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LONDON MARKET MIDDAY: Stocks lower; Sunak looks to sell protocol deal

28th Feb 2023 12:03

(Alliance News) - Stock prices in London were mostly lower at midday on Tuesday, as investors wait to hear whether UK Prime Minister Rishi Sunak has been able to win support for his Northern Irish border deal with the EU.

The FTSE 100 index was down 27.93 points, 0.4%, at 7,907.18 heading into Tuesday afternoon. The FTSE 250 was down 22.90 points, 0.1%, at 19,863.20, though the AIM All-Share was up 1.07 points, 0.1%, at 859.54.

The Cboe UK 100 was down 0.4% at 791.35, the Cboe UK 250 was up marginally at 17,433.50, and the Cboe Small Companies was down 0.1% at 14,060.42.

Sunak insisted that his new Brexit deal for Northern Ireland addressed the concerns of unionists, despite the "small and limited" role for EU law and its court.

The PM, who was visiting Northern Ireland to sell the deal secured with the EU, said he believed "hand on heart" that it addressed the concerns expressed about the current post-Brexit trading arrangements which triggered the collapse of power-sharing in Stormont.

The Democratic Unionist Party, which brought down the Northern Ireland executive over the measures, is considering its response to the new deal.

The framework removes the Northern Ireland Protocol's barriers on trade across the Irish Sea and hands a "veto" to politicians in Stormont on EU law – a set of concessions from Brussels that went further than some expected.

"While the deal may provide a reset for UK/EU relations and be good for the UK economy, reports suggest some in the DUP are not fully satisfied by what's on the table," said AJ Bell analyst Russ Mould.

Sunak, who is also expected to speak to backbench MPs in England on Tuesday, spoke at length in the Commons on the deal as he sought to see off any threat of rebellion from within his own ranks.

MPs are expected to get a vote on the deal, but Downing Street has not so far said when or how such a vote might take place.

The pound was quoted at USD1.2093 at midday on Tuesday in London, up compared to USD1.2019 at the equities close on Monday. The euro stood at USD1.0611, up against USD1.0591. Against the yen, the dollar was trading at JPY136.72, up compared to JPY136.24.

UK Bank of England Monetary Policy Committee member Catherine Mann and Chief Economist Huw Pill will each speak at around 1230 GMT.

On the LSE, Ocado hurt the FTSE 100 index, slumping 8.3%.

The online grocer and warehouse technology firm said group revenue edged up just 0.6% to GBP2.51 billion in the year ended November 27. All segments saw growth, except for retail - its joint venture with Marks & Spencer - which fell 3.8%. "Robust" customer growth in retail was offset by lower value baskets, the firm said.

Ocado's pretax loss widened to GBP500.8 million from GBP176.9 million. No dividend was declared, unchanged from a year before.

Looking ahead, Ocado expects Retail growth in the mid-single digits for 2023, with Technology to see around 40% Ocado Smart Platform fee revenue growth, and UK Logistics to be "broadly stable".

AJ Bell's Mould said: "The latest results are as appetising as a bucket of sick. Revenue growth has ground to a halt, pretax losses are getting worse and net debt has ballooned.

"Ocado has long argued that it needs to spend money to make money, but patience is wearing thin for the long-suffering shareholders."

However, the firm's grocery market share improved to 1.9% from 1.8% in the 12 weeks to February 19, according to the latest Kantar survey. Ocado sales grew by 11% on-year.

Grocery inflation hit a record of 17.1% in the four weeks to February 19, according to Kantar. This means the average UK household is likely to see an GBP811 increase to their annual bill if inflation continues at the same pace.

Croda International also hurt the FTSE 100, shedding 4.4%.

The Yorkshire, England-based chemicals maker said sales rose 11% year-on-year to GBP2.09 billion in 2022 from GBP1.89 billion a year earlier. Constant currency sales rose by 5.0%, driven by "its ability to recover input cost inflation, with price/mix up by 24%."

Pretax profit surged 90% to GBP780.0 million from GBP411.5 million, as basic earnings per share jumped to 465.8 pence from 230.0p a year ago.

Croda lifted its annual dividend by 8.0% to 108.0 pence per share from 100.0p a year prior.

Looking to 2023, it is trading in line with expectations, and expects destocking to end during the first half. It said it expects its performance to be weighted towards the second half, putting pressure on its future performance.

"Investors hate hearing that phrase as it raises the chances of a profit warning if that six-month period doesn't live up to expectations," Mould added.

In the FTSE 250, Man Group gained 7.9%.

The London-based hedge fund manager said pretax profit in 2022 jumped 25% to USD608 million from USD487 million in 2021. Assets under management fell 3.6% to USD143.3 billion from USD148.6 billion, however.

The company declared a 2022 dividend of 15.7 cents, up 12% from 14.0 a year prior.

Meanwhile, Chair John Cryan will retire from the board "towards the end of 2023". Non-Executive Director Anne Wade will replace Cryan after his departure.

On London's AIM market, Abingdon Health gained 26%.

The developer and manufacturer of rapid diagnostics tests said it expects revenue to increase significantly in its second half, with annual revenue to improve from GBP2.8 million in financial 2022.

Revenue for the six months to December came in at GBP1.1 million, down from GBP1.7 million.

"The company has successfully transitioned its activities away from Covid-19 and is now operating as a fully integrated [contract development & manufacturing organisation] maintaining its full focus on lateral flow testing," the firm explained.

Safestay also jumped 26%.

The hostel owner and operator said annual revenue in 2022 will come in ahead of market expectations at GBP19.0 million, up from GBP6.4 million in 2021. Adjusted earnings before interest, tax, depreciation and amortisation are expected to be in line with market expectations at GBP5.9 million, swinging from a GBP1.0 million loss.

It said business is "returning to normal" with guests being predominantly young travellers, as group bookings are seeing a slower recovery. Average bed rate increases to GBP23.70 from GBP19.70, which should be "sustainable", the firm noted.

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

Growth in the French economy slowed in the final quarter of 2022, final data released on Tuesday confirmed, but it avoided contraction.

According to Insee - France's national statistics body - gross domestic product in the fourth quarter grew by 0.1% from the third quarter. In the third quarter, it had grown by 0.2% from the second.

Insee also released preliminary data for consumer prices.

In February 2023, consumer prices should increase by 6.2% year-on-year, quickening from growth of 6.0% in January.

Also putting the European Central Bank under the spotlight, figures showed inflation in Spain also intensified in February, suggesting that price pressure is proving stickier than ideal.

According to INE, the yearly inflation rate in Spain quickened to 6.1% in February, from 5.9% in January.

Stocks in New York were called lower. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite were all called down 0.2%.

Brent oil was quoted at USD83.11 a barrel at midday in London on Tuesday, up from USD82.28 late Monday. Gold was quoted at USD1,810.53 an ounce, down against USD1,816.96.

Still to come in Tuesday's economic calendar, there will be a US consumer confidence reading at 1500 GMT.

By Sophie Rose, Alliance News reporter

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