Stocks turn positive as January growth figure surprises / Image Source: Adobe

European stocks ended up largely in the green on Wednesday, as the FTSE 100 was given a leg-up by hopes of an imminent end to the UK recession.

The FTSE 100 index closed up 24.36 points, 0.3%, at 7,772.17. The FTSE 250 ended down 1.29 points at 19,563.92, and the AIM All-Share closed up 0.78 of a point, or 0.1%, at 738.82.

The Cboe UK 100 ended up 0.3% at 778.45, the Cboe UK 250 closed down 0.2% at 16,932.34, and the Cboe Small Companies ended down 0.1% at 14,715.70.

In European equities on Wednesday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended down marginally.

The UK economy grew in line with expectations at the start of the year, adding hopes that the UK is out of recession.

According to the Office for National Statistics, UK gross domestic product expanded 0.2% on-month in January, in line with FXStreet cited consensus. UK GDP had shrunk 0.1% in December from November.

‘While the figure is tiny, the fact it is growing at all is a positive. Investors want the UK‘s recession status cast into the rear-view mirror so they can focus on how potential looser monetary policy could provide relief to consumers and businesses, and in turn feed into greater economic activity. Sadly, that could take time to play out,’ said AJ Bell’s Russ Mould.

Stocks in New York were mixed at the London equities close. The DJIA was up 0.4%, whilst the S&P 500 index down 0.1% and the Nasdaq Composite down 0.6%.

The pound was quoted at $1.2798 at the London equities close Wednesday, higher compared to $1.2783 at the close on Tuesday. The euro stood at $1.0945 at the European equities close Wednesday, up against $1.0916 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥147.70, down compared to JP¥147.76 late Tuesday.

In the FTSE 100, Anglo American rose 4.7%.

The London-based diversified miner said rough diamond sales by De Beers recovered compared to the first sales round of 2024, but they remained weaker on an annual basis.

Other miners also closed the day higher. Antofagasta was up 5.3% and Glencore edged up 1.8%.

In the FTSE 250, construction firm Balfour Beatty jumped 9.5%.

The London-based infrastructure construction contractor reported a 15% drop in pretax profit to £244 million in 2022 from £287 million in 2022.

This was despite a 7.4% increase in revenue, including joint-ventures and associates, to £9.60 billion from £8.93 billion in 2022. Statutory revenue, which excludes those items, was 4.8% higher at £7.99 billion from £7.63 billion.

Balfour lifted its final dividend by 14% to 8.0 pence from 7.0p. This brought its annual dividend 10% higher at 11.5p from 10.5p. In addition, it said it plans to repurchase £100 million of its stock during the 2024 phase of its share buyback programme.

On the other hand, Direct Line shares fell 4.3% as it rebuffed another takeover tilt from Belgian insurer Ageas.

Ageas Chief Executive Hans De Cuyper said the improved possible offer ‘delivers substantial cash proceeds to Direct Line shareholders, whilst ensuring they benefit from the material value creation that we believe the combination of the UK businesses of Ageas and Direct Line will deliver’.

But the Bromley, England-based motor and home insurer rejected the modestly improved terms calling them ‘unattractive’.

Amongst London’s small-caps, Metro Bank lost 4.9%.

In 2023, the London-based retail bank reported a statutory pretax profit of £30.5 million, the first time since 2018, swinging from a pretax loss of £70.7 million in 2022. Underlying revenue grew by 5% to £546.5 million from £522.1 million.

Metro Bank said it was on track to deliver £50 million of annualised cost savings in the first quarter of 2024 as previously announced, which will result in the loss of 1,000 jobs by mid-April, around 22% of the bank’s headcount.

A further £30 million of annualised cost savings is expected to be delivered by the end of 2024.

On London’s AIM, Cap-XX plummeted 80%.

The manufacturer of supercapacitors for portable electronic devices warned that its ‘working capital position has continued to deteriorate’.

Cap-XX explained that this is due to a combination of higher-than-anticipated legal costs associated with the company’s patent infringement litigation, as well as revenue and cash receipts over the first eight weeks of the year being weaker than expected.

As a result, Cap-XX said it is exploring raising additional financing but believes some sort of debt and sale/leaseback structures will not be possible.

It is considering equity financing but warned that this process is taking longer than expected.

Brent oil was quoted at $83.50 a barrel at the London equities close Wednesday, up from $82.49 late Tuesday.

Gold was quoted at $2,173.55 an ounce at the London equities close Wednesday, higher against $2,163.00 at the close on Tuesday.

In Thursday’s UK corporate calendar, there are full year results from Deliveroo, There are also trading statements from Halma, Trainline, and Moonpig.

The economic calendar for Thursday has a slew of data from the US. At 1330 GMT, there is the weekly initial jobless claims reading, as well as PPI and retail sales data.

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Issue Date: 13 Mar 2024