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(Alliance News) - London shares were on the back foot in early trade on Tuesday, following New York lower after a report that Apple plans to slow hiring due to economic growth fears.
Equities on Wall Street closed down on Monday, despite stocks initially getting a boost as markets begin to price in a 75 basis point US Federal Reserve interest rate hike, and not a super-sized 100 point lift.
The FTSE 100 was down 25.30 points, or 0.5%, at 7,197.94 early Tuesday. The FTSE 250 index fell 88.05 points, or 0.5%, at 18,927.10. The AIM All-Share index was down 3.94 points, or 0.4% at 882.03.
The Cboe UK 100 index was up 0.6% at 724.02. The Cboe 250 was down 0.4% at 16,484.54, and the Cboe Small Companies was up 0.1% at 13,176.00.
In mainland Europe, the CAC 40 stock index in Paris was down 0.7%, while the DAX 40 in Frankfurt was 0.6% lower.
In China, the Shanghai Composite closed marginally higher, but the Hang Seng in Hong Kong was down 0.9% in late trade. The S&P/ASX 200 in Sydney fell 0.6%.
The Nikkei 225 closed up 0.7%. Tokyo was playing catch up after being closed for the Marine Day holiday on Monday.
"The initial corporate news had been positive as the market moves towards peak earnings, with Goldman Sachs comfortably beating earnings and profit expectations, with a strong contribution from its fixed income unit offsetting a drop in investment banking revenue. This was followed by further earnings beats from Bank of America and then after the close from technology bellwether IBM," interactive investor analyst Richard Hunter commented.
"However, Apple put the cat among the pigeons."
Bloomberg reported that the iPhone maker plans to slow hiring and spending growth in 2023 in some of its divisions to cope with a potential economic downturn.
Apple shares fell 2.0%. In Seoul, Samsung Electronics lost 1.6% in a negative read-across, while fellow consumer electronics maker Xiaomi was 1.7% lower in Hong Kong.
The economic events calendar on Tuesday has eurozone inflation readings at 1000 BST.
Already out, the UK unemployment rate remained unchanged in the three months to May, in line with market expectations, figures on Tuesday showed. The jobless rate was 3.8%, the same level as in the three months in April, according to the Office for National Statistics. A year earlier, the unemployment rate had sat at 4.9%.
The latest figure was in line with FXStreet cited consensus.
Wage growth figures, meanwhile, were less positive.
Average earnings including bonuses rose 6.2% on an annual basis, slowing from 6.8% in the reading for April and below FXStreet-cited consensus of 6.9%. Excluding bonuses, wages grew 4.3%, in line with consensus and picking up from 4.2% growth in April.
That means UK earnings by both measures continue to lag consumer price inflation, which ran at 9.1% in May.
Analysts at ING commented: "Ultimately, this jobs market data isn't – on its own – going to change any minds on the Bank of England's policy committee. Those that have been pushing for more aggressive, 50 basis-point increases are worried that shortages in the jobs market will persist, keeping pressure on pay. Those in the majority that have so far backed steadier, 25bp rate rises, will focus on the fact that the jobs market is no longer tightening."
The pound was quoted at USD1.1995 early Tuesday in London, flat from USD1.1994 late Monday. The euro stood at USD1.0212, up from USD1.0167. Against the yen, the dollar was trading at JPY137.80, down from JPY138.17.
In London, Made.com shares tumbled 39% in early trade. The furniture retailer lowered guidance as consumer purse strings tighten. It also hinted at a potential fundraise.
Gross sales in the first half of 2022 were 19% lower year-on-year, though up 55% from pre-virus levels.
"Recent trading has been volatile, and the worsening of consumer confidence has impacted demand for discretionary big-ticket items, making new customer acquisition at financially attractive rates challenging," Made.com cautioned.
Profit for 2022 will take a GBP20 million one-off hit from clearance work related to excess inventory and additional costs in its supply chain.
For 2022, Made now expects gross sales to fall by between 15% to 30%. It had previously expected an outcome ranging from flat sales to a 15% fall.
Revenue guidance has been lowered to a range of a 9% fall to a 24% fall from between 8% growth and a 7% decline previously.
"Management is considering options to allow the company to strengthen its balance sheet," the company added.
Wise added 12%. It has kicked off its new financial year with growth in revenue and volumes.
In the three months ended June, the international money transfer service provider said revenue grew 51% yearly to GBP185.9 million from GBP123.5 million. Quarter-on-quarter, revenue was up 21%.
Transaction volumes were 49% higher yearly and 14% higher quarterly at GBP24.4 billion.
"Volume growth was driven by a higher number of active customers that are increasingly using the Wise Account and Wise Business products, which in turn also leads to a higher average volume per customer. The growth also reflects to a lesser extent, more variable drivers which include people and businesses responding to increased levels of FX volatility and the translation impact from FX movements which was a tailwind in the quarter, compared with a headwind in FY22. On a constant currency basis volume grew 45% year-on-year," Wise explained.
Wise left revenue guidance unchanged. It still expects annual growth of between 30% and 35% for financial 2023.
Photo-Me International rose 11%, after reporting its first-half outturn was boosted by easing virus restrictions.
A removal of travel curbs has meant "increased demand for passports and other official documentation", while the company's photo booth business as benefitted from an easing of social restrictions.
The Surrey-based firm provides instant-service equipment, including its photo booths but also self-service laundry.
Revenue in the six months to April 30 rose 22% to GBP115.3 million from GBP94.6 million a year earlier. Pretax profit surged 66% to GBP19.9 million from GBP12.0 million.
Photo-Me declared a 2.6 pence interim dividend, having not paid one a year earlier. It also declared a 6.5p special payout.
Among mid-caps, 4imprint said it expects to meet or even exceed it target of USD1 billion revenue for 2022. The stock shot up 12%.
The London-based marketer of promotional merchandise also said its operating profit expectations have improved "substantially".
It expects operating profit above consensus forecasts of USD75 million, which would be more than doubled from USD30.7 million.
There was a hint of caution, however: "The board is aware that, whilst reflecting current operational and trading visibility, these improved expectations for the group's financial performance come in the context of considerable uncertainty in the form of geo-political and broad economic factors, including the threat of recession. These factors could affect the group's performance during the remainder of 2022."
Informa was the best FTSE 100 performer, adding 4.0%. It reaffirmed its full-year guidance after reporting strong growth in the first half of 2022.
It also said it will resume ordinary dividends will resume alongside its interim results at 3.0 pence per share.
The London-based publisher and events organiser Informa still expects revenue between GBP2.15 billion to GBP2.25 billion for 2022, with adjusted operating profit between GBP470 million to GBP490 million.
At best, this would represent revenue growth of 25% from GBP1.80 billion in 2021 and adjusted operating profit growth of 26% from GBP388.4 million.
Guidance does not include any contribution from Industry Dive, which Informa announced it has acquired for up to USD525 million. The initial cash consideration is USD389 million.
"Industry Dive brings a scalable, single proprietary technology platform, which will enable us to expand our digital services capabilities and deliver content led services to our B2B audiences," Informa said.
Informa said that for the first half of 2022, it expects to report underlying revenue growth of 40%, helped by a return of live events.
Brent oil was quoted at USD106.59 a barrel early Tuesday in London, up from USD105.55 at the European equities close on Monday. Gold stood at USD1,709.22, largely flat from USD1,709.33.
By Eric Cunha; ericcunha@alliancenews.com
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