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LONDON MARKET MIDDAY: London largely up despite slew of outlook cuts

19th Sep 2023 12:05

(Alliance News) - Stock prices in London were mostly higher at midday Tuesday, after news that eurozone inflation eased slightly in August and despite some less-than-stellar local corporate updates.

However, sentiment remained muted as the Federal Reserve begins its two-day meeting and investors await for other interest rate decisions across the globe.

The FTSE 100 index was up 18.13 points, 0.2%, at 7,671.07. The FTSE 250 was up 84.25 points, 0.5%, at 18,533.52. The AIM All-Share was down 1.24 points, 0.2%, at 740.82.

The Cboe UK 100 was up 0.2% at 763.76, the Cboe UK 250 was up 0.4% at 16,143.04, and the Cboe Small Companies was up 0.2% at 13,426.39.

In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.1%.

In August, the eurozone's consumer price index rose by 5.2% on-year, slowing from a 5.3% rise in July. An earlier flash estimate had expected the figure to be unchanged from July's 5.3%. A year earlier, the rate of annual inflation was 9.1%.

On a month-on-month basis, consumer prices rose by 0.5%, after falling 0.1% in July. The flash estimate had been for a 0.6% rise.

Oanda's Craig Erlam said that favourable data "may come as a small relief that surprises in the data are finally in the right direction".

The pound was quoted at USD1.2388 at midday on Tuesday in London, lower compared to USD1.2393 at the equities close on Monday. The euro stood at USD1.0698, higher against USD1.0684. Against the yen, the dollar was trading at JPY147.67, down slightly compared to JPY147.70.

The overall mood in financial markets remained cautious, however. Investors are waiting for several central bank decisions.

The US Federal Reserve will be the first to announce its interest rate decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.

The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July. The Fed will begin its two-day crunch meeting on Tuesday.

"This week, the US policymakers will certainly opt for a 'hawkish pause'. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth," said Swissquote Bank's Ipek Ozkardeskaya.

Stocks in New York were called slightly higher, despite pre-Fed nerves. The Dow Jones Industrial Average and the Nasdaq Composite were both called up 0.1%. The S&P 500 index was called up 0.2%.

Though shares in London were largely higher, the cautious mood ahead of the central bank updates, as well as a slew of profit warnings, kept a lid on gains.

"These profit warnings suggest investors need to be on their guard for the next earnings season," warned AJ Bell's Russ Mould.

In the FTSE 100, Kingfisher lost 6.6%.

The DIY retailing company said sales in the first half ended July 31 edged up 1.1% to GBP6.88 billion from GBP6.81 billion a year before, but statutory pretax profit dropped by 33% to GBP317 million from GBP474 million.

The B&Q owner maintained its interim dividend at 3.80p, and announced a new share buyback programme of GBP300 million. However, the firm cut its guidance for adjusted pretax profit in 2023, now expecting around GBP590 million, compared to previous estimates of GBP634 million.

Meanwhile, on AIM, fashion company Quiz plunged 31%.

Quiz said revenue in the year beginning April 1 has continued to lag behind the prior year, sitting below management expectations, as inflationary cost pressures have hit consumer confidence and demand for its products.

In the five months to August 31, revenue was down 15% year-on-year to GBP37.0 million from GBP43.7 million. Quiz said that if the current trend continues, annual revenue is likely to be 6% to 7% behind current market expectations, which will have a knock-on effect on profit.

It said it would expect a pretax loss of no more than GBP1.5 million, swinging from profit of GBP2.3 million in the prior year.

AJ Bell's Mould added: "Even alcohol seller Naked Wines couldn't escape the doom and gloom, saying that its new financial year had started off slower than expected."

Naked Wines shares were 9.3% lower.

In more positive news, Ocado rose 3.5%.

The Hertfordshire-based online grocer and warehouse technology firm reported that revenue in its third quarter totalled GBP569.6 million, increasing 7.2% from GBP531.5 million the year prior.

Average customers grew 1.5% to 961,000, from 946,000, while the average basket value rose 4.2% to GBP120.72, from GBP115.85.

In the FTSE 250, Tui gained 6.3%.

The tour operator backed its guidance, after enjoying a strong summer for bookings and seeing "positive momentum" going into the winter.

Tui reported a "strong pipeline" of bookings for the summer 2023 period, rising 5% on-year to 13.7 million, taking it to 96% of pre-pandemic levels. Demand in the final month alone was robust, rising 8% year-on-year.

Amongst London's small-caps, consumer reviews platform Trustpilot jumped 17%.

The Copenhagen-based firm said revenue in the first half ended June 30 rose 15% on-year to USD84.6 million from USD73.4 million. It narrowed its pretax loss to USD4.0 million from USD9.2 million a year prior.

Looking ahead, Trustpilot backed its annual top-line outlook, predicting mid-teens constant currency revenue growth. However, it now believes its adjusted Ebitda will beat the current range of market expectations.

On AIM, SpaceandPeople rose by 26%.

The retail, promotional and brand experience specialist announces another extension to its commercialisation agreement with Network Rail for providing exhibitions, events and distribution activity until September 30, 2024.

Brent oil was quoted at USD95.04 a barrel at midday in London on Tuesday, up from USD94.78 late Monday. Gold was quoted at USD1,936.12 an ounce, higher against USD1,927.22.

By Sophie Rose, Alliance News reporter

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