LONDON (Alliance News) - London stock indices are trading mixed mid-morning Wednesday, as investors focus on a host of UK corporate earnings ahead of first quarter GDP reading from the US and the Federal Reserve's interest rate decision after the market close.
The FTSE 100 trades up 0.1% at 7,034.68, while the FTSE 250 trades down 0.2% at 17,624.01, and the AIM All-Share is down 0.1% at 753.16.
In Europe, the French CAC 40 is flat, and the German DAX 30 is trading slightly higher.
Earnings season in the UK continues, with Next reporting sales growth in the first quarter of 2015 ahead of its earlier guidance, which it said resulted from the earlier launch of its summer "New-In" brochure, which "helpfully" coincided with much warmer weather.
The fashion retailer reported sales growth of 4.1% in the thirteen weeks to April 25. It said full price sales were up 3.2%, slightly ahead of its guidance in March of 0% to 3%, and said total sales were up more than full price sales due to "a longer tail" to its winter end-of-season sale and a "larger mid-season sale" in Directory. Next also declared a special dividend.
Next shares are amongst the best performers in the FTSE 100 gainers, up 3.0%.
Weir Group is another strong performer, up 4.7%, despite saying its order input in the first quarter was dragged lower by weak demand in oil and gas markets, which it expects to continue in the second quarter and which will result in further cost cuts being made.
The engineering company said group order input in the first quarter was down 9%, with revenue declining broadly in line with the fall, dragged lower by a 23% fall in order input from upstream oil and gas markets, where capital expenditure levels have come under pressure from the declining oil price. However, the company did say its minerals business has remained resilient, with order input rising 5% and continued aftermarket growth partially offsetting the oil and gas-related challenges.
British American Tobacco is down 1.4% after it said revenue fell 5.8% in the first quarter of 2015 as exchange rates went against it, but it took market share, grew volumes of its key growth brands, and said revenue would have risen 1.7% if exchange rates had remained constant, as price increases offset overall volume declines.
Mining stocks are weighing on the FTSE 100, with Antofagasta the biggest faller, down 3.1%. It said production for the full year will be less than its guidance after production fell and costs increased in the first quarter of 2015 due to the ongoing disruptions at the Los Pelambres mine in Chile and heavy rain affecting its other operations.
In the FTSE 250, Countrywide is one of the biggest fallers, down 4.1%. The estate agency said its revenue in the first quarter was slightly lower as tough market conditions hit its house sales business and a better performance in its lettings arm offset the weakness.
Countrywide said its total revenue in the first quarter to the end of March was GBP154.2 million, down 2% year-on-year as deteriorating conditions in the housing market in the UK hit its estate agency and London & Premier home sales divisions. Revenue in its estate agency business dropped 13% year-on-year, while London & Premier revenue fell 14%.
Meanwhile, online, catalogue and stores retailer N Brown Group reported a decline in profit in its recently ended financial year, as it struggles to compete with other high-street and online retailers.
However, the N Brown said its guidance for the current financial year remains unchanged with gross margin expected to remain flat to 100 basis points lower as it continues its price investments, while operating costs are expected to rise by a mid-single-digit percentage. "Current trading is in line with our expectations," the company said. N Brown is the best FTSE 250 performer, up 4.3%.
Home Retail Group is up 2.2% after it reported benchmark pretax profit for its recently ended financial year at the top end of its expectations, as both Argos and Homebase demonstrated a second year of like-for-like sales growth. The company said pretax profit for the year ended February 28 of GBP132.1 million, up 14% from the GBP115.4 million the year before and at the top end of its expectations
While corporate earnings are the focus for the morning, investors also are looking ahead to the preliminary reading of US GDP for the first quarter set for 1330 BST, which is expected to show an annualised growth of 1.0%, down from 2.2% recorded in the fourth quarter, before the Fed releases its statement on its monetary policy decision at 1900 BST.
"Today we will be dominated by the US GDP reading and after some poor economic data over the last few weeks, the prospect of raising interest rates in 2015 is starting to wane. The biggest issue is that the numbers have just not been good enough out of the US to convince [Fed Chair] Janet Yellen that the economy is strong enough," says James Hughes, chief market analyst at eToro.
"Although only a preliminary number, a miss here would further harm those eyeing for a rate hike this year. The number is expected to be a rather subdued one, and poor weather yet again is likely to be blamed for the slump. With that in mind it would have to be a strong turnaround in Q2 in order to point to a September hike," Hughes adds.
Aside from US GDP and the Fed decision, German consumer price index reading and US pending home sales are still ahead at 1300 BST and 1500 BST, respectively.
Futures indicate Wall Street for a lower open with the DJIA and S&P 500 both pointed slightly lower and the Nasdaq 100 indicated down 0.2%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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