 22.
"For dollar bears, both activity and price data will have to soften over the coming weeks to make an impact on an otherwise hawkish Fed," he said.
The pound was quoted at USD1.2022 at midday on Thursday in London, lower compared to USD1.2066 at the close on Wednesday.
The euro stood at USD1.0596, lower against USD1.0629. Against the yen, the dollar was trading at JPY134.97, higher compared to JPY134.67.
Ahead of the US open, stocks in New York were called higher. The Dow Jones Industrial Average was called 0.2% higher, the S&P 500 index 0.4% higher, and the Nasdaq Composite 0.7% higher.
In London, Rolls-Royce was the best blue-chip performer at midday, soaring 25% as it delivered a debt reduction and revenue increase in 2022.
The aerospace power systems supplier reported statutory pretax loss of GBP1.50 billion, widening from GBP294 million a year ago.
The company explained this was as the result of a GBP1.58 billion fair value loss on derivative contracts and GBP308 million in net interest payable, despite a GBP81 million profit from disposals from continuing operations.
Statutory revenue, meanwhile, rose 20% to GBP12.52 billion from GBP11.22 billion. Underlying revenue was GBP12.69 billion, up 16% from GBP10.95 billion a year ago, and ahead of the average market consensus of GBP11.59 billion.
Rolls-Royce's net debt was GBP3.25 billion, narrowing from GBP5.16 billion and ahead of Shore Capital's forecast of a reduction to GBP4.64 billion.
WPP climbed 3.2% after it reported a strong performance across all its major agencies in 2022, with revenue and profit both seeing double-digit rises.
The London-based advertising and communications company said revenue in 2022 rose 13% to GBP14.43 billion from GBP12.80 billion in 2021. Pretax profit jumped 22% to GBP1.16 billion from GBP951 million.
Mondi dropped 5.1%, the worst performer in the FTSE 100 at midday, despite announcing a surge in profit in 2022, as it cautioned on 2023.
The paper and packaging firm reported a pretax profit of EUR1.56 billion in 2022, up from EUR712 million in 2021. Revenue jumped 28% to EUR8.90 billion from EUR6.97 billion.
However, looking ahead, Mondi said that macroeconomic uncertainties remain uncertain, noting a decline in input costs amid a softer demand and pricing.
In the FTSE 250, John Wood rocketed 30% after it said it rebuffed three unsolicited proposals for a takeover by Apollo Global Management on Wednesday.
It said the most recent approach was received in late January, proposing a cash offer for all of its shares at a price of 230 pence each, around GBP1.59 billion in total.
Drax, meanwhile, dropped 5.2% after it reported a lower profit in 2022 as cost of sales outpaced revenue growth.
The Yorkshire, England-based power generator said in 2022, pretax profit fell 36% to GBP78.1 million from GBP121.5 million in 2021. Revenue grew 53% to GBP7.78 billion from GBP5.09 billion.
Cost of sales however widened 61% to GBP6.75 billion from GBP4.20 billion. Operating and administrative expenses increased 16% to GBP542.8 million from GBP469.9 million.
Elsewhere in London, TT Electronics climbed 7.5% as it boasted its annual results will be ahead of expectations.
Organic revenue growth will be 20%, TT said, thanks to its positioning in structural growth markets, along with adding new projects and customers. In addition, adjusted pretax profit is expected at the top end of analyst consensus, which TT cited at a range of GBP36.5 million to GBP39.4 million.
On AIM, Star Phoenix skyrocketed 82% as its shares were restored to trading.
This followed the publishing of its delayed annual results for its year to June, which it released on Tuesday. Its shares had been suspended since January.
In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.4%.
Eurozone headline inflation eased at the beginning of 2023, though core inflation ticked up.
According to Eurostat, annual inflation in the eurozone eased to 8.6% in January from 9.2% in December. In January 2022, inflation stood at 5.1%. The reading was slightly higher than a flash estimate of 8.5%, published at the beginning of February.
Core inflation - excluding energy, food, alcohol & tobacco - ticked up to 5.3% in January from 5.2% in December.
Jack Allen-Reynolds said the surprise upward revision to eurozone's core inflation in January will "embolden" the majority of European Central Bank policymakers, who want to press on with significant further interest rate hikes.
Brent oil was quoted at USD81.24 a barrel at midday in London on Thursday, up from USD81.16 late Wednesday. Gold was quoted at USD1,825.00 an ounce, lower against USD1,835.00.
Still to come in Thursday's 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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