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LONDON MARKET OPEN: Stocks rise; Kingfisher drops on guidance cut

19th Sep 2023 09:00

(Alliance News) - Stock prices in London opened slightly higher on Tuesday, but a cautious sentiment prevailed in global equity markets ahead of central bank meetings and the upward trajectory of oil prices.

The FTSE 100 index opened up 11.30 points, 0.2%, at 7,664.24. The FTSE 250 was up 37.48 points, 0.2%, at 18,486.75, and the AIM All-Share was up 0.27 of a point at 742.33.

The Cboe UK 100 was up 0.2% at 763.11, the Cboe UK 250 was up 0.2% at 16,101.70, and the Cboe Small Companies was up 0.1% at 13,407.54.

In the FTSE 100, Hargreaves Lansdown had risen around 4% before returning some of its initial gains.

The UK-based digital wealth management service said revenue climbed 26% to GBP735.1 million in the year to June 30 from GBP583.0 million a year before, as pretax profit surged 47% to GBP402.7 million from GBP269.2 million. The results beat MarketScreener-cited forecasts of revenue at GBP717 million and pretax profit of GBP380 million.

Net new business inflows fell 13% to GBP4.8 billion from GBP5.5 billion, however, although active clients increased by 67,000 to 1.8 million. The firm raised its dividend by 4.5% to 41.5 pence per share from 39.7p.

At the bottom of the large-cap index was Kingfisher, down 6.0%.

The retailing company said sales in the first half ended July 31 edged up 1.1% to GBP6.88 billion from GBP6.81 billion a year before, but statutory pretax profit dropped by 33% to GBP317 million from GBP474 million.

The B&Q owner maintained its interim dividend at 3.80p, and announced a new share buyback programme of GBP300 million. However, the firm cut its guidance for adjusted pretax profit in 2023, now expecting around GBP590 million, compared to previous estimates of GBP634 million.

"Despite the positive buyback announcement, the profit downgrade cannot be overlooked and the market consensus of the shares as a sell reflects little confidence in the group's immediate outlook," said interactive investor's head of markets, Richard Hunter.

FTSE 100 oil majors Shell and BP were up 0.8% and 0.9% in early trading, tracking the price of oil higher. Brent oil was trading at USD94.95 a barrel early Tuesday, higher than USD94.78 late Monday.

Meanwhile in the FTSE 250, Tui rose 4.8%.

The holiday operator delivered an upbeat trading update on the financial year ending September 30. It cited strong consumer demand, and higher prices coming into the Winter period. It reiterated expectations for a significant increase in underlying earnings before interest and tax for its final quarter and its financial year as a whole.

Meanwhile on AIM, fashion company Quiz plunged 47%.

It said revenue in the year beginning April 1 has continued to lag the prior year, sitting below management expectations, as inflationary cost pressures have hit consumer confidence and demand for its products.

In the five months to August 31, revenue was down 15% year-on-year to GBP37.0 million from GBP43.7 million. Quiz said that if the current trend continues, annual revenue is likely to be 6% to 7% behind current market expectations, which will have a knock-on effect on profit.

It would expect a pretax loss of no more than GBP1.5 million, swinging from profit of GBP2.3 million in the prior year.

Quiz said: "Whilst the impact of cost of living pressures on consumers' disposable income persists, management continues to retain a tight control on costs and is proactively reviewing all aspects of the business to mitigate the impact of the current economic and trading environment on the group and identify potential strategies to drive additional revenue growth."

Meanwhile, the overall mood in financial markets was cautious, ahead of several central bank decisions.

In European equities on Tuesday, the CAC 40 in Paris and DAX 40 in Frankfurt were marginally lower.

The US Federal Reserve will be the first to announce its interest rate decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.

The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July.

"This week, the US policymakers will certainly opt for a 'hawkish pause'. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth," said Swissquote Bank's Ipek Ozkardeskaya.

Sterling was quoted at USD1.2378 early Tuesday, lower than USD1.2393 at the London equities close on Monday. The euro traded at USD1.0683, edging down from USD1.0684. Against the yen, the dollar was quoted at JPY147.80, up a touch from JPY147.70.

In the US on Monday stocks on Wall Street made little headway, with the Dow Jones Industrial Average and the Nasdaq closing flat and the S&P 500 edging up 0.1%.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.9%, with markets re-opening following a public holiday on Monday. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong was up 0.3% in late dealings. The S&P/ASX 200 in Sydney closed down 0.5%.

Gold was quoted at USD1,932.75 an ounce early Tuesday, higher than USD1,927.22 on Monday.

On Tuesday, the Federal Open Market Committee meeting will begin. There is also a CPI reading from the EU.

By Elizabeth Winter, Alliance News senior markets reporter

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