25th Jan 2023 12:05
(Alliance News) - Stock prices in London were lower at midday on Wednesday, despite some positive UK company trading updates.
The FTSE 100 index was down 4.92 points, 0.1%, at 7,752.44. The FTSE 250 was flat at 19,850.17, and the AIM All-Share was down 2.59 points, 2.6%, at 860.88.
The Cboe UK 100 was down 0.2% at 775.16. The Cboe UK 250 was down 0.1% at 17,330.00. The Cboe Small Companies was up 0.3% at 14,044.07.
UK producer input prices rose by 16.5% annually in December, slowing from the 18.0% annual rise seen in November, according to the Office for National Statistics. On a monthly basis, input prices fell 1.1% in December, compared to a revised monthly fall of 0.2% in November.
Wednesday's PPI reading did not add much optimism, following a gloomy set of UK economic data on Tuesday.
UK public sector borrowing - excluding public sector banks - in the final month of 2022 reached its highest December figure since monthly records began in 1993. Borrowing hit GBP27.4 billion, which was GBP16.7 billion higher than the previous year, and GBP9.8 billion higher than the latest official forecast from the Office for Budget Responsibility.
Also out on Tuesday, the UK composite purchasing managers' index fell deeper into contraction territory in January to 47.8 points from 49.0 in December, according to the flash reading. The manufacturing PMI rose to 46.7 in January from 45.3 in December, but the services PMI fell to 48.0 from 49.9.
In European equities on Wednesday, both the CAC 40 in Paris and the DAX 40 in Frankfurt were down 0.5%.
Business sentiment in Germany improved at the beginning of the year, according to survey results released on Wednesday.
The ifo Business Climate Index rose to 90.2 points in January from 88.6 in December. "This is due to considerably less pessimistic expectations. Companies were, however, somewhat less satisfied with their current situation," ifo explained.
The German government said it expects the country to narrowly escape a recession this year, as Europe's biggest economy weathers the fallout from the Ukraine war better than expected. Germany is forecast to eke out growth of 0.2% in 2023, the economy ministry said in its latest projections.
Back in October, when fears were running high about soaring energy costs in the wake of Russia's war in Ukraine, Berlin was bracing for a contraction in the German economy of 0.4%.
"The further increase in the Ifo business climate index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year," commented Capital Economics.
"But the fall in its current conditions index is a reminder that the economy is not out of the woods yet. We think GDP will at best stagnate in the first half of the year."
The pound was quoted at USD1.2312 at midday on Wednesday in London, down compared to USD1.2323 at the close on Tuesday. The euro stood at USD1.0862, down against USD1.0881. Against the yen, the dollar was trading at JPY129.74, down compared to JPY129.89.
In the FTSE 100, Aviva shares were 3.0% higher in midday trade.
The London-based insurer left its returns guidance unchanged, as it put the cost of a UK cold snap late last year at GBP50 million.
Claims stemming from a UK freeze event in December amounted to GBP50 million, Aviva said, though it added that its "weather experience" for 2022 was largely in line with its long-term average. It was only "marginally" above the long-term average in the fourth quarter.
Aviva also maintained returns guidance. It said in November that it expects a 31.0 pence per share payout for 2022 and 32.5p for 2023. In addition, it said at the time that it intends to "return further capital to shareholders" next year.
In the FTSE 250, Ascential surged 22%.
The business-to-business media and events firm said it is proposing to separate its worldwide digital commerce assets into an independent US-listed company. It also proposed to sell WGSN, with its UK listing continuing as an events company.
In its trading update, Ascential reported double-digit revenue growth across all four of its segments in 2022.
Ascential now expects revenue to be at least GBP520 million, ahead of the top end of the current consensus range of GBP479 million to GBP516 million. Adjusted earnings before interest, tax, depreciation and amortisation is now expected at GBP118 million, which is also ahead of the top end of the current consensus range.
In 2021, Ascential brought in revenue GBP349 million and adjusted Ebitda of GBP89 million.
Shore Capital said: "We are pleased to note the strong trading performance [of Ascential] and regard the group's decision to unbundle/create greater structural clarity as a bold, if not entirely unexpected, move to realise the latent shareholder value that we have previously identified. The extent to which this succeeds will clearly depend on a range of factors including prevailing conditions in financial markets and whether today’s news prompts external approaches to acquire individual/groups of assets."
Also in the FTSE 250, easyJet shares jumped 10%, putting the company in contention to rejoin the FTSE 100 index at the next quarterly review.
In the low-cost airline's first quarter ended December 31, it reported a headline pretax loss of GBP133 million, narrowed from a GBP213 million loss a year earlier. Revenue improved by 83% to GBP1.47 billion, up from GBP805 million.
It noted that passenger numbers in the quarter improved by 47% annually.
Looking ahead, the easyJet said it expects to be beat current market pretax profit expectations of GBP126 million. In financial year 2022, the company reported a pretax loss of GBP208 million.
AJ Bell Investment Director Russ Mould said: "If Chief Executive Johan Lundgren's profit forecast proves accurate, easyJet will be in the black on an annual basis for the first time since the financial year that ended in September 2019, although from an investor’s perspective, there is still a lot of work to be done as the shares (and annual profits) actually peaked way back in 2015."
Among London small caps, Forterra gained 4.9%
The Northampton, England-based building product manufacturer said it expects 2022 results to be ahead of management's expectations.
The company now predicts full year revenue of around GBP450 million, up around 21% from GBP370.4 million a year earlier. It will publish its results on March 9.
Looking ahead, Chief Executive Stephen Harrison said: "There is considerable uncertainty as to the outlook for the UK housing market and accordingly, demand for our products in the coming year."
Stocks in New York were called mostly lower. The Dow Jones Industrial Average was called up 0.3%, but the S&P 500 index was called down 0.1% and the Nasdaq Composite down 0.3%.
Brent oil was quoted at USD86.15 a barrel at midday in London on Wednesday, down from USD88.82 late Tuesday. Gold was priced at USD1,924.96 an ounce, down against USD1,930.76.
By Sophie Rose, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.