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(Alliance News) - Stock prices in London were lacking direction on Friday morning, with investors weighing the roaring success of the third quarter earnings season against rising inflation, while the FTSE 100 index was held back by heavyweight constituent AstraZeneca.
The large-cap index was up 23.03 points, or 0.3%, at 7,361.15 early Friday. The mid-cap FTSE 250 index was up 67.49 points, or 0.3%, at 23,506.56. The AIM All-Share index was up 0.32 of a point at 1,247.68.
The Cboe UK 100 index was down 0.3% at 729.47. The Cboe 250 was down 0.3% at 20,997.51, and the Cboe Small Companies was down 0.2% at 15,552.83.
In mainland Europe, the CAC 40 stock index in Paris up 0.2%, while the DAX 40 in Frankfurt was broadly flat.
"Markets have moved into a holding pattern as the conflicting signals from higher inflation and strong company earnings continue to do battle," noted Richard Hunter, head of Markets at interactive investor.
Wholesale selling prices in Germany rose by 15% in October when compared to the prior year, data from Destatis showed. This was the highest annual rate of change since March 1974 after the first oil crisis, when the prices grew by 16% year-on-year.
In September and August, the annual rates of change had been 13% and 12%, respectively.
Destatis explained that the move was driven by increased prices for raw materials and intermediate products. The largest impact on the year-on-year price rate in wholesale trade were increased prices for mineral oil products, which jumped 55% year-on-year.
The pound fell to its lowest levels this year. After reaching a low of USD1.3351 early Friday, it recovered slightly to USD1.3392 at the time of London equities open on Friday, and was trading higher than USD1.3381 at the London equities close Thursday.
"UK investors have the Bank of England to thank, with last week's decision to push back a rate rise helping to drive the pound lower," noted Joshua Mahony, senior market analyst at IG.
The euro was priced at USD1.1446, soft from USD1.1462. Against the yen, the dollar was trading at JPY114.21 in London, firm from JPY114.02.
The global economic calendar on Friday has eurozone industrial production data at 1000 GMT.
In FTSE 100, AstraZeneca was the worst performer, down 2.5%, recovering from a sharper opening decline.
The drug maker reported total revenue in the year to date - including Alexion Pharmaceuticals Inc - was USD25.41 billion, up 32% year-on-year. On a constant currency basis, revenue grew by 28% in the nine months to September 30. Total revenue in the third quarter alone increased by 50% to USD9.87 billion.
Astra noted that the Alexion integration is progressing well, creating new opportunities in rare diseases. Astra bought Alexion, a Boston, Massachusetts-based biotech firm, in July for USD13.3 billion in cash and 236.3 million new AstraZeneca shares. Revenue includes Alexion from July 21 onward.
Excluding Astra's Covid-19 vaccine, total revenue increase 21% or 17% at constant exchange rates, in the year to date, to USD23.19 billion, and by 34% in the third quarter to USD8.82 billion.
"Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth. Following accelerated investment in upcoming launches after positive data flow, we expect a solid finish to the year and our earnings guidance is unchanged," said Chief Executive Pascal Soriot.
For all of 2021, Astra said it expects total revenue excluding the Covid-19 vaccine to grow by a low-twenties percentage. Including vaccine revenue in the final quarter of 2021, revenue is expected to grow by a mid-to-high-twenties percentage.
Annual guidance for core earnings per share was kept at USD5.05 to USD5.40. Core EPS was USD1.08 in the third quarter and USD3.59 in the first nine months.
Astra said it now expects to "progressively transition the vaccine to modest profitability as new orders are received". However, it said the profit contribution of this to the final quarter of 2021 will be offset by costs related to antibody combination AZD7442, so it left core earnings guidance unchanged for the full year.
Among mid-cap stocks in London, John Wood Group lost 5.5% after initiating a strategic review of the part of its Consulting business facing the built-environment end-market. The scope of the review will consider a range of options to unlock value from this part of the business for shareholders, the company said.
Turning to trading, John Wood said it expects to deliver improved revenue and earnings in the second half of 2021 relative to the first half.
The engineering and consulting company said it is seeing robust activity in Consulting and Operations, but the rate of recovery in Projects has been slower than anticipated largely due to the deferral of activity and awards into 2022.
More positively, the Aberdeen, Scotland-based firm said it has maintained strength in the order book which was up 18% at the end of September compared to December 2020.
As a result, John Wood said it expects 2021 revenue to be USD6.4 billion. In 2020, the company recorded revenue of USD7.56 billion.
Redrow gained 1.6% as the housebuilder's trading has remained strong since its financial year end on June 27. The value of net private reservations in the 19 weeks to November 5 was 2.1% above the prior year at GBP672 million versus GBP658 million. The private revenue per outlet per week was GBP309,000 compared to GBP298,000 last year.
Average selling price of private reservations rose 14% on the equivalent period last year to GBP453,000 from GBP398,000.
During the period Redrow said it has added 1,400 plots to its current land holdings and 95 plots to its forward land holdings compared to 457 plots and 119 plots, respectively, last year.
Homes turnover for the 19 weeks to November 5 was 3.5% below the prior year's GBP690 million, at GBP666 million, but the total forward order book is a record GBP1.51 billion, up 2.0% from GBP1.48 billion a year ago.
The company warned on material shortages and supply interruptions facing the industry, but said it is working with long-term supply partners to ensure build output remains at normal levels. Redrow said it estimates that overall build cost inflation will be 5% for the current financial year.
Looking ahead, Redrow said it now expects its revenue for 2022 to be GBP2.1 billion, and its operating margin to be 19%. A year ago, it posted revenue of GBP1.94 billion.
Elsewhere, Avon Protection plummeted 38% after it reported that its Vital Torso Protection Enhanced Small Arms Protective Inserts plates have encountered a failure in first article testing which will significantly delay the likely approval timetable for this product.
Protection equipment company said it has also experienced further delays in obtaining final product approvals for the US Defense Logistics Agency Enhanced Small Arms Protective Inserts body armour plates, with approvals for this product now expected in the second quarter of its current financial year ending September 2022.
In light of these issues, Avon Protection said it has initiated a strategic review of its body armour business.
Finally, the company said it will delay an announcement of its full-year results, planned for November 23, to allow for a review of the carrying value of the assets related to the body armour business.
In Tokyo on Friday, the Nikkei 225 index closed up 1.1%. The Shanghai Composite closed up 0.2%, while the Hang Seng index closed up 0.3%. The S&P/ASX 200 in Sydney closed up 0.8%.
Brent oil was quoted at USD82.19 a barrel Friday morning, slipping from USD82.48 late Thursday. Gold stood at USD1,858.01 an ounce, down from USD1,861.20.
OPEC lowered its world oil demand forecast for 2021 on Thursday, citing weaker demand among major consumers China and India and an expected hit from high energy prices.
In a monthly report, the cartel of major oil producers cut its forecast by around 160,000 barrels per day. Global demand for 2021 is now forecast to reach 96.4 million barrels per day.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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