23rd Feb 2023 09:02
(Alliance News) - Stock prices in London opened mixed on Thursday, with large-cap indices underperforming amid mixed corporate earnings.
The FTSE 100 index opened down 13.51 points, or 0.2%, at 7,917.12. The FTSE 250 was up 172.45 points, 0.9%, at 19,852.74, and the AIM All-Share was up 3.13 points, 0.4%, at 855.41.
The Cboe UK 100 was down 0.2% at 792.14, the Cboe UK 250 was up 1.0% at 17,341.55, and the Cboe Small Companies was 0.1% lower at 13,929.97.
In European equities on Thursday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.2%.
Investors were also considering the latest policy-meeting minutes from the US Federal Reserve.
Although the 25 basis point rate hike was agreed upon, the minutes showed a "few" members said they wanted a half-point, or 50-basis-point, hike that would show even greater resolve to get inflation down.
Since the February meeting, regional presidents James Bullard of St Louis and Loretta Mester of Cleveland have said they were among the group that wanted a more aggressive move at the January 31 to February 1 rate-setting meeting.
"A lot of the takeaway from the minutes last night was that they didn't provide a lot of new information. That isn't entirely true, given that we now know that a number of other Fed officials share the view of Bullard and Mester that more needs to be done, and in light of the data since then that position will only have hardened further," said CMC Markets' Michael Hewson.
There was a fairly muted response on Wall Street, with the Dow Jones Industrial Average ending down 0.3% and the S&P 500 down 0.2% but the Nasdaq Composite up 0.1%.
The dollar was stronger against major currencies.
Sterling was quoted at USD1.2052 early Thursday, lower than USD1.2066 at the London equities close on Wednesday. The euro traded at USD1.0612, down from USD1.0629. Against the yen, the dollar was quoted at JPY134.86, firm on JPY134.67.
In the FTSE 100, Rolls-Royce shares jumped 17% in early trade.
The jet engine maker's annual revenue increased to GBP13.52 billion from GBP11.22 billion a year before, but its pretax loss widened to GBP1.50 billion from GBP294 million, due to GBP2.42 billion in net financing costs. Operating profit improved to GBP837 million from GBP513 million, however.
CEO Tufan Erginbilgic said Rolls-Royce will begin a strategic review as part of its restructuring programme, and will share the findings and its medium term goals in the second half of 2023. Looking to 2023, the company noted a "continued recovery" in its end markets, and is confidence of higher profit and cash flow.
"When Erginbilgic took over earlier this year he didn't hold back in the challenges facing the current business. Likening the company to a 'burning platform' his words pulled the shares off their recent highs, which where their highest levels since February last year," said CMC's Hewson.
"The announcement of a strategic review of all the businesses should go some way to indicating how he intends to steer the company."
WPP added 3.9% in early trading, boasting strong performance across all its major agencies in 2022.
Ad agency said revenue in 2022 rose 13% to GBP14.43 billion from GBP12.80 billion in 2021. Revenue less pass-through costs rose 14% to GBP11.80 billion.
Pretax profit jumped 22% to GBP1.16 billion from GBP951 million. WPP raised its dividend to 39.4p from 31.2p.
"We enter 2023 in a strong financial position with good momentum from new business and the many opportunities ahead of us," said CEO Mark Read. WPP expects like-for-like revenue less pass-through costs growth of 3% to 5% in 2023.
"As a media giant, WPP has been stung by a global slowdown in marketing spending brought on my enormous geopolitical and economic stress. By all accounts this looks to be reversing, which has fed into strong growth at the end of the year," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
At the other end of London's blue-chips was Mondi, down 6.3%.
The packaging and paper company said revenue jumped 28% in 2022 to EUR8.90 billion from EUR6.97 billion a year before. Pretax profit more than doubled to EUR1.56 billion from EUR712 million. The figures are based on continuing operations, excluding its divested Russian operations.
Mondi recommended a dividend of 70 euro cents, up 7.7% from 65 cents a year before. However, investors seemed perturbed by the firm's shaky outlook.
"Whilst a number of input costs are starting to decline, we continue to see an environment of softer demand and pricing, with destocking expected to continue through the first quarter," Mondi warned.
Ex-dividend stocks also were holding back the FTSE 100. AstraZeneca was down 1.8%, Unilever 1.4%, and Barclays 0.6%.
In the FTSE 250, John Wood surged 31%.
Late Wednesday, the energy sector-focused engineering and consulting business said it has rebuffed three unsolicited proposals for a takeover by Apollo Global Management.
It said the most recent approach was received in late January, proposing a cash offer for all of its shares at a price of 230 pence each, around GBP1.59 billion in total.
John Wood said the board "carefully considered" each of the proposals with its financial advisers and "engaged on a limited basis" with Apollo, before unanimously rejecting each proposal.
Hikma Pharmaceuticals rose 5.3%, as it reported a dip in annual revenue while profit tumbled, but shared a more positive outlook for the current year.
Revenue edged down 1% to USD2.52 billion from USD2.55 billion, but pretax profit dropped to USD233 million from USD544 million.
This was due to an impairment in its Generics business. Hikma noted a strong performance from Injectables and Branded businesses, which helped to partially offset the Generics decline. The annual dividend was lifted by 4% to 56 cents.
"Looking ahead, we are confident that we will deliver good growth across all three of our businesses in 2023," said Chair & CEO Said Darwazah.
On AIM, Quadrise Fuels added 10%.
The residual oil technology licensor updated on its Moroccan material transfer & cooperation agreement. The company confirmed the MSAR fuel for the forthcoming trial has been cleared at Moroccan customers, and is now on its way to the client's facility.
It is now finalising the trial schedule with its client, and expects fuel trials to begin before the end of the current quarter.
In Asia on Thursday, financial markets in Tokyo were closed for the Emperor's Birthday holiday. In China, the Shanghai Composite fell 0.1%, while the Hang Seng index in Hong Kong lost 0.4%. The S&P/ASX 200 in Sydney closed down 0.4%.
Gold was quoted at USD1,827.78 an ounce early Thursday, down from USD1,835.00 on Wednesday. Brent oil was trading at USD80.96 a barrel, lower than USD81.16
Still to come on Thursday's economic calendar, there's a eurozone inflation reading at 1000 GMT, before the latest US jobless claims data at 1330 GMT.
By Elizabeth Winter, Alliance News senior markets reporter
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