London stock market investors were sinking their teeth into a groaning board of company updates early Wednesday, lifting prices, as they await two key reports: the Gray inquiry into 'partygate' in the UK and the minutes of the most recent US Fed policy meeting.
The FTSE 100 index was up 31.91 points, or 0.4%, at 7,516.26 early Wednesday. The mid-cap FTSE 250 index was up 94.83 points, or 0.5%, at 19,944.65. The AIM All-Share index was down just 0.48 of a point, at 954.83.
The Cboe UK 100 index was up 0.4% at 749.05. The Cboe 250 was up 0.4% at 17,673.39, and the Cboe Small Companies was 0.2% lower at 14,575.73.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt rose 0.4% early Wednesday.
In Tokyo on Wednesday, the Nikkei 225 closed down 0.3%. The Shanghai Composite ended up 1.2%, while the Hang Seng in Hong Kong was 0.8% higher in late trade. The S&P/ASX 200 ended 0.4% higher.
The minutes of the US Federal Reserve's policy meeting earlier this month will released at 1900 BST. At that meeting, the Fed decided to raise interest rates by 50 basis points, as expected.
This was the first time the US central bank had hiked rates by a half-point in one step since 2000, and it took the federal funds rate to a range of 0.75% to 1.00%.
The Fed also decided to start reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at the start of June.
For Treasury securities, the cap will initially be set at $30 billion per month and after three months will increase to $60 billion per month. For agency debt and agency mortgage-backed securities, the cap will initially be set at $17.5 billion per month and after three months will increase to $35 billion per month. It gives an initial total balance sheet reduction of $47.5 billion.
Analysts at Lloyds Bank commented: ‘The Fed's message seems clear, with its policymakers united in indicating that for now they are more concerned about inflation than growth. As result, 50bp increases in interest rates are likely in both June and July. Consequently, it seems unlikely that much new will be learned from the minutes. There has been some speculation that the Fed could act even more aggressively and raise rates by 75bp in one go, and so there will interest in whether this was discussed. However, a series of Fed officials have already said that this not a probable option for now.’
The pound regained some poise early Wednesday, after tumbling following troubling UK economic data on Tuesday. Sterling rose to $1.2552 early Wednesday from $1.2518 at the London equities close on Tuesday.
Political uncertainty may heap more pressure on the pound, however. Some attention by investors - and a great deal by politicians - will be paid to the release of a report by a civil servant on partygate, which could be key to the future of Prime Minister Boris Johnson.
Number 10 is bracing for the publication of Sue Gray's full report into Downing Street parties in Whitehall during the coronavirus lockdown.
The senior civil servant's report is expected to be heavily critical of the culture in No 10, which led to the repeated violations of Covid restrictions. Potentially damaging further details, including the names of some of those who attended gatherings, are also due to be published.
A Downing Street press conference is expected to be held after her findings are made public.
Johnson is scheduled to address the 1922 Committee of backbench Tories on Wednesday. He is also due to address the Commons.
The euro faded to $1.0693 early Wednesday in London from $1.0725 at the European equities close on Tuesday. Against the yen, the dollar advanced to JP¥127.18 from JP¥126.67.
In London, SSE was the best-performing large-cap stock. Shares in the power utility were 4.4% higher.
In the financial year that ended March 31, revenue climbed 42% to £16.91 billion from £11.87 billion. Pretax profit rose 44% to £3.48 billion from £2.42 billion.
Adjusted earnings per share grew by 22% to 95.4 pence, within guidance, from 78.4p. The adjusted EPS figure has been tipped to rise to ‘at least’ 120p for the new year. For the five-year period to financial 2026, it expects compound annual adjusted EPS growth of between 7% and 10%.
SSE hiked its payout by 5.8% to 85.7p from 81.0p.
SSE recently kicked off plans for a sales process for its SSEN Transmission arm. This is expected to formally begin in the summer. SSE plans to sell a 25% stake in the electricity transmission network unit.
Joint-venture partners M&S and Ocado moved in opposite directions.
M&S added 1.0%. The clothing, homewares and food retailer M&S reported a swing to profit for the year ended April 2, but cautioned on profit in the year ahead, amid the war in Ukraine and investment plans.
Revenue for the recently ended financial year climbed 19% to £10.89 billion from £9.17 billion.
M&S swung to a pretax profit of £391.7 million from a £209.4 million loss. Adjusted pretax profit jumped to £522.9 million from £50.3 million.
It expects capital expenditure to increase to around £400 million in the coming year, from £300.2 million.
Part of that investment will go towards expanding capacity at the Ocado Retail arm.
Looking ahead, the retailer cautioned: ‘This year the business will not receive business rates relief and International will not have the profit contribution from Russia. As we invest in capacity growth at Ocado Retail, we anticipate a minimal contribution of share of net income to group results.
‘Consequently, we start 2022-23 from a lower adjusted profit base. The business is now much better positioned and has had an encouraging start to the year. However, given the increasing cost pressures and consumer uncertainty we do not currently expect to progress from this lower profit base in 2022-23.’
M&S said it is preparing for an ‘adverse impact on volumes due to price inflation’. It said price inflation will slow ‘the rate of sales growth’.
Ocado Retail is a joint-venture operated alongside online grocer and technology firm Ocado. Shares in the FTSE 100 company were 3.8% lower.
Ocado itself warned the joint-venture's trading environment has ‘deteriorated’ since an update in mid-March, due to the cost of living crisis.
Annual growth at the JV will now be ‘in the low single digits’, the forecast lowered from a 10% climb.
There will be a ‘low single digit’ earnings before interest, tax, depreciation and amortisation margin.
‘In the last few months, the grocery market has declined by 4-5% compared to last year when the country was experiencing peak Covid restrictions. Online grocery overall has declined by around 20% compared with last year, although the online market remains 60-70% higher compared with two years ago. Online share of grocery at 11-12% is almost double compared to pre-pandemic levels,’ Ocado explained.
Shares in fellow retailer Pets At Home rose 7.8% on stronger annual earnings.
In the year to March 31, revenue rose 15% to £1.32 billion from £1.14 billion. Pretax profit jumped 40% to £148.7 million from £106.3 million.
Gulf Keystone Petroleum rose 8.3%. The oil and gas exploration company operating in Iraq plans a UD50 million special payout. It adds to a £25 million ordinary dividend already declared.
SDX Energy rose 3.2% to 8.51 pence, as it agreed to a takeover offer from Toronto-listed Tenaz Energy. Tenaz is focused on buying energy assets with the intention of then returning free cash flow to shareholders.
The deal values each SDX share at 10p and its share capital at £21.4 million.
For each SDX share owned, shareholders will receive 0.075 of a new Tenaz share.
‘In addition to a track record of successful acquisitions, Tenaz's management team has a history of effecting operational improvements following successful integration of acquired assets,’ SDX said.
Its directors backed the deal.
Brent oil rose to $114.60 a barrel early Wednesday from $113.97 late Tuesday. Gold stood at $1,858.20 an ounce, down from $1,866.09.
The economic events calendar on Wednesday has US durable goods orders at 1330 BST.
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