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LONDON MARKET MIDDAY: Miners lift FTSE 100 even as pound rebounds

18th Apr 2023 12:14

(Alliance News) - Stock prices in London were mixed at midday on Tuesday, as markets pondered the implications of a higher-than-expected UK employment rate, while the FTSE 100 benefited from gains by commodity stocks.

The FTSE 100 index was up 19.99 points, or 0.3%, at 7,899.50. The FTSE 250 was marginally higher, up 3.99 points at 19,290.89, while the AIM All-Share was down 0.70 of a point, or 0.1%, at 832.67.

The Cboe UK 100 was up 0.2% at 790.43, the Cboe UK 250 was flat at 16,924.50, and the Cboe Small Companies was up 0.2% at 13,804.20.

The UK unemployment rate unexpectedly ticked up in the three months to February. According to the Office for National Statistics, the UK jobless rate was 3.8% in the three months to February.

This was higher than FXStreet-cited market consensus, which had expected the reading to remain unchanged from 3.7% in the three months to January.

Annual growth in average total pay, including bonuses, was 5.9%, unchanged from the upwardly revised figure in the three months to January. However, it was higher than the market consensus of 5.1%.

Excluding bonuses, average earnings rose 6.6%, also unchanged from the upwardly revised figure last month, and higher than the consensus of 6.2%.

James Smith, developed markets economist at ING, said the continued strong wage growth will be "unwelcome news" for the Bank of England, as it prepares to decide on interest rates on May 11.

"For those of us expecting the Bank of England to keep interest rates unchanged next month, the latest surprise pick-up in UK wage growth undoubtedly puts a spanner in the works."

The pound was quoted at USD1.2441 at midday on Tuesday in London, significantly higher than USD1.2364 at the equities close on Monday.

Chris Turner at ING said sterling enjoyed a lift from Tuesday's jobs data as traders now see a 25-basis-point interest rate hike in May from the BoE priced in with an "82% probability".

Miners were the top performers at midday in London, after better-than-expected economic growth data for China improved the demand outlook for metals and minerals.

Fresnillo added 3.7%, Anglo American 3.6%, Glencore 2.3%, Antofagasta 2.2%, and Endeavour Mining 2.0%.

China's economy grew 4.5% year-on-year in the first quarter, rebounding after the end of zero-Covid measures late last year, according to data published by the National Bureau of Statistics.

The figures were the first snapshot since 2019 of a Chinese economy unencumbered by the strict health measures that helped keep the coronavirus in check but battered businesses and supply chains.

The reading was ahead of FXStreet-cited market consensus of 4.0%. In the previous quarter, annual growth was just 2.4%.

Brent oil was quoted at USD84.44 a barrel at midday in London on Tuesday, down from USD84.99 late Monday. Gold was quoted at USD2,004.34 an ounce, higher against USD1,990.71.

Elsewhere in the FTSE 100, Entain was the best blue-chip performer, rising 5.1%, as it reported "strong momentum" across the company, with double-digit revenue growth at the start of the year.

The Ladbrokes and Coral-owner said group net gaming revenue for the first quarter of 2023 was up by 15%. With the inclusion of Entain's 50%-owned BetMGM joint venture, net gaming revenue for the period was up by 22%.

Chief Executive Officer Jette Nygaard-Anderson said: "We are delivering both financially and strategically, with a record number of active customers enjoying our products, and we are executing on growth opportunities to further diversify and expand across regulated markets. In the US, BetMGM continues to grow in line with expectations and enjoyed a successful quarter which included the Super Bowl and March Madness."

In the FTSE 250, Mitie jumped 14% as it announced a GBP50 million share buyback programme and said revenue in the year ended March 31 is expected to exceed its financial 2022 figure.

The facilities management company said revenue for financial 2023 is expected to be slightly above GBP4.0 billion the year before, having "successfully replaced all revenue from short-term Covid-related contracts".

Operating profit before other items is expected to be at least GBP155 million, beating current guidance of at least GBP145 million. In financial 2022, operating profit before other items was GBP167 million.

IntegraFin climbed 8.3% as it reported a higher average amount of daily funds under direction in the second quarter of its financial year.

The company, which owns the investment platform Transact, said average daily funds under direction for the second quarter ended March 31 was USD53.8 billion, up 2.5% from USD52.5 billion the same period a year before.

IntegraFin reported a record number of Transact platform clients of 228,000 at the end of the quarter, up 4.6% from 218,000 a year before.

Despite the increases, the company said it expects revenue to be GBP66 million in the first half of the year. This would be slightly down from GBP67 million a year before.

Outside the FTSE 350, Cineworld rose 7.1% after it abandoned plans to sell its operations outside the US, UK and Ireland.

The embattled cinema operator said it received proposals from a "number of prospective counterparties" for its Rest of the World unit, though no possible bid met a value required by the company's lenders.

The company earlier in April said it failed to find a buyer for its key US, UK and Ireland operations. Cineworld entered into a restructuring agreement, leaving shareholders out of pocket.

On Tuesday last week, Cineworld said it filed the plan to a US bankruptcy court in the Southern District of Texas. Cineworld plans to emerge from the Chapter 11 process during the first half of 2023.

In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt both were up 0.5%.

The euro stood at USD1.0976, higher against USD1.0919. Against the yen, the dollar was trading at JPY134.01, lower compared to JPY134.49.

Stocks in New York were called to open higher, adding to gains made on Monday. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.6%. On Monday, all three indices closed up 0.3%.

Investors are awaiting more earnings reports from major US banks this week, including Goldman Sachs, Bank of America and Morgan Stanley. Other companies due to report include Johnson & Johnson, Tesla and Netflix.

So far, the US banking results season has gotten off to a strong start, with JPMorgan beating revenue expectations despite the tumultuous environment for banks following the collapse of Silicon Valley Bank.

By Heather Rydings, Alliance News senior economics reporter

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