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LONDON MARKET MIDDAY: Stocks stay downbeat; Digital 9 plunges 32%

28th Sep 2023 11:47

(Alliance News) - Stock prices in London were lower at midday on Thursday as elevated oil prices added fuel to inflationary fears and supported the higher for longer narrative around global interest rates.

The FTSE 100 index was down 16.71 points, or 0.2%, at 7,576.51. The FTSE 250 was down 102.19 points, or 0.6%, at 18,118.04, and the AIM All-Share was down 3.60 points, or 0.5%, at 724.93.

The Cboe UK 100 was down 0.1% at 756.48, the Cboe UK 250 was down 0.5% at 15,786.77, and the Cboe Small Companies was down 0.2% at 13,179.08.

"Crude oil has played a significant role in the global inflation challenge as initial concerns about oil supply disruptions caused by the Russia-Ukraine conflict sent prices soaring, later pulling back. However, high global demand and OPEC+ production cuts are pushing prices back towards USD100 per barrel, indicating that the fight against inflation is ongoing as the commodity has a noticeable impact on overall price pressure," said Walid Koudmani, chief Market Analyst - XTB

Oil prices have risen 30% since June after some of the world's biggest producers, including Saudi Arabia and Russia, announced a series of supply cuts to last until the end of this year.

Brent oil was quoted at USD93.82 a barrel at midday in London on Thursday, down from USD95.52 at the London equities close on Wednesday.

The rise has fuelled concerns over persistent inflation adding to the narrative that interest rates will have to stay higher, for longer.

Higher for longer fears resurfaced last week after the US Federal Reserve left its benchmark interest rate at a 22-year high but signalled it still expects one more hike before the end of the year and fewer cuts than previously indicated next year.

In London, BP and Shell were among some of the top blue-chip stocks at midday on Thursday, up 0.5% and 0.3%, respectively, benefiting from the elevated Brent price.

In the FTSE 250, Digital 9 Infrastructure plunged 32%, making it the index's worst-performing stock at midday.

The company, which invests in assets such as data centres, subsea fibre cables, and mobile phone masts, withdrew its dividend target as it turned to an interim loss, citing soft UK consumer confidence and high inflation.

Digital 9 Infrastructure's net asset value on June 30 was 100.13 pence per share, down from 109.76p on December 31 and from 105.13p a year prior. Its NAV total return for the six months was negative 11.2%, compared to positive 10.7% a year before.

For the six months to June 30, the company swung to a pretax loss of GBP57.4 million from a profit of GBP27.4 million a year prior. It reported a loss on investments of GBP81.5 million compared to a profit of GBP30.7 million the previous year.

The company declared an interim dividend of 1.50p per share, halved from 3.00p a year prior. Digital 9 Infrastructure also announced it has decided to withdraw its target dividend of 6.0 pence per share for 2023.

"The period has been characterised by a continued challenging macroeconomic backdrop across major developed economies, with rising inflation and interest rates resulting in continued uncertainty for the capital markets. That same difficult macroeconomic environment has continued to impact the company's liquidity and sustainable balance sheet management," the company said.

Mitchells & Butler added 3.4% said its annual results will be at the top end of market expectations following "strong" trading in the final quarter of its financial year.

The All Bar One and Toby Carvery operator reported like-for-like sales growth of 9.7% in the three months that ended September 23, a faster pace than the 9.1% growth seen in the financial year as a whole. The pace of increase matched the third quarter. Second-quarter growth was the weakest at 6.4% and first-quarter growth the strongest at just over 10%.

Total sales for the year were up 11%.

Looking forward, it said cost headwinds were abating and remain at the bottom end of the range previously expected.

Mitchells & Butlers said it remains "mindful" of the challenging macroeconomic environment and pressures on the UK consumer but is confident that the current financial year will be at the top end of consensus expectations and lend momentum to financial 2024.

"We are delighted to have continued our strong like-for-like sales performance through the fourth quarter, underpinned by volume growth and reflecting increasing out-performance against the market," said Chief Executive Phil Urban.

Elsewhere in London, Hansard Global jumped 10% after posting a surge in annual profit in the financial year ended June 30.

The specialist long-term savings provider reports a pretax profit of GBP5.9 million in the year ended June 30, up 55% from GBP3.8 million the year prior. Profitability improves as the company swings to a GBP44.5 million investment income gain in the year from a loss of GBP103.5 million the year prior.

On AIM, Physiomics dropped 12% after posting a widened annual loss and a drop in revenue.

The oncology consultancy explained it was a "difficult year" for the company, with its income impacted by cost reduction measures carried out by a "major" unnamed client. It said that the proportion of revenue derived from its largest customer fell to 35% in financial 2023 from 85% in financial 2019.

Physiomics pretax loss widened to GBP572,009 in the year ended June 30, from GBP358,972 the previous year. Its revenue dropped 28% to GBP597,354 from GBP830,266.

In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was down 0.1%.

Stocks in New York were seen largely higher. The Dow Jones Industrial Average was called up 0.1% and the S&P 500 index up 0.1%, while the Nasdaq Composite was called down 0.1%.

The pound was quoted at USD1.2189 at midday on Thursday in London, higher compared to USD1.2140 at the close on Wednesday. The euro stood at USD1.0533, higher against USD1.0517. Against the yen, the dollar was trading at JPY149.32, lower compared to JPY149.42.

Gold was quoted at USD1,874.58 an ounce, lower against USD1,880.42.

Still to come on Thursday's economic calendar, the US weekly unemployment claims report and GDP print will be released at 1330 BST.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

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