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LONDON MARKET OPEN: Marshalls downgrades outlook on earnings hit

18th Mar 2024 08:49

(Alliance News) - Stock prices in London opened mixed on Monday, with the FTSE 100 treading water, as investors look ahead to a week of interest rate decisions.

The FTSE 100 index opened up 3.59 points at 7,731.01. The FTSE 250 was down 39.45 points, 0.2%, at 19,473.46, and the AIM All-Share was down 2.29 points, 0.3%, at 736.02.

The Cboe UK 100 was up slightly at 774.01, the Cboe UK 250 was down 0.1% at 16,893.02, and the Cboe Small Companies was up 0.1% at 14,766.29.

In European equities on Monday, the CAC 40 in Paris was up marginally, while the DAX 40 in Frankfurt was up 0.2%.

In Japan on Monday, the Nikkei 225 index in Tokyo was up 2.7%.

Major Japanese media and economists are now betting that the Bank of Japan will drop its negative interest rate policy.

The central bank is scheduled to start a two-day policy board meeting on Monday, with Governor Kazuo Ueda's press conference scheduled for Tuesday afternoon.

Citing "sources close to the matter", the Japan Times said the BoJ's policymakers have the requisite confidence that a "virtuous cycle" of wage growth and price hikes is taking place.

Analysts at ING said "the BoJ’s hike or hold decision is a 50-50 affair."

"Looking only at the macro picture, we think the BoJ is more likely to wait until April to take a closer look at consumer developments. However, some media reports in Japan have quite clearly suggested the hike will come tomorrow," ING added.

An interest rate decision from the US Federal Reserve will follow on Wednesday, with the Bank of England making its own decision the following day.

Both are expected to keep interest rates unchanged.

In China, the Shanghai Composite closed up 1.0%, while the Hang Seng index in Hong Kong was was up 0.1% in late dealings. The S&P/ASX 200 in Sydney closed up 0.1%

The pound was quoted at USD1.2745 early on Monday in London, up compared to USD1.2735 at the equities close on Friday. The euro stood at USD1.0896, higher against USD1.0889. Against the yen, the dollar was trading at JPY149.07, higher compared to JPY149.04.

In the FTSE 100, Haleon lost 2.0%.

Haleon said that Pfizer intends to sell approximately 630 million Haleon ordinary shares through a public offer, worth GBP315 million.

On completion, the sale is expected to reduce Pfizer's interest in Haleon to approximately 24% from 32%.

In the FTSE 250, Marshalls lost 12%.

Marshalls reported that revenue in 2023 fell to GBP671.2 million from GBP719.4 million a year earlier. Pretax profit tumbled by 40% to GBP41.0 million from GBP47.9 million.

On the back of the results, Marshalls lowered its final dividend by 42% to 5.7p from 9.9p. This brings the full year dividend to 8.3p, down 47% from 15.6p.

Marshalls said that revenue in the first two months of the year was lower than 2023 and reflects the continued weakness seen in the second half of last year.

"In line with recent sentiment of UK economic and industry forecasts, the board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves. The start of this recovery is now expected to be slower and more modest than previously assumed," the company explained.

Therefore, Marshalls believes that revenue in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023.

Bytes Technology lost 11%.

Bytes Technology updated markets on its financial year ended February 29. The company said it delivered growth "comfortably" in double digits in its key metrics of gross profit and adjusted operating profit, and cash conversion in line with its target of 100%, resulting in a cash position of approximately GBP89 million at the year end.

In February, Bytes was hit by the shock resignation of Chief Executive Neil Murphy.

The company said Murphy had resigned with immediate effect after disclosing to the board a number of undisclosed trades in the company. The trades were not disclosed to the company or the market in compliance with the PDMR disclosure requirements, it added.

On Monday the company said: "Given Mr Murphy's longstanding leadership position in the company, the board of directors is saddened as well as shocked by Mr Murphy's actions, which it finds hard to comprehend. His actions were entirely at odds with the values of openness, honesty, and transparency which have been and which remain central to the group's culture and to its ongoing success."

On AIM, Focusrite fell 35%.

For financial 2024, ending August 31, the music and audio products firm expects revenue to be at least GBP155 million. In financial 2023, revenue amounted to GBP178.5 million.

"HY24 performance has been impacted by similar factors across the group's geographic regions. The Content Creation market globally continues to struggle due to a number of macroeconomic issues. Content Creation revenue in Asia have shown particular continued weakness with now 18 months of continuous decline, the largest negative impacts being in China and Japan, and no improvement is now assumed for the remainder of the year," Focusrite said.

In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.5%, the S&P 500 down 0.7% and the Nasdaq Composite down 1.0%.

Brent oil was quoted at USD85.90 a barrel early in London on Monday, up from USD85.33 late Friday.

Gold was quoted at USD2,153.20 an ounce, lower against USD2,162.90.

Still to come on Monday's economic calendar has a eurozone consumer price reading at 1000 GMT, as well as trade balance data.

By Sophie Rose, Alliance News senior reporter

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