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LONDON MARKET MIDDAY: Shares and pound up as market confidence builds

30th Mar 2023 12:06

(Alliance News) - Equity markets continued to climb on Thursday at midday in London, with investors confident the threat of a banking crisis has been contained.

The risk-on mood supported the pound, which hit a near two-month high. The dollar also retreated against the euro.

"The market was lifted by a broad range of sectors including retail, banking, travel and property," AJ Bell analyst Russ Mould commented.

"That suggests confidence is rebuilding among investors who have been shaken by the rapid unfolding of issues concerning a handful of US and European banks, and as expectations for interest rates once again swerved in a new direction."

The FTSE 100 index rose 69.15 points, 0.5%, to 7,633.42. The FTSE 250 was up 239.67 points, 1.3%, at 18,872.48, and the AIM All-Share was up 7.98 points, 1.0%, at 804.18.

The Cboe UK 100 was up 1.0% at 763.01, and the Cboe UK 250 rose 1.5% to 16,482.13. The Cboe Small Companies was up 0.3% at 13,288.66.

In European equities, the CAC 40 index in Paris was up 1.4%, while the DAX 40 in Frankfurt added 1.1%.

So far this week, the FTSE 100 has risen by around 3.0%. The more bullish week for London's benchmark index has put it back in positive territory for the year-to-date, up around 2.4%.

"But it's important to remember that sentiment remains fragile after such a shaky month for banks," Swissquote analyst Ipek Ozkardeskaya commented.

Among banking shares in Europe on Thursday, Societe Generale added 3.0% in Paris, BBVA rose 2.6% in Madrid, and Barclays was up 2.8% in London.

The dollar was largely weaker ahead of a final US gross domestic product reading for the final quarter of last year.

Sterling was quoted at USD1.2345 midday Thursday in London, up from USD1.2326 at the London equities close on Wednesday. Cable rose as high as USD1.2364 on Thursday, its best level since it hit USD1.2400 in early February.

The euro traded at USD1.0869, higher than USD1.0834. Against the yen, the dollar was quoted at JPY132.66, up slightly versus JPY132.51.

The third US GDP estimate for the fourth quarter is due at 1330 BST. It is expected to affirm that world's largest economy grew 2.7% quarter-on-quarter in the final three months of 2022.

Ahead of the data, stocks in the US were called to open higher. The Dow Jones Industrial Average and S&P 500 both were called up 0.5% and the Nasdaq Composite up 0.4%.

Eyes also will be on a German inflation reading at 1300 BST, ahead of eurozone data at 1000 BST on Friday.

According to FXStreet-cited market consensus, Germany's annual inflation rate is expected to slow to 7.3% this month from 8.7% in February. The single currency area's inflation rate is forecast to ease to 7.2% from 8.5%.

In London, Drax recovered some earlier losses to trade 1.2% lower. Shares in the power generator had slumped more than 10% earlier on Thursday.

Drax defended a biomass project which was snubbed by the UK government.

The Department for Energy Security & Net Zero said that Drax's power bioenergy with carbon capture and storage submission would not be one of eight projects selected for its track-1 programme.

The UK government noted that it will continue to engage with Drax's project, adding that "track-1 is not the extent of our ambition".

Drax said it believes its BECCS offering is the "only project that can enable the government to achieve" its aim of a yearly removal of five million tonnes of engineered greenhouse gases by 2030.

"With the right engagement from government and swift decision-making, Drax stands ready to progress our GBP2 billion investment programme and deliver this critical project for the UK by 2030," Chief Executive Officer Will Gardiner said.

Analysts at energy sector-focused investment research firm Longspur commented: "The decision by the UK government not to select Drax for its Track-1 carbon capture programme does not mean that the government has walked away from supporting Drax's UK BECCS ambitions. Support will continue to be assessed under a separate process."

Shares in electricity utility SSE rose 3.6%. It lifted guidance for its financial year, which ends on Friday.

SSE now expects adjusted earnings per share of over 160p, compared to previous guidance of over 150p. It would represent a rise of over two-thirds from 95.4p.

SSE was among the best-performing large-caps in London. Insurer Aviva, housebuilder Taylor Wimpey and packaging firm Mondi were among the worst, down 3.2%, 2.8% and 1.7%. The trio went ex-dividend on Thursday, meaning new buyers will not qualify for the latest payout.

Among smaller listings, energy services company Petrofac and online greeting cards and gifting firm Moonpig were standout performers, jumping 65% and 16%.

Petrofac, alongside Tokyo-listed Hitachi, have been awarded a wind farm contract by Dutch-German grid operator TenneT. The deal is worth EUR13 billion.

The contract, which Petrofac said is the largest in its history, covers six projects, each worth over EUR2 billion. The multi-year framework agreement is part of TenneT's 2 gigawatt high-voltage direct current offshore wind programme.

Moonpig affirmed yearly guidance and hailed its best ever week of UK sales in the run-up to Mother's Day on March 19.

Moonpig, which ends its financial year on April 30, said its trading performance so far in the second half has been "resilient". It still expects yearly revenue of around GBP320 million, which would represent a 5.2% rise from GBP304.3 million in financial 2022.

Casual dining restaurant operator Tasty fell 13%. It said it swung to a GBP6.4 million pretax loss for the year ended December 25 from profit of GBP1.2 million. Revenue increased 26% to GBP44.0 million from GBP34.9 million.

"The energy crisis and unprecedented inflationary costs suppressed the results further, significantly increasing our running costs," Tasty said.

It said its performance so far in the new financial year is "ahead of management expectations". It cautioned that it will be difficult to predict the damage done by the "cost of living crisis and input cost inflation and shortages", however.

Brent oil was trading at USD78.24 a barrel midday Thursday, down slightly from USD78.37 late Wednesday. Gold fetched USD1,969.65 an ounce, up from USD1,967.03.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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