18th May 2023 08:59
(Alliance News) - European equities made headway at Thursday's open, though the FTSE 100 underperformed due to share price falls for BT and Burberry.
The FTSE 100 index opened up 35.60 points, 0.4%, at 7,758.83 . The FTSE 250 was up 32.84 points, 0.2%, at 19,248.29, and the AIM All-Share was up 0.79 of a point at 809.99.
The Cboe UK 100 was up 0.5% at 775.47, the Cboe UK 250 was up 0.1% at 16,809.24, and the Cboe Small Companies was up 0.1% at 13,575.42.
In European equities, the CAC 40 index in Paris was up 0.8%, while the DAX 40 in Frankfurt was up 1.0%. Financial markets in Paris and Frankfurt remained open for Ascension Day on Thursday, but Zurich is closed.
Global equities took their cue from a rally on Wall Street, as hopes rose of averting a potentially catastrophic US debt default.
The Dow Jones Industrial Average and the S&P 500 both rose 1.2%, and the Nasdaq Composite added 1.3%.
US President Biden said he is "confident" a deal can be reached with Republicans leaders to avert a potentially catastrophic US debt default, which could come as early as June 1. Biden arrives on Thursday in Hiroshima, Japan and will meet leaders from the rest of the G7 club – Britain, Canada, France, Germany, Italy, Japan.
Meanwhile, UK Prime Minister Rishi Sunak has announced that Japanese businesses are committing to invest nearly GBP18 billion in the UK. Sunak set out the investments as he prepares to host a reception of business chiefs in the Japanese capital on Thursday, seeking to foster closer ties ahead of attending the G7 summit in Hiroshima.
In Tokyo on Thursday, the Nikkei 225 index closed up 1.6%.
In China, the Shanghai Composite added 0.4%, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed up 0.5%.
Sterling was quoted at USD1.2455 early Thursday, lower than USD1.2474 at the London equities close on Wednesday. The euro traded at USD1.0825, flat from USD1.0826. Against the yen, the dollar was quoted at JPY137.51, up slightly versus JPY137.47.
BT Group dropped 8.3% in early trade.
In the financial year that ended March 31, BT said revenue edged down 0.8% to GBP20.68 billion from GBP20.85 billion, as growth in Openreach was offset by declines elsewhere. Adjusted Ebitda rose 4.6% to GBP7.93 billion from GBP7.58 billion, but pretax profit fell 12% to GBP1.73 billion from GBP1.96 billion.
BT said it will cut its total labour force from 130,000 to between 75,000 and 90,000 by 2028 to 2030, meaning up to 55,000 job losses.
"By continuing to build and connect like fury, digitise the way we work and simplify our structure, by the end of the 2020s BT Group will rely on a much smaller workforce and a significantly reduced cost base. New BT Group will be a leaner business with a brighter future," said CEO Philip Jansen.
The move is likely to stoke the ire of BT's unionised workers. Last year, they walked out during industrial action by unions including the Communications Workers Union.
Similarly, Royal Mail's parent company swung to an annual loss, in a year plagued by extended strike action by the CWU.
International Distributions Services swung to a GBP676 million pretax loss in the 52 weeks to March 26, compared to profit of GBP662 million the year before. Revenue fell 5.3% to GBP12.04 billion from GBP12.71 billion.
Non-Executive Chair Keith Williams said he is pleased to have "moved on from the crossroads", after reaching an agreement with the Communication Workers Union on pay and change last month, though members are yet to vote on the deal.
International Distributions Services shares fell 2.7%.
Luxury retailer Burberry fell 5.0%.
In the 52 weeks to April 1, the trench coat and handbag maker said revenue rose 10% year-on-year to GBP3.09 billion from GBP2.83 billion. Company-compiled consensus had been expecting GBP3.11 billion. Burberry said the performance was supported by progress in core leather goods and outwear categories, with revenue growth accelerating in its final quarter as growth rebounded in mainland China.
Pretax profit jumped 24% to GBP634 million from GBP511 million. Adjusted operating profit rose 21% to GBP634 million, which was ahead of consensus of GBP621 million.
"The initial reaction to the numbers reflects the high expectations which investors had going into the results," said interactive investor's Richard Hunter.
"At the same time, the recently strong performances from the likes of LVMH and Hermes provided a major clue to high-end retailers’ fortunes at present, such that there will be a strong element of profit taking within the opening share price dip."
Shares in medical technology firm Convatec rose 3.2%.
Ahead of its annual general meeting, Convatec reported a 3.1% year-on-year increase in organic revenue in the four months ended April 30. On a reported basis, revenue fell 1.7%, after the exit of hospital care and related industrial sales last year.
In light of the good organic growth against tough comparatives, the company said it now expects annual revenue growth to be rise by between 5.0% and 6.5%, compared to a previous guidance range of 4.5% and 6.0%. It also upped constant currency operating profit margin guidance to 19.7% from 19.5%.
Aston Martin Lagonda jumped 20%.
The luxury sports car maker announced a GBP234 million investment from Geely Holding, a Chinese automotive group.
Geely will raise its stake in Aston Martin to 17%, buying 42 million existing shares at 335p from Yew Tree, who will remain the majority shareholder. It also will subscribe for 28 million new shares at the same price.
"This transaction enables the creation of a long-term partnership with Geely - a relationship that I believe will bring very significant value for all of our shareholders over time," said Executive Chair Lawrence Stroll.
Among London's small-caps, De La Rue added 3.5%.
The banknote printer and authentication firm announced it has appointed Clive Whiley as non-executive chair with immediate effect.
Whiley is currently chair of Mothercare, and senior independent non-executive director of Griffin Mining and Sportech. He was previously chair at funeral services provider Dignity. Interim Chair Nick Bray will return to his role as non-executive director.
The firm's former chair, Kevin Loosemore, recently resigned following months of pressure from the firm's major shareholder Crystal Amber Fund, which had called for him to step down.
Gold was quoted at USD1,978.38 an ounce early Thursday, lower than USD1,982.40 on Wednesday. Brent oil was trading at USD76.69 a barrel, up from USD75.96.
Thursday's economic calendar has the latest US jobless claims report at 1330 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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