19th Feb 2025 08:52
(Alliance News) - European stocks traded mixed early Wednesday, with Glencore, BAE Systems and HSBC declining in London after the trio reported annual results, while the pound returned gains it made immediately after a hotter-than-expected UK inflation reading.
The FTSE 100 index fell 29.57 points, 0.3%, at 8,737.16. The FTSE 250 fell 32.06 points, 0.2%, at 20,849.50, and the AIM All-Share lost 2.59 points, 0.4%, at 721.93.
The Cboe UK 100 fell 0.4% to 876.80, the Cboe UK 250 dropped 0.3% to 18,179.56, and the Cboe Small Companies fell 0.1% at 15,994.88.
In Paris, the CAC 40 was down 0.1%. Frankfurt's DAX 40 rose 0.3%.
Sterling traded at USD1.2617 on Wednesday morning UK time, flat from USD1.2616 at the time of the London equities close on Tuesday. The euro was down at USD1.0449 from USD1.0462. Against the yen, the dollar was largely flat to JPY151.70 from JPY151.71.
According to the Office for National Statistics, the pace of yearly consumer price inflation picked up to 3.0% in January, from 2.5% in December. The reading topped the FXStreet cited consensus of 2.8%.
It was the sharpest annual consumer price rise since March 2024's 3.2% increase. In January 2024, the inflation rate was 4.0%.
Transport, and food and non-alcoholic beverages provided the largest upward contribution to the consumer price inflation rate last month, the ONS said, while the largest downward contribution to both came from housing and household services.
Annual core consumer price inflation picked to 3.7% in January from 3.2% in December. The measure excludes energy, food, alcohol and tobacco.
Service price inflation accelerated to 5.0% from 4.4%.
Consumer prices fell 0.1% in January from December. They had risen 0.3% monthly in December. The latest reading topped the FXStreet cited consensus, as a chunkier 0.3% price fall was forecast.
Ebury analyst Matthew Ryan commented: "The Bank of England will be more than just a little bit alarmed by the details of this morning's UK inflation report, which once again hammers home just how challenging it will be for the bank to hit its 2% price target.
"As recently as less than a fortnight ago, two members of the MPC voted in favour of an immediate 50 basis point rate reduction, which seems both overly hasty and ill-considered in light of today's data.
Let's not forget that the bank's mandate is ensuring price stability, not supporting growth, and given the prominence of inflationary risks, notably stemming from elevated wage pressures, we see no more than a couple of further cuts from the BoE during the remainder of the year. Today's news will also be a major cause for concern for consumers, who will likely feel the pinch from a fresh squeeze in real incomes and weaker purchasing power."
Sterling had spiked to USD1.2634 straight after the data, but then faded.
UK Defence Secretary John Healey will travel to meet his Norwegian counterpart as Europe is thrown into turmoil over the future of Ukraine and the continent's wider security.
Healey and Tore Sandvik will meet as European leaders plot their next steps to ramp up defence spending in the face of pressure from the US.
America and Russia have kicked off talks to broker a peace in Ukraine, led by US Secretary of State Marco Rubio and Russia's foreign minister Sergei Lavrov.
Ukraine was not invited to the negotiations, which took place in Riyadh, Saudi Arabia, and concluded with ground rules set for further diplomacy.
Analysts at Deutsche Bank commented: "There have been concerns that Europe and Ukraine are being left on the sidelines and yesterday Zelenskiy postponed his own visit to Saudi Arabia, saying 'we want no one to decide anything behind our back'. That said, last night Rubio did have a call with major European foreign ministers to brief them on the meeting. And while the direction of travel may be very uncomfortable for Europe politically, markets have been more focused on the prospect of any agreement to end the war rather than the type of agreement."
A barrel of Brent rose to USD76.34 early Wednesday from USD75.66 at the time of the London equities close on Tuesday. Gold rose to USD2,939.13 an ounce from USD2,928.05.
In London, Glencore lost 4.3%. It reported a pretax loss of USD998 million for 2024, swinging from profit of USD5.42 billion. Revenue rose 6.0% to USD230.94 billion from USD217.83 billion.
It reported an "other expense" of USD2.12 billion, rising from USD1.27 billion and hurting its bottom line. The figure includes USD445 million in foreign exchange losses, USD295 million in "legal and government proceedings" and USD870 million worth of closed sites rehabilitation provisions. In addition, the cost of goods sold rose 8.3% to USD224.29 billion.
CEO Gary Nagle said: "Operationally, 2024 was a strong year for Glencore. Our Industrial assets delivered full year production numbers within their original guidance ranges, which together with the addition of Elk Valley Resources's steelmaking coal volumes from July 2024, resulted in a 4% growth in copper equivalent volumes year over year. Basis current production plans for our existing operations, we also model a 4% compound annual growth rate to 2028 (in copper equivalents) from 2024."
It recommended a USD0.10 per share "base cash distribution", down from USD0.13 a year prior. Glencore also announced a "top-up" share buyback worth USD1.0 billion.
BAE Systems fell 2.2% despite the aerospace and defence firm reporting stronger annual results.
"The results we're reporting today reflect the outstanding efforts of our employees and continue our track record of strong top-line and earnings growth, free cash flow and orders," Chief Executive Charles Woodburn said. "We're supporting our customers around the world, while shaping our portfolio towards higher growth and strategically important markets. Across our business, we're also investing in our people, facilities and technologies to drive efficiencies, boost capacity and increase our agility to deliver in a rapidly evolving environment. Based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future."
BAE went into the results with a year-to-date advance of over 15%.
HSBC fell 0.9% despite reporting profit growth. Pretax profit increased 6.5% to USD32.31 billion in 2024 from USD30.35 billion a year prior, the lender said. Revenue fell 0.3% to USD65.85 billion from USD66.06 billion.
The bank lifted its final dividend by 16% to USD0.36 per share from USD0.31 previously. The total dividend therefore amounted to USD0.87 per share, up 43% from USD0.61. Additionally, HSBC said it intends to carry out a USD2 billion share buyback programme, which is expected to complete before the bank issues its first quarter 2025 results.
In 2025 the bank aims to reduce costs by approximately USD300 million and commits to an annualised reduction of USD1.5 billion in its cost base by the end of 2026.
Jet2 slumped 9.7% as it warned of cost hikes. It predicted profit growth, however.
The mandated increase in sustainable aviation fuel in its aircraft fuel mix with result in more than GBP20 million of incremental costs. The airline and package holiday operator said this is in addition to GBP25 million worth of extra costs after "recent fiscal announcements" in the UK, which include an increase to the national living wage.
It expects pretax profit before foreign exchange revaluation for the year to March 31 between GBP560 million and GBP570 million, an improvement of 8% and 10%.
Also declining in the travel sector were easyJet, down 2.5%, IAG, down 1.9% and Wizz Air, falling 2.5%.
Trainline slumped 6.9% as JPMorgan cut the rail ticketing platform to 'neutral' from 'overweight'.
By Eric Cunha, Alliance News news editor
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