It was a mixed close for London stocks on Thursday, with large caps outperforming their smaller counterparts, while Walt Disney proved a favourite as equities in New York were on the up.
London’s FTSE 100 retreated from its fresh intraday high of 7,949.57 points, though it did achieve a new closing record. There was little joy elsewhere in London, however, as mid and small-cap measures ended lower.
The mood was somewhat jittery as the session wore on, after the Bank of England governor said inflation will come down, but noted he is slightly concerned by the persistence of price pressures.
The FTSE 100 index ended up 25.98 points, or 0.3%, at 7,911.15. Well-received earnings from AstraZeneca and M&A potential for Standard Chartered supported the blue-chip benchmark. Ladbrokes owner Entain and British American Tobacco ended lower, however.
The FTSE 250 index, however, fell 26.47 points, or 0.1%, at 20,277.34. The AIM All-Share closed down 2.39 points, or 0.3%, at 880.84.
The Cboe UK 100 ended up 0.5% at 792.32, the Cboe UK 250 lost 0.3% at 17,707.17, and the Cboe Small Companies fell 0.1% to 14,144.35.
In European equities on Thursday, the CAC 40 index in Paris closed up 1.0%, while the DAX 40 in Frankfurt ended up 0.7%.
Policymakers at the Bank of England have said inflation is almost ‘guaranteed’ to come down rapidly this year unless there is a new, unexpected global event.
Andrew Bailey, the bank’s governor, told MPs during the Treasury Committee that he is ‘concerned’ about the continued persistence of inflation, but expects the rate to halve this year.
He said: ‘We are concerned about persistence. This is why we raised interest rates at this time. I’m very uncertain, particularly about pricing and wages, and we have the largest upside force we’ve ever had on inflation. We do put weight on the persistent risks, but there are also very powerful downside forces this year.’
Bailey insisted that there would be a ‘very powerful unwinding’ of inflation throughout the year, which would only be derailed if there is a new external shock, like a development in the Ukraine war, that it cannot foresee.
Silvana Tenreyo, an external member of the bank’s nine-person Monetary Policy Committee, stressed that declining inflation is all but guaranteed.
The euro stood at $1.0750 at the time of European equities close on Thursday, higher against $1.0734 on Wednesday. The pound was quoted at $1.2154, higher compared to $1.2084. Against the yen, the dollar was trading at JP¥131.10, lower compared to JP¥131.29.
The dollar was weaker after a rise in US jobless claims.
In the week that ended February 4 - this past Saturday - the advance figure for seasonally adjusted initial claims was 196,000. This represents an increase of 13,000 from the previous week’s unrevised total of 183,000.
In London, Standard Chartered jumped 11% on a report that First Abu Dhabi Bank is pressing ahead with a potential $35 billion offer for the London-based lender.
According to Bloomberg, FAB’s proposed acquisition of Standard Chartered is still in play, after a move to put earlier takeover plans on hold ‘didn’t halt its ambitions to become a global financial powerhouse’.
AstraZeneca added 4.1%. The pharmaceutical firm posted a swing to profit in 2022, despite ending the year with a slightly weaker fourth quarter.
Revenue in 2022 rose by 19% to $44.35 billion from $37.42 billion a year before, or by 24% at constant currency. AstraZeneca swung to a pretax profit of $2.50 billion from a loss of $265 million, while core earnings per share jumped 26% to $6.66.
Earnings from BAT disappointed. The cigarette maker reported a marginal rise in profit for 2022, amid an ‘increasingly challenging’ economic environment, but it noted that momentum in its New Category was ‘strong’.
The London-based maker of Dunhill, Kent and Lucky Strike cigarettes said pretax profit was up just 1.7% to £9.32 billion in 2022 from £9.16 billion in 2021. Annual revenue grew 7.7% to £27.65 billion from £25.68 billion.
The stock closed down 2.4%.
While StanChart got a boost from possible M&A action, Labdrokes owner Entain plunged 14% as one-time suitor and current joint-venture partner MGM Resorts ruled out a deal.
In an earnings call on Wednesday, US casino operator MGM Resorts International squashed any speculation of a potential takeover.
‘The simple answer on Entain is no; we’ve moved on,’ said MGM Chief Executive Bill Hornbuckle, later adding: ‘We value the relationship with Entain. We value BetMGM.’
Elsewhere in London, Watches of Switzerland slid 11% as a fall in jewellery sales overshadowed otherwise decent third-quarter results.
The luxury watch retailer said revenue rose 17% year-on-year to £407 million from £348 million. However, jewellery revenue alone fell 2% year-on-year to £41 million.
‘The company may be taken aback at the scale of the negative reaction to what were otherwise reasonably robust third quarter numbers accompanied by reiterated guidance. It suggests a degree of scepticism over its claims to be relatively insulated from weaker consumer demand thanks to a wealthier clientele and the continuing strong demand for luxury watches,’ AJ Bell analyst Russ Mould commented.
Elsewhere in London, Deliveroo rose 0.1%. The food delivery company plans to axe about 350 roles, amid a slowdown in the number of people ordering takeaways. It is understood the majority of the cuts will affect UK-based employees, PA reported.
The delivery firm’s founder, Will Shu, told staff on Thursday that it will cut 9% of roles, as it became the latest tech business to cut jobs. Deliveroo said it expects the total number of workers to be made redundant to be ‘closer to 300’ due to redeployments elsewhere in the business.
After also announcing job cuts, Walt Disney climbed 1.6% in New York. The entertainment company will lay off 7,000 workers, Chief Executive Robert Iger said on a call to analysts on Wednesday. It will be one of his first major decisions since returning to the role.
It is targeting $5.5 billion worth of cost savings. The company’s share price rise on Thursday suggests investors are impressed by Iger’s more austere approach. Former boss Bob Chapek spent two years as CEO, a period that saw Wall Street concerned about rising expenses at the company.
Stocks in New York were higher at the time of the closing bell in London on Thursday. The Dow Jones Industrial Average and the S&P 500 index were up 0.2%. The Nasdaq Composite was up 0.3%.
Brent oil was quoted at $83.73 a barrel late Thursday in London, down from $84.01 late Wednesday. Gold was quoted at $1,873.46 an ounce, down against $1,878.10.
Friday’s economic events calendar has inflation data from China overnight, before a UK gross domestic product reading at 0700 GMT.
The local corporate events calendar has a trading statement from speciality chemicals firm Victrex and annual results from insurer Lancashire Holdings.
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