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(Alliance News) - Stocks in London ended lower on Thursday as data continued to show an uptick in US inflation, prompting fears of monetary policy tightening from the Federal Reserve.
The US Bureau of Labor Statistics said US producer prices jumped 6.2% year-on-year in April, the largest advance since 12-month data were first calculated in November 2010. This marked an acceleration from growth of 4.2% in March and topped expectations, according to FXStreet, for 5.9%.
Month-on-month, the producer price index rose 0.6%, slowing from 1.0% in March but again ahead of market forecasts for just 0.3% growth.
On Wednesday, data showed the annual US inflation rate surged to 4.2% in April from March's consumer price growth of 2.6%. Markets had expected an April rate of 3.6%.
The FTSE 100 index closed down 41.30 points, or 0.6%, at 6,963.33. The FTSE 250 ended down 38.53 points, or 0.2%, at 22,069.31, and the AIM All-Share closed down 7.72 points, or 0.6%, at 1,224.84.
The Cboe UK 100 ended down 0.7% at 694.20, the Cboe UK 250 closed down 0.4% at 19,852.20, and the Cboe Small Companies ended down 0.6% at 14,918.00.
In Paris the CAC 40 ended up 0.1%, while the DAX 30 in Frankfurt ended up 0.3%.
"In an extremely fickle environment, markets are continuing to wrestle with the dilemma as to whether the current bout of rising inflation prints is transitory in nature. US PPI for April only served to reinforce this inflationist narrative, however it is still very difficult to put aside how much base effects are exerting upward pressure on the overall numbers," said CMC Markets analyst Michael Hewson.
In the FTSE 100, M&G ended the best performer, up 4.2%, after Bloomberg reported late Wednesday that fund manager Schroders was considering a potential acquisition of the investment manager.
According to Bloomberg, Schroders was working with a partner earlier this year to consider a breakup of M&G by splitting its asset management operations from its pension and insurance unit, according sources. However, it recently abandoned the idea after deciding M&G would be too expensive.
Schroders closed 2.0% lower.
3i Group ended up 2.5% after the private equity investor lifted its annual dividend after strong performances in by retail and medical portfolio companies.
3i made a total return of 22% in the financial year that ended March 31, beating the previous year's return of 3%. Operating profit before tax multiplied, to GBP1.85 billion from GBP216 million. The company's net asset value per share rose 18% to 947 pence from 804p in the year.
3i will pay a final dividend per share of 21p bringing the total for financial 2021 to 38.5p, up 10% from 35p the previous year.
At the other end of the large-caps, BT Group ended the worst performer, down 5.9%, after the telecommunication firm reported a fall in revenue and profit.
Revenue for the financial year that ended March 31 fell 7% to GBP21.33 billion, with pretax profit falling 23% to GBP1.80 billion. The revenue slide was due to a Covid hit to its consumer and enterprise units, ongoing legacy product declines, and divestments. The consensus forecast for BT Group's revenue was GBP21.37 billion, while Ebitda was seen at GBP7.43 billion.
Adjusted earnings before interest, tax, depreciation and amortization came in at GBP7.42 billion, down 6%, primarily due to the fall in revenue, special frontline bonus, increased service costs and continued investment in copper-to-fibre migrations.
BT separately said it has decided that the "conditions are right" to increase and accelerate Openreach's total fibre-to-the-premises build to 25 million premises from 20 million by December 2026. It cited the clarity provided by regulator Ofcom's recent market review, the UK government's cash tax super-deduction, and a "positive outcome" from the recent 5G spectrum auction.
Hargreaves Lansdown ended 4.6% lower. The fund supermarket said it has seen a period of "very strong growth" with record net new business and client growth, it reported on Thursday.
Net new business in the four months to April 30 was GBP4.6 billion, with assets under administration of GBP132.9 billion at the end of the period, up 28% in the year-to-date. Revenue for the period was GBP233.2 million, bringing the year-to-date total to GBP532.7 million, up 19% on a year before.
Hargreaves reported assets under administration of GBP132.9 billion as at April 30, up 37% from GBP96.7 billion a year prior.
Shore Capital attributed the decline in the stock price to possible stake sales by co-founder Peter Hargreaves.
Peter Hargreaves sold GBP300 million of shares in February, leaving his stake just shy of 20%. Shore noted that the 90 day lock-up following the sale is about to expire, and there is likely "high expectation" of another placing.
"This may keep a lid on the share price over the next few days compared to what the natural reaction might ordinarily have been to this positive statement," said Shore's Paul McGinnis.
Burberry Group closed down 4.2% as the fashion house reported a fall in annual earnings, but it brought its payout back to pre-pandemic levels.
Revenue for the year to March 27 fell 11% to GBP2.34 billion, in line with market consensus, from GBP2.63 billion the year before. The fall in revenue, which was down 10% at constant exchange rates, was due to store closures and reduced tourism, Burberry said, though with a strong recovery in the second half.
Adjusted operating profit, meanwhile, slipped by 9% year-on-year to GBP396 million. According to company-compiled consensus, adjusted operating profit was predicted to have fallen 13% to GBP378 million from GBP433 million.
Burberry declared a full-year dividend at the financial 2019 level of 42.5p on the back of strong cash generation with the progressive policy reinstated. This compares to just an interim dividend of 11.3p paid out for the 2020 financial year.
In the FTSE 250, NCC Group ended the star performer, up 16% at 295.42 pence, after the IT security company said it has agreed to buy the intellectual property management business of Iron Mountain for USD220 million in cash, partly funded by a share issue.
NCC said the consideration and all related transaction costs will be funded through a combination of USD99 million gross proceeds of the share placing, USD70 million from a new three-year term facility agreement, existing cash balances of USD10 million, and the balance from the company's existing revolving credit facility agreement.
Upon completion of the placing, the company had raised USD102.3 million, through the issue of 27.9 million shares at a price of 260p each, which represents a 3.4% discount to the prevailing middle market price at the time of agreeing the placing.
Elsewhere, shares in Alphawave IP Group started first day of conditional trading on the Main Market of London Stock Exchange on Thursday, with unconditional dealings starting on Tuesday.
The company had set its initial public offering price at 410 pence, expecting a GBP3.1 billion market capitalisation upon admission. The stock closed at 343p, down 16% from the IPO price, giving Alphawave a market value of around GBP2.6 billion.
The pound was quoted at USD1.4045 at the London equities close, down from USD1.4104 at the close Wednesday.
The euro stood at USD1.2071 at the European equities close, down slightly from USD1.2075 late Wednesday. Against the yen, the dollar was trading at JPY109.60, up from JPY109.45 late Wednesday.
Stocks in New York were rebounding from Wednesday's steep declines, as US data showed lower unemployment claims.
The DJIA was up 1.6%, the S&P 500 index 1.4% and the Nasdaq Composite up 1.3%.
The Department of Labor said US initial weekly jobless claims fell to 473,000 in the week to May 8 from 507,000 the week before. The latest reading marked the lowest level for initial claims since the pandemic began to grip the US in mid-March last year.
Continuing claims edged down to 3.66 million for the May 1 week from the prior week's 3.70 million.
Thursday's early gains suggested "that the scope of recent losses has gone far enough to whet the appetite of the buy-the-dippers who have successfully feasted over the last year or so on down moves like the one that has recently unfolded," said Briefing.com analyst Patrick O'Hare.
Brent oil was quoted at USD67.55 a barrel at the equities close, down from USD69.77 at the close Wednesday.
Gold was quoted at USD1,823.80 an ounce at the London equities close, marginally lower against USD1,825.25 late Wednesday.
The economic events calendar on Friday has US retail sales figures at 1330 BST.
The UK corporate calendar on Friday has interim results from accounting software provider Sage Group and a trading statement from Sabre Insurance.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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