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London open
London stocks fell in early trade on Thursday amid another deluge of earnings, as investors continued to digest hawkish guidance from US Federal Reserve chair Jerome Powell on rate hikes.
At 0830 GMT, the FTSE 100 was down 0.4% at 7,896.55.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets have opened lower with US futures pointing to a softer open as markets digest a slew of corporate news and the testimony from Fed Chair Jay Powell.
“The FTSE 100 is leading the declines across Europe with miners like Rio Tinto languishing near the bottom of the basket following a drop in the Shanghai Composite and the Hang Seng overnight.”
Investors were mulling the latest data from the National Bureau of Statistics in China, which showed that consumer price inflation eased more than expected in February.
CPI rose 1% on the year following a 2.1% increase in January, and versus expectations of 1.9%. It marked the slowest rate since February 2022.
The NBS put the slowdown down to cooling demand after the Lunar New Year holiday and ample food supply conditions thanks to warm weather.
Meanwhile, producer price inflation fell 1.4% on the year, having declined by 0.8% in January. Analysts had been expecting a 1.3% drop.
On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed that the housing market is still falling but there are indications that pessimism is easing.
RICS said a return of optimism, and lower-than-expected interest rates, had boosted short-term hopes after a weak start to 2023.
Its monthly survey showed a net balance of -29% last month, up from -45% in January. This was the smallest decline since July although still the 10th consecutive negative reading.
The reading measures the proportion of surveyors who reported a rise in new buyer inquiries from those saying they fell.
New sales readings also improved in February, to -26% from a net balance of -36%. However, the average time taken to complete a transaction continues to rise and is now approaching 19 weeks.
In equity markets, Spirax-Sarco Engineering slumped despite reporting a rise in full-year adjusted pre-tax profit, with higher revenues driven by volume growth and price increases to protect margins.
M&G lost ground after it posted a 27% drop in its full-year adjusted operating profits to reach £529m, together with a similar-sized decline in its operating capital generation to £821m.
Endeavour Mining and Network International also fell after full-year results.
DS Smith was on the back foot after it said third-quarter trading was in line with management expectations, while National Express was knocked lower by a downgrade to ‘sell’ from ‘hold’ at Liberum.
Recruiter PageGroup retreated despite hailing a record year, reporting a rise in profit and revenue and lifting its dividend.
On the upside, Aviva rallied after it posted a better-than-expected 35% rise in annual operating profit and announced a £300m share buyback, driven by a rise in life and general policy sales.
Profits for 2022 came in at £2.2bn against a company-compiled consensus of £1.75bn and a total dividend of 31p a share was declared, in line with expectations. Aviva upgraded dividend guidance to low-to-mid single digit growth.
Informa gained as it announced the acquisition of B2B events group Tarsus for $940m, alongside its full-year results.
Convatec and Volution were also trading up after results.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Aviva Plc | +2.98% | +13.40 | 463.50 |
| 2 |  |
Informa Plc | +2.27% | +15.40 | 694.80 |
| 3 |  |
Bae Systems Plc | +1.35% | +12.40 | 927.60 |
| 4 |  |
Prudential Plc | +0.71% | +9.00 | 1,284.00 |
| 5 |  |
Hiscox Ltd | +0.58% | +6.50 | 1,135.00 |
| 6 |  |
Legal & General Group Plc | +0.57% | +1.50 | 263.00 |
| 7 |  |
Imperial Brands Plc | +0.35% | +7.00 | 2,016.00 |
| 8 |  |
Direct Line Insurance Group Plc | +0.26% | +0.45 | 176.35 |
| 9 |  |
Astrazeneca Plc | +0.22% | +24.00 | 10,846.00 |
| 10 |  |
Phoenix Group Holdings Plc | +0.09% | +0.60 | 636.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Spirax-sarco Engineering Plc | -4.42% | -525.00 | 11,345.00 |
| 2 |  |
Rio Tinto Plc | -4.36% | -260.00 | 5,700.00 |
| 3 |  |
Smith (ds) Plc | -4.02% | -13.80 | 329.30 |
| 4 |  |
Bhp Group Limited | -3.86% | -103.00 | 2,565.50 |
| 5 |  |
Carnival Plc | -3.48% | -28.40 | 787.60 |
| 6 |  |
Ocado Group Plc | -2.93% | -14.80 | 489.60 |
| 7 |  |
Ashtead Group Plc | -2.23% | -130.00 | 5,700.00 |
| 8 |  |
Smurfit Kappa Group Plc | -2.11% | -68.00 | 3,149.00 |
| 9 |  |
Antofagasta Plc | -2.09% | -34.00 | 1,591.50 |
| 10 |  |
Halma Plc | -1.90% | -41.00 | 2,115.00 |
US close: Stocks mixed on Powell’s second day of testimony
Stock markets on Wall Street ended with a mixed performance on Wednesday, as Federal Reserve chairman Jerome Powell testified on Capitol Hill for the second consecutive day.
The Dow Jones Industrial Average declined by 0.18%, closing at 32,798.40.
In contrast, the S&P 500 increased by 0.14%, closing at 3,992.01, and the Nasdaq Composite rose by 0.4%, closing at 11,576.00.
In currency markets, the dollar’s performance was mostly negative, declining 0.01% on the pound to last trade at £0.8442.
The dollar-euro pair decreased 0.02% to €0.9481, while it weakened 0.28% against the yen to change hands at JPY 136.98.
“Jerome Powell has once again grabbed the limelight, as the Federal Reserve chair sought to limit the losses associated with yesterday’s hawkish comments in Washington,” said IG senior market analyst Joshua Mahony.
“As is often the case, the second day of testimony from Powell provided a chance to fine-tune market expectations after an initial appearance which drew equity bulls back into their shells.”
Mahony said Powell had done a “good job” of waking up markets to the risk that rates could be higher for longer in a bid to drive down inflation.
“While we have seen stocks stabilise somewhat today, the data-dependent nature of the Fed could mean a 50-basis point hike if inflation fails to head lower next week.”
Jobs data mixed as trade deficit widens less than expected
In economic news, the US Department of Labor reported that the number of job openings declined at the beginning of the year, although by less than anticipated.
In seasonally-adjusted terms, job openings were down by 3.6% month-on-month to 10.824 million.
That figure was higher than economists at Barclays had anticipated, having predicted a decline to 10.3 million.
Job openings for December were revised up from 11.012 million to 11.234 million.
Additionally, hiring rose by 1.9% compared to December to 6.372 million, and the number of voluntary separations or ‘quits’ fell by 5.1% to 3.884 million.
As a result, the quits rate ticked lower by 0.1% to 2.5%.
Elsewhere, private sector employment in the US rose more than expected in February, according data from ADP.
Employment increased by 242,000 from January, exceeding expectations for a 200,000 jump.
The figures also showed that annual pay was up by 7.2%.
While small businesses with fewer than 50 employees shed 61,000 jobs, medium businesses with between 50 and 499 employees added 148,000 jobs.
Additionally, large businesses with more than 500 employees added 160,000 jobs.
The service sector created 190,000 jobs, while the goods-producing sector saw a 52,000 increase.
“There is a trade-off in the labour market right now,” said Nela Richardson, chief economist at ADP.
“We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated.
“The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near term.”
Meanwhile, America’s trade deficit with the rest of the world widened in January by slightly less than anticipated, according to the Department of Commerce.
In seasonally-adjusted terms, the trade deficit in goods and services increased at a month-on-month pace of 1.6% to -$68.3 billion.
Economists had expected a deficit of -$69 billion.
Total exports were 3.4% higher on the month, reaching $257.5 billion, while imports grew by 3.0% to $325.8 billion.
Among exports, pharmaceuticals jumped by $2.8 billion, civilian aircraft by $0.5 billion, and auto vehicles, parts, and engines by $1.2 billion.
Looking at imports, purchases of cell phones and other household goods rose by $1.6 billion, while those of trucks, buses, and special purpose vehicles were up by $1.4 billion.
“The rebound in trade flows to start the year signals that the economy continues to carry momentum, but we do not expect the strength to be sustained in the months ahead,” said Matthew Martin, US economist at Oxford Economics.
“Imports and exports are likely to weaken as consumers and businesses pull back, leading the deficit to move sideways through the first half of the year.
“As such, we expect trade’s impact on GDP to be much more muted than the large positive contributions to growth in the final three quarters of 2022.”
Soup giant up, grocery wholesaler tanks on earnings
In equities, Campbell Soup Company stock rose by 1.94% after the company reported better-than-expected adjusted earnings due to higher prices for its food products.
CrowdStrike Holdings also had a strong day, increasing 3.19% after the security software company reported higher-than-expected fourth-quarter adjusted earnings and a fiscal first-quarter outlook above analyst expectations.
On the downside, United Natural Foods plunged 28.05% after the grocery wholesaler reported second-quarter profit that missed significantly, which it put down to rapidly rising inflation.
Thursday newspaper round-up: EY, Jes Staley, Beazley
Four bankers have appeared in a Swiss court charged with helping to hide tens of millions of francs on behalf of Vladimir Putin. The men, who had senior roles at the Swiss branch of Russia’s Gazprombank, are accused of helping Sergei Roldugin – a close friend of the Russian president who has been described as “Putin’s wallet” – to move millions through Swiss bank accounts without the proper due diligence checks. – Guardian
EY has shelved a crucial vote on breaking itself up after a backlash from partners dealt a blow to radical plans to separate the Big Four firm’s consulting and accountancy arms. The firm’s leadership sidelined plans to put the break-up proposal to a vote after a meeting of US partners on Wednesday, The Telegraph understands. Its UK partners will be updated on Thursday. – Telegraph
JP Morgan is suing former executive Jes Staley over his relationship with paedophile Jeffrey Epstein. The Wall Street titan is seeking to hold Mr Staley, who later became chief executive of Barclays, personally liable for any penalties the bank may face amid claims it enabled Epstein’s sex trafficking crimes. – Telegraph
Beazley has cut the pay of two of its top executives by close to £250,000 after a financial blogger pointed out that it had used the wrong number of shares to calculate their remuneration. The FTSE 100 insurer yesterday amended the total pay packages for last year of Adrian Cox, its chief executive, and Sally Lake, finance director. – The Times
Britain’s largest employers’ group has called for legislation setting out maximum allowable payment times should the government fail to tackle slow and late settlement of commercial debt. The Federation of Small Businesses said new laws may be required to dictate the period that small suppliers’ bills must be paid within if other measures do not result in an improvement. – The Times
