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(Alliance News) - Stock prices in London were higher at midday on Thursday, with the internationally exposed FTSE 100 supported by weakness in the pound, as the dollar climbed across the board after US inflation spiked.
The large-cap index was up 29.84 points, or 0.4%, at 7,369.99. The mid-cap FTSE 250 index was up 84.06 points, or 0.4%, at 23,517.31. The AIM All-Share index was flat at 1,244.83.
The Cboe UK 100 index was up 0.6% at 730.80. The Cboe 250 was up 0.1% at 21,008.60 and the Cboe Small Companies down 0.4% at 15,570.29.
In mainland Europe, the CAC 40 stock index in Paris and the DAX 40 in Frankfurt both were up 0.1%.
"The FTSE 100 made a fresh post-pandemic high...this morning, albeit supported chiefly by the weaker pound. Miners rose, but Auto Trader stole the show with a pop of 12% after posting record half-year revenue and profit. Burberry was at the back of the class with Johnson Matthey," said Markets.com analyst Neil Wilson.
Auto Trader was the standout London blue-chip, up 12%. The digital automotive marketplace said it delivered its highest ever six-monthly revenue and profit, with consumer engagement and retailer numbers at record levels.
For the six months to September 30, revenue was GBP215.4 million, up 82% from GBP118.2 million last year and pretax profit more than doubled to GBP150 million from GBP66.2 million.
Auto Trader declared an interim dividend of 2.7 pence per share having paid none in the prior year.
Precious metal miners Polymetal International and Fresnillo were up 4.5% and 2.7% respectively, tracking spot gold prices higher.
Gold stood at USD1,865.45 an ounce at midday, rising against USD1,856.96 late Wednesday. The precious metal was trading at a five-month high, amid concern over inflation, after US consumer prices rose at their fastest pace in 30 years in October.
Data released by the Bureau of Labor Statistics on Wednesday showed the US consumer price index rose 6.2% in October from a year before, ticking up from a 5.4% annual rise in September. The latest reading was higher than the market forecast, cited by FXStreet, of 5.3%.
Even US President Joe Biden acknowledged that consumer prices are "too high".
IG Chief Market Analyst Chris Beauchamp commented: "Inflation readings seem to be providing gold with the strength to rally further, as the metal touches USD1,860 for the first time since June. Commodities as a group appear to have further to run now that inflation prints have started picking up again, with no sign as yet that supply has begun to respond in a meaningful fashion."
3i Group was up 4.5% after the private equity investor reported a strong half-year performance by its portfolio of companies and infrastructure assets, raising its interim dividend by 10% in response.
Net asset value per share was 1,153 pence on September 30, after paying a 21p second interim dividend in July, up from 947p on March 31.
3i declared a first interim dividend for financial 2022 of 19.25p, up from 17.5p a year ago, which it said was in line with its policy.
At the other end of the large-caps, Johnson Matthey was by far the worst performer, down 17%. The speciality chemicals company said it will exit an underperforming business and announced the departure of its chief executive.
Johnson Matthey said it has concluded that the potential returns from its Battery Materials business would not "be adequate to justify further investment".
Back in May, Johnson Matthey had said capital expenditure would amount to up to GBP600 million in the financial year, as it sought to ramp up investment in battery materials and hydrogen technology in a bid to serve Europe's growing electric vehicle market.
The London-based firm said it has decided to pursue the sale of all or parts of the business with the intention of exiting "swiftly".
Johnson Matthey also said CEO Robert MacLeod will retire early next year, with Liam Condon hired from Germany's Bayer to succeed him. MacLeod will step down in February after eight years and will stay on until July to help with the transition.
In addition, Johnson Matthey said half-year results - to be released on November 24 - will be in line with market expectations, but full-year results will be at lower end of expectations. It cited supply chain shortages for its auto industry customers and labour shortages in the US hurting its Health business.
Burberry was down 6.3% on fears sales in the fashion house's high growth market of China will be hurt by regional lockdowns in the second half.
Beijing authorities have sealed off a mall and locked down several residential compounds over a Covid flare-up, as the latest outbreak spread to the Chinese capital's central districts.
Six new cases were found in Beijing's central districts of Chaoyang and Haidian Thursday morning, local media reported, all close contacts of people infected recently in northeastern Jilin province.
Raffles City mall in Dongcheng - also a central district in the capital - was sealed off Wednesday evening after a close contact of a person with Covid-19 was found to have visited the mall, the Beijing Youth Daily reported. Its exits were closed, and all staff and customers inside were not allowed to leave until they got tested.
For the 26 weeks to September 25, Burberry said revenue jumped 38% to GBP1.21 billion from GBP878 million last year. Operating profit surged to GBP207 million from GBP88 million, and pretax profit more than doubled to GBP191 million from GBP73 million.
Burberry declared an interim payout of 11.6p per share having paid none in prior year due to the pandemic. Looking ahead, Burberry maintained medium-term guidance for high single-digit top line growth.
"The initial share price reaction to the numbers reflect a weakening of sales during the second quarter, even though numbers for the first-half as a whole are in comfortably positive territory, and generally high expectations. The move takes some sheen from a share price which had risen by 22% over the last year, as compared to a hike of 15% for the wider FTSE 100, although yet to regain pre-pandemic levels, having dipped by 4% over the last two years," commented interactive investor's Richard Hunter.
B&M European Value Retail was down 6.7%, despite the variety store chain reporting upbeat interim results, on fears its pandemic boost will start to wane.
For the 26 weeks to September 25, revenue increased by 1.2% to GBP2.27 billion from GBP2.24 billion last year, and pretax profit rose 2.4% to GBP241.4 million from GBP235.6 million.
B&M declared an interim dividend of 5.0 pence up 16% from 4.3p paid last year.
"While B&M is a solid business that highly benefited from the pandemic thanks to its essential status retailer, we are conscious of the tough comps the business faces this year," said analysts at Shore Capital.
J Sainsbury, BP, Royal Dutch Shell 'A and Shell 'B' were down 1.2%, 1.7% and 1.4% respectively after the stocks went ex-dividend - meaning new buyers no longer qualify for the latest payout.
The dollar was higher across the board following Wednesday's US inflation figures, putting more pressure on the Federal Reserve to tighten policy.
The pound was trading at near-12 month lows against the buck, quoted at USD1.3394 at midday Thursday, down sharply from USD1.3492 at the London equities close on Wednesday. Sterling was trading around the USD1.42 mark back in May.
On the economic front, UK economic growth lost momentum in the third quarter of 2021, compared to the second quarter when many lockdown restrictions had been lifted, according to the Office for National Statistics.
On an annual basis, the UK economy grew 6.6% in the third quarter, slowing sharply from 24% in the second quarter. The latest reading missed the market forecast, cited by FXStreet, of 6.8%.
More positively, UK gross domestic product advanced 0.6% in September, picking up pace from 0.4% in August. The September print beat the market estimate of 0.4%.
Analysts at ING commented: "At face value, September's UK GDP figures look quite good. Activity grew by 0.6% during the month, though as has often been the case through the pandemic, the majority of this comes from the way health spending is documented in the GDP figures. Once you strip out the effect of people returning to in-person doctor appointments and also other pandemic-related spending, UK growth appears less exciting... Having said all of that, the economy is still growing - albeit slowly."
The euro was priced at USD1.1465, down from USD1.1529. Against the Japanese yen, the dollar was trading at JPY114.01, up from JPY113.86.
"These [US] inflation levels pile more pressure onto the Federal Reserve who have long maintained that price increases are 'transitory' and will fade in time. The Fed though must have been shocked by yesterday's release and now the market will be expecting them to tighten their monetary policy at a faster pace than is currently signalled. As a result of this market reaction the US dollar index, which measures the dollar against a basket of global currencies surged," OFX analysts said.
Brent oil was quoted at USD82.64 a barrel Thursday at midday, down sharply from USD84.12 late Wednesday.
US stock market futures were pointed to a higher open, rebounding from Wednesday's losses. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.6%.
On the corporate front, Walt Disney shares will be in focus after the film and television content producer late Wednesday reported that fourth-quarter revenue missed the mark and growth in its streaming arm slowed.
In the fourth quarter ended October 2, revenue increased 26% year-on-year to USD18.53 billion from USD14.71 billion. Revenue missed CNN cited forecasts of USD18.8 billion. Disney swung to a quarterly pretax profit of USD290 million, from a USD580 million loss a year earlier.
Disney posted diluted earnings per share of USD0.09, swinging from a USD0.39 loss a year earlier. Minus some one-off items, diluted EPS amounted to USD0.37, swinging from a USD0.20 loss. The USD0.37 missed CNN cited consensus forecasts of USD0.52.
Disney+ subscribers totalled 118.1 million at the end of the quarter, up 60% annually and 1.8% quarter-on-quarter. Quarterly growth slowed from the third quarter's 12% climb, however.
The Dow 30 stock was down 4.9% in pre-market trade in New York.
Tesla shares were up 2.4% in the pre-market even after Chief Executive Officer Elon Musk offloaded company shares worth USD5 billion, days after setting off a Twitter poll - in which millions voted - asking whether he should sell 10% of his huge stake in the electric carmaker.
The eccentric billionaire, the world's richest man with a net worth of around USD300 billion, sold 4.5 million shares this week, according to regulatory filings made on Wednesday. But they did not suggest the unconventional virtual referendum he issued on Saturday was behind the decision.
A batch of shares worth USD1.1 billion were sold on Monday in a bid to settle tax obligations after Musk exercised stock options, but the sale was initiated under a pre-arranged trading plan set up in September, according to the filings.
It was not clear if the remaining share sales notified on Tuesday and Wednesday - around 3.6 million shares worth around USD4 billion - were also planned ahead of the Twitter poll.
To hit a 10% sale of his total stake in Tesla, Musk would have to sell millions more shares than he has done so far this week. Before the sales, he still owned more than 170 million Tesla shares, about a 17% stake in the company, according to the US Securities & Exchange Commission.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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