Market focus in London early Wednesday was on individual stocks, especially insurers, as earnings season continues, with broader direction on hold ahead of a US inflation report due just after midday.
The FTSE 100 was down 12.78 points, or 0.2%, at 7,475.43 early Wednesday. The FTSE 250 index was down 28.62 points, or 0.1%, at 19,883.78. The AIM All-Share index was down 3.47 points, or 0.4%, at 911.28.
The Cboe UK 100 index was down 0.2% at 746.06. The Cboe 250 was down 0.2% at 17,243.59. The Cboe Small Companies was down 0.1% at 14,278.55.
In Paris, the CAC 40 stock index was down 0.1%, while in Frankfurt, the DAX 40 was up 0.1%.
Consumer prices in Germany rose at a slower pace in July, the Federal Statistical Office said, continuing a trend seen since May, but inflation remained elevated. Annually, consumer price inflation was 7.5% in July, confirming flash estimates, slowing slightly from 7.6% in June and 7.9% in May.
On Tuesday, the Dow Jones Industrial Average closed down 0.2%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 1.2%.
In New York, all eyes will be on the inflation print due at 1330 BST.
Consensus, according to FXStreet, expects the US annual consumer price inflation rate to have eased to 8.7% in July from 9.1% in June. The core rate, however, is seen ticking up to 6.1% from 5.9%.
‘With the Fed's focus squarely on inflation, there's no doubt that this is the big one every month nowadays, even if the Fed does pay lip service to the personal consumption expenditure deflators as their preferred inflation gauges,’ commented Marshall Gittler at financial firm BDSwiss.
He also noted that the Cleveland Fed's Nowcast forecast is slightly above market consensus at 8.8%. ‘The market may be braced for a higher-than-expected figure and so the surprise from a lower-than-expected figure would be bigger than the surprise from a higher-than-expected figure,’ Gittler said.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.7%. In China, the Shanghai Composite lost 0.5%, while the Hang Seng index in Hong Kong ended 2.2% lower. The S&P/ASX 200 in Sydney ended down 0.5%.
China's consumer inflation quickened in July to a two-year-high, official data showed, with a surge in pork prices pushing up the cost of food.
Compared with other countries, consumer costs in the world's second-biggest economy have not skyrocketed, largely spared the impact of a global surge in food prices after the Russian invasion of Ukraine.
China's consumer price index rose less than expected at 2.7% from a year ago in July, National Bureau of Statistics data showed. A 2.9% advance was expected. Inflation accelerated from 2.5% in June, however.
In London, UK insurers Admiral and Aviva were sitting atop the FTSE 100.
Aviva, up 4.9%, reported an ‘excellent’ first half and is confident of meeting its annual targets.
In the six months to June 30, its IFRS loss widened to £633 million from a £198 million loss a year prior. Adjusted operating profit rose to £829 million from £725 million.
Annuities & equity sales increased 12% to £2.76 billion from £2.47 billion.
Aviva's General Insurance gross written premiums rose 6% to £4.69 billion from £4.37 billion. Its combined operating ratio worsened to 94.0% from 91.6%, however. A result below 100% represents a profit from underwriting and the lower the better.
New business sales in Life unit were up 3% to £17.4 billion from £16.9 billion.
Its Solvency II cover ratio fell to 234% from 244%.
Aviva declared an interim dividend of 10.3p, rising 40% from 7.35p a year earlier.
‘Overall, Aviva is in excellent health and our strategy is delivering results. We enter the second half of 2022 with confidence and while we remain mindful of market and macro-economic challenges, we are on track to meet all of our financial targets,’ Chief Executive Amanda Blanc said.
Insurance peer Admiral advanced 3.1%.
Pretax profit slumped 48% to £251.3 million from £482.2 million
Turnover rose 6% to £1.85 billion from £1.75 billion. Net revenue fell to £720 million from £790 million.
Its combined ratio worsened significantly to 96.7% from 75.2%. As a result, its underwriting profit fell to £106.6 million from £244.5 million.
Admiral's customers ended the first half at 9.11 million, up from 8.02 million at the same point the year prior.
It declared an interim dividend of 60p, almost halved from 115p a year before.
‘The group delivered another solid set of results in the first half of 2022 against a backdrop of challenging market conditions and an elevated inflationary environment. Following on from two outlier years of higher profits resulting from Covid and related factors, group profits have returned to a level more comparable to pre-Covid periods,’ Admiral explained.
Fellow insurer Prudential also reported early Wednesday. Its shares were down 0.5%.
Among London midcaps, TP ICAP was the standout performer, rising 11%. It saw revenue grow across its asset classes in the first half of 2022, leading to a nice bump in dividend.
Pretax profit more than doubled to £72 million from £28 million.
Revenue rose to £1.08 billion from £936 million, led by a strong performance in Rates. Global broking revenue was up 8%, with TP ICAP saying all asset classes generated revenue uplift.
Global broking revenue per broker increased 14%.
TP ICAP upped its dividend by 13% to 4.5p from 4.0p.
‘Despite the uncertain backdrop, we are cautiously optimistic for the remainder of the year and we are well positioned,’ the interdealer broker added.
4imprint Group was 6.0% higher.
The marketer of promotional merchandise, for the 26 weeks to July 2, saw pretax profit multiply to $43.9 million from $3.4 million.
Revenue jumped 58% to $515.5 million from $326.8 million. 4imprint said its total orders processed rose to 886,000 from 616,000 the year before.
‘The board remains very confident in the group's strategy, the strength and resilience of its business model and its competitive position. This confidence is expressed in our expectation of reaching our long-held revenue target of $1 billion during the 2022 financial year,’ Chair Paul Moody said.
It upped its interim dividend to 40 US cents from 15 cents.
In the second half, 4imprint said the first few weeks have been ‘encouraging’.
Royal Mail shed 2.3%. The letter and parcel delivery company warned that it will be ‘materially loss making’ if the four-day strike organised by the Communication Workers Union takes place.
Royal Mail said the CWU has called for strike action on August 26 and August 31, as well as September 8 and September 9. The decision follows a recent ballot for strike action, which saw the majority of its members vote in favour of industrial action.
If the announced strike action takes place, Royal Mail expects its UK division to be materially loss making in financial year 2023.
Royal Mail said that in recent discussions with CWU, it had agreed a 2% pay rise. It added that a further 3.5% increase is available, subject to agreeing on a series of changes and including a new 'above and beyond' bonus.
The CWU has since rejected this offer.
The pound was quoted at $1.2088 early Wednesday, steady on $1.2086 at the London equities close Tuesday
The euro stood at $1.0211, down from $1.0223 at the European equities close Tuesday. Against the yen, the dollar was trading at JP¥134.97, flat on JP¥134.96 late Tuesday.
Gold was quoted at $1,790.50 early Wednesday, falling from $1,793.82 an ounce at the London equities close Tuesday.
Brent oil was quoted at $95.58 a barrel, down from $97.62 a barrel at the London equities close Tuesday.
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