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(Alliance News) - Stock prices in London remained in the red at midday on Thursday as investors look ahead to Friday's US jobs report, while airlines stocks were lower as the UK government prepares to update its list of travel destinations that don't require quarantine.
The FTSE 100 index was down 55.15 points, or 0.8%, at 7,053.03. The mid-cap FTSE 250 index was down 63.07 points, or 0.3%, at 22,870.22. The AIM All-Share index was flat at 1,255.02.
The Cboe UK 100 index was down 0.7% at 702.90. The Cboe 250 was down 0.3% at 20,620.76, but the Cboe Small Companies was up 0.2% at 15,255.25.
In Paris the CAC 40 was down 0.1%, while the DAX 30 in Frankfurt was down 0.2%.
US stock market futures were pointed to a lower open ahead of the latest jobless claims figures at 1330 BST and US services PMI at 1445 BST.
The Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite all were called down 0.5%.
Analysts at ActivTrades said: "Stock indices slid lower on Thursday, extending losses registered overnight in Asia, amid decreasing appetite for riskier assets ahead of key macro data. Today's market sentiment is a reaction to the recent hawkish comments from Fed officials about tapering, confirming what many investors have been anticipating for the last couple weeks.
"However, even if the path to the end of monetary stimulus is getting clearer and clearer, investors will keep an eye on today's batch of US data ahead of tomorrow's jobs report."
In the FTSE 100, Johnson Matthey was the best performer at midday, up 0.9% at 3,101.00 pence. Jefferies raised its price target on the speciality chemicals firm to 4,200p from 4,100p and reiterated its Buy rating.
At the other end of the large-cap index, National Grid and Kingfisher were the worst performers, down 4.5% and 4.0%, respectively, after the stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.
B&M European Value Retail was 4.0% lower. The discount store chain flagged an uncertain outlook after the Covid-19 pandemic subsides, as it reported stellar annual results.
In the UK, B&M was allowed to trade through lockdowns as it was classified as an essential retailer.
For the financial year ended March 27, revenue was up 26% to GBP4.80 billion from GBP3.81 billion the year before and pretax profit doubled to GBP525.4 million from GBP252.0 million.
Adjusted earnings before interest, tax, depreciation and amortisation increased by 83% to GBP626.4 million from GBP342.3 million. In March, B&M had guided for adjusted Ebitda to be in the range of GBP590 million to GBP620 million.
The company said the B&M UK business experienced very strong sales in the last month of the financial year, with the final week being the strongest in its history which led to the Ebitda outperformance. Like-for-like revenue growth picked up from 23.0% in the first half of the year to 24.5% in the second half.
B&M declared a total dividend of 17.3 pence, more than doubled from 8.1p paid out the year before. The ordinary dividend was slightly above expectations and was in addition to GBP450 million special dividends paid in financial 2021.
Chief Executive Officer Simon Arora said: "Looking ahead, there are many uncertainties as society slowly emerges from lockdown and trading patterns are likely to be unpredictable for much of the year."
BT was down 2.9%, after Deutsche Bank downgraded the telecommunications firm to Sell from Hold.
In the FTSE 250, Chemring was the best performer, up 4.9%. The defence contractor increased its interim dividend after reporting a rise in both profit and revenue in the first half of 2021.
For the six months to April 30, pretax profit rose 28% to GBP24.3 million from GBP19.0 million a year prior. Revenue also increased, rising 3.9% to GBP198.5 million from GBP191.0 million in the first half of 2020. Chemring declared an interim dividend of 1.6 pence, up 23% from 1.3p in 2020.
Pennon was up 2.5% after the Exeter-based water works rewarded shareholders with a special payout as it acquired its neighbour, Bristol Water.
Pennon also announced plans for a share buyback and a share consolidation, as it reported annual results. For the financial year to March 31, the utility posted revenue of GBP644.6 million, up 1.2% from GBP636.7 million the year before, but pretax profit was GBP132.1 million, down 32% from GBP193.1 million.
Pennon said it has acquired Bristol Water Holdings for an equity value of GBP425 million and enterprise value of GBP814 million from iCon Infrastructure and Itochu. Pennon also announced a return of capital to shareholders, consisting of a special dividend of GBP1.5 billion - representing 355 pence per share - and a share buy-back programme of up to GBP0.4 billion.
As part of the special dividend, Pennon intends to consolidate its share capital on the basis of two new shares for every three existing shares. Pennon declared a final dividend 14.97p, leading to an annual dividend of 21.74p, down from 43.77p.
Pennon said the special dividend equates to GBP3.55 per share after the share consolidation, while the final dividend will equate to 22.46p and the full-year dividend 32.61p.
Pennon also said it expects to increase its dividend base by 2.00p per share in financial 2022 to recognise the earnings accretion of the Bristol Water acquisition.
Travel stocks were lower ahead of the UK government's travel list update for the summer, expected later on Thursday. British Airways-parent International Consolidated Airlines was down 3.8%, while budget airlines easyJet and Ryanair were down 3.1% and 2.1%, respectively.
The pound was quoted at USD1.4188 at midday, firm from USD1.4182 at the London equities close Wednesday, recovering from an intraday low of USD1.4144 in early trade, after positive UK PMI data.
UK services sector activity saw its quickest pace of growth since 1997 in May as Covid-19 restrictions were eased further.
The IHS Markit-CIPS UK services purchasing managers' index print was 62.9 points in May, up from 61.0 in April and markedly improved from the earlier flash reading for May of 61.8. The composite PMI score was 62.9 points in May, up from 60.7 in April and higher than the preliminary reading for May of 62.0.
The euro was priced at USD1.2190, down from USD1.2214, despite upbeat PMI data from the continent.
The services sector in the eurozone showed further growth in May, with the continent also benefiting from easing Covid restrictions and with further expansion expected as vaccination programmes pick up.
The IHS Markit eurozone purchasing managers' index services business activity index jumped to its highest level for just under three years in May, recording 55.2 points, up from 50.5 in April and slightly above the flash reading for May of 55.1.
All nations recorded an improvement in activity since April, albeit with some considerable differences in growth rates. Ireland and Spain led the way, followed by France. The biggest EU economy, Germany, recorded the slowest expansion.
The eurozone composite output index surged to 57.1 points in May from 53.8 in April and improved on the flash reading of 56.9.
Against the yen, the dollar rose to JPY109.72 from JPY109.61.
Brent oil was quoted at USD71.27 a barrel at midday on Thursday, up from USD70.96 late Wednesday in London. Gold stood at USD1,895.77 an ounce, lower from USD1,904.77.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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