City of London skyscrapers, including Gherkin
Global stocks take a breather after strong run / Image source: Adobe

The FTSE 100 suffered a slow start on Thursday, with broker downgrades hitting some of its more influential constituents, though there was some impetus from M&A action elsewhere in London.

JPMorgan cut British Airways parent IAG to ’underweight’ from ’neutral’, sending that stock 3.3% lower. Vodafone fell 1.3% as Exane BNP lowered its rating for the telecommunications firm to ’underperform’.

Underwhelming data from China also kept a lid on enthusiasm, on the eve of Friday’s key US jobs report.

The FTSE 100 index opened down 27.92 points, 0.4%, at 7,487.46. The FTSE 250 was down 193.65 points, 1.0%, at 18,473.08, and the AIM All-Share was up 0.72 of a point, 0.1%, at 718.95.

The Cboe UK 100 was down 0.6% at 747.55, the Cboe UK 250 was down 1.2% at 15,991.25, while the Cboe Small Companies was up 0.5% at 13,889.76.

In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.2%.

The pound was quoted at $1.2571 early Thursday, lower compared to $1.2601 at the close on Wednesday. The euro stood at $1.0776, down against $1.0796. Against the yen, the dollar was trading at JP¥145.07, lower compared to JP¥147.17.

In the UK, house prices increased in November for the second month in a row, following a prior streak of six successive monthly falls, according to mortgage lender Halifax.

The average house price index increased 0.5% in November from October. Prices had increased from an upwardly revised 1.2% in October from September. On an annual basis, prices were 1.0% lower, easing from a 3.1% fall in September. The year-on-year reading for October was nudged higher from an initially reported 3.2% fall. The data from October had initially showed prices rose 1.1% on-month.

The typical UK home cost £283,615 in November, around £1,300 higher than in October.

Halifax said South East England continues to see most downward pressure on house prices.

In the FTSE 100, Frasers was up 0.5%.

The owner of the Sports Direct and Flannels retail chains said pretax profit in the six months that ended October 29 rose 8.0% to £310.2 million from £287.2 million a year earlier, while revenue rose 4.4% to £2.77 billion from £2.65 billion.

Retail operating costs for the owner of the Sports Direct and Flannels retail chains rose 0.4% to £755.9 million from £752.6 million.

Looking ahead, Chief Executive Officer Michael Murray said: ‘As noted at the [financial] 2023 preliminary results, [financial] 2024 started well. This strong trading momentum continued throughout the first half of [financial] 2024 and into the early recent weeks of the second half especially at Sports Direct.

‘We are looking forward to our Christmas trading period and remain confident of achieving [adjusted pretax profit] in the range £500 million to £550 million. We are building a diverse business for sustained multi-year growth. Our substantial ongoing investment into our elevation strategy, infrastructure and new business integrations continues to unlock that potential, and we expect further profitable growth for [financial] 2025 and beyond.’

DS Smith lost 2.0%, after the paper-based packaging maker said half-year profit fell and its chief executive intends to retire in 2025.

Pretax profit in the six months that ended October 31 fell 15% to £268 million from £315 million a year earlier, while revenue fell 18% to £3.51 billion from £4.30 billion.

DS Smith said second-quarter volume performance improved compared to the first quarter, while it expects stronger volume performance in the second half than first half. It maintained its interim dividend payment at 6.0 pence per share. It expects a full-year outcome in line with internal expectations.

Meanwhile, Chief Executive Officer Miles Roberts intends to retire after 13 years with the company. His formal notice period will start on December 1 next year, meaning he would step down no later than November 30, 2025. DS Smith said this will give the company enough time to identify and appoint his successor.

Declining Brent Crude prices weighed on London’s oil majors, with BP and Shell down 0.9% and 0.4%, respectively.

Brent oil was down at $75.04 a barrel early in London on Thursday from $75.14 late Wednesday.

In the FTSE 250, Future lost 25%.

The magazine publisher saw pretax profit fall 19% to £138.1 million in the financial year that ended September 30 from £170.0 million a year earlier.

Revenue fell 4.4% to £788.9 million from £825.4 million, while it declared an unchanged final dividend of 3.4 pence per share.

Looking ahead, it said the stabilisation of trends gives it confidence to return to organic growth in the second half, translating into low single-digit revenue growth for the full-year.

Future also announced that Chief Financial & Strategy Officer Penny Ladkin-Brand will step down later next year.

Games Workshop lost 9.0%, despite the miniature wargames maker and retailer saying trading since last September was in line with expectations.

It estimates first half revenue of no less than £235 million, up from £212.3 million a year earlier.

This is alongside operating profit projected to rise to no less than £82 million from £70.7 million, and pretax profit to rise to £94 million from £83.6 million.

Among London’s small-caps, Kin & Carta rose 9.6%.

The business software consultancy said Apax Partners upped its takeover offer to 120p per Kin & Carta share, valuing the firm at £220.3 million on fully diluted basis from a previous £203 million.

Kin & Carta also noted it gives the company an enterprise value of £258 million. It now believes the new bid is fair and reasonable, unanimously recommending to shareholders that they vote in favour of the scheme at the court and general meetings.

The meetings scheduled for Thursday have now been adjourned until December 21 to allow shareholders more time to consider the increased and final offer.

On AIM, Smart Metering surged 42%, after it agreed to a private equity takeover from funds advised by Kohlberg Kravis Roberts.

KKR will pay 955 pence per Smart Metering share, a 40% premium to the stock’s Wednesday closing price. It gives Smart Metering a £1.3 billion valuation on a fully diluted basis and an enterprise value of £1.4 billion.

In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2% the S&P 500 down 0.4% and the Nasdaq Composite down 0.6%.

In Asia on Thursday, the Nikkei 225 index in Tokyo fell 1.8%. In China, the Shanghai Composite edged down 0.1%, while the Hang Seng index in Hong Kong lost 0.7%. The S&P/ASX 200 in Sydney slipped 0.1%

Chinese exports rose in November for the first time in seven months, officials said Thursday, as the country navigates a troubled recovery from the Covid-19 pandemic.

However, the reading compares with a low base from last year when authorities were still wedded a zero-Covid policy that hammered output and business activity, while a surprise drop in imports highlighted weak consumer activity at home.

Overseas shipments edged up 0.5% on-year to $291 billion, the General Administration of Customs said, marking their first increase since April.

The figure was much better than analyst forecasts and followed a 6.4% slump in October, though it still suggested a post-Covid recovery from the Asian nation is materialising slowly.

Gold was quoted at $2,033.61 an ounce early in London on Thursday, up from $2,026.89 on Tuesday.

Still to come on Thursday’s economic calendar, gross domestic product data for the eurozone is released at 1000 GMT.

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Issue Date: 07 Dec 2023