7th Mar 2023 12:21
(Alliance News) - Stock prices in London were broadly flat at midday on Tuesday, though the FTSE 100 crept into the green, as investors waited for Federal Reserve Chair Jerome Powell's two days of testimony before the US Congress.
Powell will present his semi-annual monetary policy report to Congress, starting with the House on Tuesday and continuing with the Senate on Wednesday.
Russ Mould, investment director at AJ Bell, said investors are waiting with "bated breath", "eager for any new thoughts on the central bank's monetary policy and how it will tame inflation".
The FTSE 100 index was up 18.52 points, or 0.2%, at 7,948.32. The FTSE 250 was up just 3.08 points at 20,067.46, and the AIM All-Share was down 0.44 of a point at 20,067.46.
The Cboe UK 100 was up 0.3% at 795.64, the Cboe UK 250 was up 0.2% at 17,601.97, and the Cboe Small Companies was up 0.3% at 13,948.32.
Powell's comments come two weeks before the US central bank's next policy decision, with the Federal Open Market Committee meeting on March 21 and 22. At its last meeting, the FOMC slowed the pace of rate hikes to 25 basis points.
AJ Bell's Mould said the "big unknown" is whether the Fed will go for a 25 or 50 basis point hike at its March meeting. The latter, Mould said, would show the central bank is prepared to "keep fighting aggressively" and "may trigger some investors to reconsider their appetite for risk".
According to the CME FedWatch tool, markets think there is a 72% chance that the US central bank will lift rates by 25 basis points again at its March meeting, with just a 28% chance of a larger 50 basis point hike.
Sterling dipped amid the risk-off sentiment. The pound was quoted at USD1.1987 at midday on Tuesday in London, lower compared to USD1.2031 at the stock-market close on Monday.
Chris Turner at ING said cable will continue to have a "slight downside bias" given Powell's testimony.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.
In London, Fresnillo was the worst blue-chip performer at midday, falling 2.4%.
The Mexican gold and silver miner said its results for 2022 were hit by industry pressures, including volatile precious metal prices and rising cost inflation. Profit slumped 59% to USD248.6 million from USD611.5 million, as its adjusted production costs rose 15% to USD1.45 billion from USD1.26 billion. Total revenue fell 10% to USD2.43 billion from USD2.70 billion.
Fresnillo declared a final dividend of 13.3 US cents per share, bringing the annual total to 16.7 US cents. This was half the payout of the previous year.
Ashtead Group rose 3.3% as it reported third quarter profit growth, citing markets as benefiting from current US legislative policies and mega-projects.
The US-focused industrial equipment rental company said pretax profit in the three months to January 31 climbed 29% to USD505 million from USD393 million a year prior.
Revenue grew 23% to USD2.43 billion from USD2.00 billion, while rental revenue increased 22% to USD2.19 billion from USD1.82 billion.
Consequently, Ashtead said it anticipates results for financial year 2023, ending April 30, to be ahead of previous expectations.
It now expects annual rental revenue growth of 21% to 23%, up from a previous range of 18% to 21%.
In the FTSE 250, John Wood Group jumped 14% to 221.90 pence after it rebuffed a fourth proposal for a takeover by Apollo Global Management.
John Wood said US private equity firm Apollo Global submitted an offer of 237p per share in cash.
John Wood said: "The board believes this latest proposal continues to undervalue the group and is therefore minded to reject. The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo."
The company had already rejected three proposals by Apollo, the most recent in January for 230p, or around GBP1.59 billion in total.
Premier Foods climbed 12% as it increased its profit expectations for financial 2023 on the back of high growth from its grocery business.
Premier Foods now anticipates trading profit of around GBP155 million for financial year 2023, up from GBP141.2 million a year prior, after software amortisation.
In contrast, Spirent Communications dropped 12%. The firm proposed a higher annual payout, as profit and revenue grew in 2022, but it expects revenue to fall in 2023 due to delays in customers' decision-making.
Elsewhere in London, Wincanton plunged 25% as it announced the loss of a major contract with UK HM Revenue & Customs and a noted more challenging backdrop moving forward, issuing a profit warning for financial 2024.
The logistics provider said it has been notified by HMRC of its decision to move to another supplier to support customs arrangements at inland border facilities, following a re-tendering process.
Wincanton said it is "extremely disappointed" to lose this business after two years.
In addition, Wincanton said it continues to expect a more challenging external environment in the coming financial year, including an accelerated reduction in consumer spending and customer volumes.
As a result of this, Wincanton said it now expects a reduced pretax profit for financial 2024. It expects the figure to be "materially lower" than current market consensus, which it places at GBP63 million. Pretax profit was GBP54.8 million in financial 2022.
In European equities on Tuesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.2%.
The euro stood at USD1.0659 midday on Tuesday, lower against USD1.0678 at the equities close on Monday. Against the yen, the dollar was trading at JPY136.01, higher compared to JPY135.98.
Brent oil was quoted at USD85.74 a barrel at midday in London on Tuesday, down from USD85.90 late Monday. Gold was quoted at USD1,841.47 an ounce, lower against USD1,850.32.
Still to come on Tuesday's economic calendar, US consumer credit data will be released at 2000 GMT.
By Heather Rydings, Alliance News senior economics reporter
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