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(Alliance News) - Stock prices in London were lacking direction at midday on Tuesday, with the overall market on hold ahead of a key Federal Open Market Committee monetary policy decision due on Wednesday.

The US central bank is widely expected to jack up borrowing costs by 75 basis points as it battles rampant inflation.

The FTSE 100 was up 31.90 points, or 0.4%, at 7,338.20. The FTSE 250 index was down 101.14 points, or 0.5%, at 19,701.90. The AIM All-Share index was down 0.66 of a point at 901.48.

The Cboe UK 100 index was up 0.4% at 732.47. The Cboe 250 was down 0.7% at 17,144.12. The Cboe Small Companies was flat at 13,651.61.

In mainland Europe, the CAC 40 stock index in Paris was down 0.7%, while the DAX 40 in Frankfurt was 0.8% lower.

Adding to the unease on the continent was news that Russia's Gazprom will cut back gas deliveries to Germany, citing a faulty turbine, less than a week since restarting flows after 10 days of maintenance work.

"European stocks fluctuated on Tuesday as traders brace for the incoming policy decision from the Federal Reserve this week. There is a sense of the calm before the storm on the market today, with Treasuries remaining stable while most [stock] indices are trading sideways without clear direction. This is seen as a sign of expectation from investors as most of them are waiting for tomorrow's widely expected 0.75bp rate hike from the Fed, alongside further potential policy signals," said ActivTrades analyst Pierre Veyret.

In London, Compass was the best performer in the FTSE 100 index, up 2.5%.

The contract caterer said the strong growth momentum seen throughout the first half of the year continued into the third quarter, with all three of its geographic regions operating above 2019 levels.

For the three months that ended June 30, Compass said underlying revenue was up 109%. North American revenue was up 112%, while revenue from Europe and the rest of the world were 104% and 106% stronger, respectively.

Looking ahead, Compass raised its 2022 organic revenue growth guidance to around 35% from around 30%. It also confirmed financial 2022 operating margin guidance of over 6% and now expects exit margin to "moderate slightly" from around 7% due to the strong net new business performance and ongoing inflationary pressures.

Unilever was the second-best performer, up 2.4%, after the Dove soap and Ben & Jerry's ice cream maker said it delivered a first half performance that built on the momentum of 2021.

For the six months to June 30, revenue was EUR29.62 billion, up 15% from EUR25.79 billion a year before. Unilever posted first-half pretax profit of EUR4.359 billion, down 0.2% from EUR4.369 billion a year previous.

Operating profit was EUR4.5 billion, up 1.7% from EUR4.4 billion. Underlying operating profit growth was 4.1%. Operating profit margin was 15.2% in the first half, down by two percentage points from a year before, though underlying operating profit margin was 17.0%.

Unilever said it generated underlying sales growth of 8.1% in the first half as it raised prices to counter rising costs and slumping volumes.

Looking ahead, Unilever expects 2022 underlying sales growth to be above its previous 4.5% to 6.5% guidance range. It had previously forecast full-year underlying sales growth at the top end of a range of 4.5% to 6.5%.

Oil majors BP and Shell were up 1.7% and 1.9% respectively, tracking spot oil prices higher.

Brent oil was quoted at USD106.82 a barrel Tuesday at midday, up sharply from USD104.78 at the close Monday.

Rolls-Royce was up 0.8%. The jet engine maker has hired former BP executive Tufan Erginbilgic as its new chief executive officer. Erginbilgic will take up his new role on January 1, succeeding Warren East who had previously announced his intention to step down at the end of this year.

In his last role before leaving in 2020, Erginbilgic led BP's downstream business, which included Refining, Petrochemicals, Service Station Network, Lubricants, Midstream operations and the Air BP jet fuel operation.

At the other end of the large-caps, B&Q-owner Kingfisher was the worst FTSE 100 performer, down 7.0%, suffering a negative read-across from smaller rival Wickes, which issued a worrying outlook over the health of the DIY retail sector in the UK.

Wickes was down 20% after it noted "signs of softening" in the DIY market in recent weeks, leading it to expect a fall in annual profit.

FTSE 250-listed Travis Perkins, out of which Wickes was spun, was down 5.0%.

For the 26 weeks to July 2, Wickes said like-for-like sales growth was 0.8% year-on-year. This comprised a 4.0% decline in the first quarter offset by growth of 5.4% in the second quarter.

Local Trade sales performed very strongly, with its TradePro customer base increasing by 60,000 to 690,000 during the first half. However, Wickes noted: "DIY sales remain below last year and although activity is ahead of pre Covid levels, there have been signs of the market softening in recent weeks."

As such, Wickes expects full-year adjusted pretax profit in a range of GBP72 million to GBP82 million, which would be below the GBP85.0 million achieved in 2021.

In the FTSE 250, Bridgepoint was the best performer, up 7.5%, after the private equity investor reported "strong" half-year results ahead of expectations.

For the six months that ended June 30, Bridgepoint's pretax profit jumped by 20% to GBP48.3 million from GBP40.4 million a year earlier. Total operating income went up by 15% to GBP140.1 million from GBP122.2 million.

It declared an interim dividend of 4.0 pence per share, compared to none a year ago and up 10% from the 2021 final dividend.

Looking ahead, Bridgepoint said it expects market volatility and inflation pressures to continue, but it remains well-positioned to deliver 2022 financial performance in line with expectations.

New York was pointed to a lower open after Walmart cut its profit forecast, sending retail stocks lower. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all were called down 0.5% on Tuesday. The indices had closed up 0.3%, up 0.1% and down 0.4% respectively on Monday.

The big-box retailer on Monday said its annual profit will be weaker than expected, as rampant food inflation means consumers are doing less general merchandise spending.

Second-quarter sales will top expectations, though the top-line will be boosted by lower-margin offerings, such as food. For its second quarter, which concludes on Sunday, the Bentonville, Arkansas-based firm expects comparative sales in the US to rise 6% annually, excluding fuel.

Consolidated net sales for the quarter are expected to rise 7.5% yearly. For the full-year, Walmart expects growth of 4.5%. Excluding disposals, annual sales are to rise 5.5%, Walmart said.

There will be a double-digit profit fall, however, Walmart said. Operating income for the second quarter will decline 13% to 14%. For the full-year, it will slump 11% to 13%.

The stock dropped 9.0% in pre-market trade in New York. Amazon lost 3.5% in the pre-market session, while Macy's and Target shed 4.2% and 5.1%, respectively.

Amazon, which reports on Thursday after the US close, said it will hike the price of its Prime delivery and streaming service due to "increased inflation and operating costs".

The e-commerce firm offers free unlimited delivery, entertainment streaming, and live sport through the Prime service. It said it will increase the price of Prime from GBP7.99 each month to GBP8.99 from September 15 for new customers, or on the date of the customer's next renewal.

Ahead in the US earnings calendar Tuesday, trillion-dollar tech names Alphabet and Microsoft report after the market close.

The pound was quoted at USD1.1995 at midday on Tuesday, down from USD1.2041 at the London equities close Monday.

The euro was priced at USD1.0150, down from USD1.0215. Against the Japanese yen, the dollar was quoted at JPY136.65, marginally lower against JPY136.71.

Gold stood at USD1,718.58 an ounce, unmoved against USD1,718.56 late Monday.

A light economic events calendar on Tuesday has US Richmond Fed business activity survey and new residential sales at 1500 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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