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(Alliance News) - Stock prices in London opened lower on Tuesday, as investors chewed on a full plate of blue-chip earnings, and looked ahead to PMI readings for the UK, Europe and US.
The FTSE 100 index gave up the 8,000-point level. It was down 53.96 points, 0.7%, at 7,960.65. The FTSE 250 was down 122.72 points, 0.6%, at 19,975.69, and the AIM All-Share was down 2.17 points, 0.3%, at 864.07.
The Cboe UK 100 was down 0.7% at 796.76, the Cboe UK 250 was down 0.6% at 17,418.53, and the Cboe Small Companies was flat at 13,992.20
In European equities on Tuesday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was 0.3% lower.
The UK public sector budget saw a higher-than-expected surplus in January, thanks to record self-assessed tax receipts, according to the Office for National Statistics on Tuesday.
UK public sector borrowing - excluding public sector banks - was in surplus by GBP5.4 billion last month, the ONS said. This was well behind the GBP12.5 billion surplus of January 2022, but GBP5.0 billion larger than the Office for Budget Responsibility had forecast.
Self-assessed income tax receipts were GBP21.9 billion in January, which was the highest figure for the month since monthly records began back in 1999. It was up from GBP16.4 billion a year before. The payment deadline for self-assessed returns in the UK is January 31.
ONS said the self-assessed tax receipts were partially offset by the "substantial" spending on energy support schemes, as well as a large one-off payment related to historic customs duties owed to the EU.
"January should be a month that sets the country's finances up for the new year and when you compare the surplus with that generated last year, despite an increase in tax receipts, the picture doesn't look quite so rosy and doesn't bode well for anyone hoping to see a few a rabbits jump out of Jeremey Hunt's hat next month," said AJ Bell's Danni Hewson.
Chancellor Jeremy Hunt will lay out his spring budget on March 15.
"With debt at the highest level since the 1960s, it is vital we stick to our plan to reduce debt over the medium term," Hunt said, adding that this "will require some tough choices".
The dollar was a bit firmer early Tuesday.
Sterling was quoted at USD1.2014 early Tuesday, soft on USD1.2034 at the London equities close on Monday. The euro traded at USD1.0670, lower than USD1.0687. Against the yen, the dollar bought JPY134.59, up versus JPY134.07.
In the FTSE 100, Smith & Nephew was the top performer, adding 3.4%.
The medical technology firm said annual revenue edged up 0.1% to USD5.22 billion in 2022 from GBP5.21 billion, as trading profit fell to USD901 million from USD936 million, at a trading margin of 17.3%. In the fourth quarter, revenue grew 1.4% to USD1.37 billion from USD1.35 billion a year before.
Pretax profit fell to USD235 million from USD586 million.
"We continued to outperform in Sports Medicine & ENT and Advanced Wound Management and, even though we are early in our work to fix Orthopaedics, performance improved here too," said Chief Executive Deepak Nath.
In 2023, S&N expects underlying revenue growth of 5.0% to 6.0% and a trading profit margin of at least 17.5%. It left its annual dividend unchanged at 37.5 cents.
HSBC shed 1.8% in early trade in London, having closed down 2.0% in Hong Kong.
The Asia-focused lender said net operating income - before credit losses and impairment charges - improved to USD51.73 billion from USD49.55 billion. This was slightly ahead of company-compiled consensus of USD51.41 billion. It was driven by a sharp rise in net interest income, which benefitted from higher interest rates.
Pretax profit fell 7.3% to USD17.53 billion from USD18.91 billion. This was also slightly better than company-compiled market consensus of USD17.49 billion.
In relation to the USD10 billion sale of its Canadian banking business, HSBC said that as a "priority use" of the sale proceeds, the board will consider a special dividend of USD0.21 per share. HSBC declared a second interim dividend of USD0.23 per share for 2022, bringing the annual total to USD0.32. This is up from the total of USD0.25 in 2021.
"A marginal element of profit-taking has been witnessed in early trade, but HSBC is a group to monitor for the long term. Indeed, the market consensus of the shares as a buy is likely to be consolidated by HSBC's evident progress," said interactive investor's Richard Hunter.
InterContinental Hotels was down 1.8%.
The hotel and resort chain reported pretax profit of USD540 million for 2022, up 50% from USD361 million in 2021.
Revenue totalled USD3.89 billion in 2022, up 34% from USD2.91 billion in 2021. This was in line with expectations of USD3.9 billion from UBS and just below expectations of USD3.97 billion from Jefferies.
IHG raised its total annual dividend by more than 60%, and announced a new USD750 million share buyback.
Looking forward, InterContinental, whose brands also include Regent, Holiday Inn and Crowne Plaza, expects to see continued strong leisure demand in many markets, alongside a further return of business and group travel and the re-opening of China.
In the FTSE 250, Wizzair fell 3.5% as Barclays cut the stock to 'underweight' from 'overweight'.
On AIM, UK Oil & Gas shares added 16%.
The oil and gas explorer and producer said the competent person's report for its Loxley Gas discovery in Surrey, England showed showed the net present value of its 2C recoverable gas ranges from GBP123.7 million to GBP86.5 million net to UKOG, depending on gas price forecasts.
"Its potential future revenue streams have the capacity to deliver material shareholder value in the foreseeable future," said CEO Stephen Sanderson.
In New York, markets were closed for a public holiday on Monday. Stock indices were pointed to open down 0.7% to 1.2% on Tuesday.
In Asia on Tuesday, the Nikkei 225 index lost 0.2%, as data showed growth in Japan's private sector steadied in February.
The au Jibun Bank flash composite purchasing managers' index was unchanged from January at 50.7 points. At above the 50-point no-change mark, it shows the private sector as a whole saw marginal growth in February.
A boost to activity in the services sector was offset by a decline in manufacturing, which saw a sharp drop in new orders and production.
In China, the Shanghai Composite added 0.5%, while the Hang Seng index in Hong Kong was down 1.8%. The S&P/ASX 200 in Sydney closed down 0.2%.
Gold was quoted at USD1,835.15 an ounce early Tuesday, lower than USD1,843.50 on Monday. Brent oil was trading at USD83.37 a barrel, edging up from USD83.29.
Still to come on Tuesday's economic calendar, there is a flash PMI print for the UK at 0930 GMT, followed by the same for the US at 1445 GMT.
The eurozone flash composite PMI for February was a better-than-expected 52.3 points, up from 50.3 in January.
By Elizabeth Winter, Alliance News senior markets reporter
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