(Alliance News) - Stock prices in London opened mixed on Thursday, as trepidation set in ahead of key US economic data, though M&A action offered some fizz, with financial outsourcer Equiniti and waste management Augean the latest objects of takeovers.
The FTSE 100 index was down just 0.95 of a point at 7,025.98 early Thursday. The mid-cap FTSE 250 index was up 34.00 points, or 0.2%, at 22,674.08. The AIM All-Share index was down 0.80 of a point, or 0.1%, at 1,251.72.
The Cboe UK 100 index was flat at 700.36 points. The Cboe 250 was up 0.2% at 20,433.24, and the Cboe Small Companies up 0.2% at 14,912.46.
In mainland Europe, the CAC 40 in Paris was up 0.1%, but the DAX 30 in Frankfurt was down 0.5%.
Data from GfK on Thursday showed consumer confidence in Germany will rise in June, though by less than market estimates.
"German consumer sentiment was rather bright than muted during the month of May. Economic and income expectations are on the rise. By contrast, the propensity to buy suffered moderate losses after three consecutive increases," GfK said.
It is forecasting its consumer confidence index to improve to negative 7.0 points in June, from a revised negative 8.6 points for May. However, consensus cited by FXStreet tipped the figure to improve to negative 5.2 points.
In Asia on Thursday, the Shanghai Composite closed up 0.4%, the Hang Seng in Hong Kong was down 0.2% in late trade, and the Nikkei 225 in Tokyo closed 0.3% lower. The S&P/ASX 200 in Sydney closed flat.
OANDA analyst Jeffrey Halley noted Asian equity markets lost their zeal on Thursday.
"Some of the week's froth has come out of the markets in Asia today, with equities edging lower, along with energy and precious metals and our good friends, the cryptocurrency space, while the US dollar edged higher after an impressive rally overnight," Halley commented.
Traders are eyeing a batch of economic data from the US on Thursday, including a second gross domestic product estimate, the latest jobless claims figures and a personal consumption expenditure price reading. They are all released at 1330 BST.
Halley added: "Inflation is a story that just won't go away, especially when the markets are positioned heavily against it. My argument is that it will continue rising, but that we just don't know yet whether the supply-chain disruption, re-opening consumption spike is a transitory impact on annual CPI's or [a] comeback after a 20-year vacation."
The dollar was largely higher ahead of the data, though gave back its earlier gains on the pound.
Sterling was quoted at USD1.4126 in London early on Thursday, flat from USD1.4125 at the London equities close Wednesday. The euro stood at USD1.2207, down slightly from USD1.2214.
Against the yen, the dollar was trading at JPY109.08, up from JPY109.01.
Among London's large-caps, Aveva was among the best performers, up 2.0%, after Barclays raised the stock to Overweight from Equal Weight.
Johnson Matthey fell 2.6%, after reporting an annual revenue hike though profit fell as one-off costs rose.
Boosted by booming metal prices, revenue for the year ended March 31 rose 7.5% to GBP15.67 billion from GBP14.58 billion. However, pretax profit dropped 22% to GBP238 million from GBP305 million. Major impairment and restructuring costs amounted to GBP171 million, rising 22%.
The specialty chemicals firm said that, should precious metals remain at their "current high level", the company will see a net benefit of GBP120 million for the current financial year. It also said capital expenditure will amount to up to GBP600 million, and it expects a GBP25 million profit hit due to foreign exchange movements.
Third Bridge Senior Analyst Ben Nuttall commented: "Johnson Matthey's full-year results show sales excluding precious metals 5% lower than last year, primarily driven by people buying few cars, but slightly beating street expectations. Capex for the group is expected to ramp up to as much as GBP600 million, as investments in battery material capacity continue.
"Johnson Matthey's key challenge is managing the transition from internal combustion engines to battery-powered and hydrogen-powered vehicles."
Aviva rose 2.1% after noting that it registered a record performance in its Savings & Retirement arm.
Net flows in the unit rose 31% year-on-year to GBP2.98 billion in the first three months of 2021. Sales at the unit grew 23% to GBP6.17 billion.
Aviva's core general insurance gross written premiums rose 4% annually to GBP2.0 billion in the first quarter of 2021.
Aviva has also made progress in its debt reduction plans, Chief Executive Amanda Blanc highlighted.
"We made very good progress in the first quarter. We concluded the refocus of our portfolio, selling eight non-core businesses which will generate total cash proceeds of GBP7.5 billion once completed. We have made excellent headway in reducing leverage with debt reduction of GBP1.9 billion in the first half of 2021, and we expect the leverage ratio to be around 26% at the half year," Blanc explained.
There was more M&A action in London, as financial administration outsourcer Equiniti received a firm takeover offer from Siris Capital, and Morgan Stanley Infrastructure said it is mulling a takeover offer for waste management firm Augean.
Equiniti shares were up 8.2% and Augean up 14%.
Equiniti received a firm 180p per share takeover offer from Earth Private Holdings, a newly formed company owned by funds managed or advised by Siris Capital.
Equiniti shares were at 182.27p on Thursday morning, giving it a market capitalisation of GBP669.1 million.
The takeover bid values Equiniti at GBP673 million on a fully diluted basis, Siris said. The 180p offer is a 56% premium to Equiniti's 116p share price at the close of play on February, the day before initial press reports of a potential bid for the company.
Equniti's directors backed the offer.
Morgan Stanley Infrastructure confirmed press reports that it is considering a possible takeover offer for West Yorkshire-based waste management firm Augean. MSI said there can be no certainty that an offer will be made for the AIM listing or on what terms.
Augean currently has a market capitalisation of GBP296.0 million.
The latest slice of M&A action follows a busy day on Wednesday. Mid-cap pharmaceutical company Vectura agreed to be taken over by Murano Bidco, a company controlled by funds managed by Carlyle Europe Partners V, in a deal worth GBP958 million.
In addition, Spire Healthcare on Wednesday agreed to a cash takeover offer from Ramsay Health Care.
Elsewhere in London early Thursday, Tate & Lyle fell 5.1%, among the worst mid-cap performers. The food and beverage ingredients firm as it warned adjusted earnings will fall in its new financial year.
For the year ended March 31, revenue fell 2.6% to GBP2.81 billion from GBP2.88 bilion. Pretax profit was down 4.4% to GBP283 million from GBP296 million.
Tate & Lyle raised its payout by 4.1% to 30.8p per share from 29.6p.
Looking ahead, Tate & Lyle warned: "Reflecting significantly lower Commodities profits and an increase in the adjusted effective tax rate, Group adjusted diluted earnings per share are expected to be lower than the prior year in constant currency.
Adjusted dilued EPS was 61.2p for the year just gone, up 5.9% from 57.8p.
Brent oil was quoted at USD68.57 a barrel on Thursday morning London time, soft from USD68.64 late Wednesday in London. Gold was quoted at USD1,899.63 an ounce early Thursday, down from USD1,904.70 late Wednesday.
By Eric Cunha; ericcunha@alliancenews.com;
Copyright 2021 Alliance News Limited. All Rights Reserved.
