The FTSE 100 may have closed Tuesday in the red due to negative results from Ocado and Croda International, but continuing sterling momentum meant stocks were largely up in London.

Sterling, meanwhile, continued to climb. The currency was supported by positive developments between the UK and the EU over a deal regarding Northern Ireland.

The FTSE 100 index closed down 58.83 points, or 0.7% at 7,876.28 on Tuesday. The FTSE 250 ended up 17.18 points, or 0.1%, at 19,903.28. The AIM All-Share closed 0.90 of a point, or 0.1%, at 859.37.

The Cboe UK 100 ended down 0.7% at 788.63, the Cboe UK 250 closed up 0.1% at 17,445.99, and the Cboe Small Companies ended down 0.6% at 13,826.03.

The pound was quoted at $1.2118 at the London equities close on Tuesday, up from $1.2019 at the close on Monday.

Ricardo Evangelista, senior analyst at ActivTrades, said the pound was carrying the ‘positive momentum’ initiated on Monday, after the UK and the EU agreed on a framework to deal with unresolved issues related to the Northern Ireland protocol.

The new deal, dubbed the Windsor framework, removes barriers on trade across the Irish Sea and hands a ‘veto’ to politicians in Stormont on EU law - a set of concessions from Brussels that went further than some expected.

UK Prime Minister Rishi Sunak promised the deal would be a ‘turning point’ after years of post-Brexit frustration.

ActivTrades analyst Evangelista added: ‘After years of dispute, which ultimately could have led to a trade war between the two sides, investors were quick to price-in the brighter outlook for UK assets.’

However, Francesco Pesole at ING cautioned that the ‘central bank story’ would remain the ‘most central driver’ of sterling, arguing that it would be hard for the pound to find ‘sustained support’ on the new Northern Ireland deal alone.

In the FTSE 100, Ocado Group plunged 12%, finishing the day as the worst blue-chip performer.

Ocado posted a pretax loss of £500.8 million in the year ended November 27, stretching from £176.9 million the year prior.

The online grocer and warehouse technology firm said group revenue amounted to £2.51 billion, up 0.6%, from £2.50 billion. The figure fell short of consensus of £2.54 billion, however.

Russ Mould, investment director at AJ Bell, said the results were ‘as appetising as a bucket of sick.’

‘Consumers are pulling back from doing big shops which is problematic for Ocado. It’s more cost and time efficient to fill a van with a big customer order than lots of little ones, so the shift in shopping behaviour creates a headwind,’ he explained.

Numbers from Kantar showed UK grocery price inflation spiked to another record high earlier in February.

Grocery price inflation hit 17.1% in the four weeks to February 19, the hottest-ever grocery price inflation rate recorded by Kantar.

Croda International dropped 5.1% despite the chemicals maker reporting a 90% surge in pretax profit in 2022 to £780.0 million from £411.5 million.

Croda also lifted its annual dividend by 8.0% to 108.0 pence per share from 100.0p a year prior.

However, looking to 2023, it said it expects its performance to be weighted towards the second half, putting pressure on its future performance.

AJ Bell’s Mould explained that investors hate hearing that phrase as it ‘raises the chances of a profit warning if that six-month period doesn’t live up to expectations’.

In the FTSE 250, Man Group jumped 8.2% after the fund manager announced a profit climb in 2022 and said Chair John Cryan will retire from the board around the end of 2023.

Man Group’s pretax profit in 2022 jumped 25% to $608 million from $487 million in 2021. Assets under management fell 3.6% to $143.3 billion from $148.6 billion, however.

Serco rose 4.9%. The outsourcer announced a new £90 million share buyback for 2023, as its annual revenue ticked up as the company recovered from Covid.

Serco said revenue in 2022 increased 2.5% year-on-year to £4.53 billion from £4.42 billion in 2021. Pretax profit edged up 2.4% to £196.8 million from £192.2 million.

Elsewhere in London, AO World shares climbed 8.4% after it lifted profit guidance on better-than-expected margins, amid the online electrical goods retailer’s cost saving measures.

AO now expects adjusted earnings before interest, tax, depreciation, and amortisation between £37.5 million and £45 million for the year ending March.

Its outlook was lifted from the previous £30 million to £40 million forecast, which itself was bumped up from guidance of the top end of a £20 million to £30 million range.

On AIM, Safestay jumped 20% as it announced that its annual revenue in 2022 will come in ahead market expectations at £19.0 million, multiplying from £6.4 million in 2021.

The hostel operator explains its business was ‘returning to normal’, though it noted that group bookings were seeing a slower recovery.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.4%, while the DAX 40 in Frankfurt ended 0.1% lower.

Both France and Spain both saw an unwelcome rise in inflation in February. According to INE, the yearly inflation rate in Spain quickened to 6.1% in February, from 5.9% in January. In France, Insee said consumer prices should increase by 6.2% year-on-year, compared to growth of 6.0% in the previous month.

The euro stood at $1.0613 at the European equities close on Tuesday, higher against $1.0591 at the same time on Monday.

Stocks in New York were largely higher at the London equities close, with the Dow Jones Industrial Average down 0.3%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.2%.

Against the yen, the dollar was trading at JP¥136.11 late Tuesday, lower compared to JP¥136.24 late Monday.

Brent oil was quoted at $83.50 a barrel at the London equities close on Tuesday, up from $82.28 late Monday. Gold was quoted at $1,827.19 an ounce, sharply higher against $1,816.96.

In Wednesday’s UK corporate calendar, there are full year results from Aston Martin Lagonda, Just Eat Takeaway.com, Persimmon and Reckitt Benckiser.

In the economic calendar, the EU, UK, and the US will publish manufacturing PMI prints.

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Issue Date: 28 Feb 2023