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(Alliance News) - A busy day for UK corporate news saw stocks in London finish with moderate losses on Tuesday, with Reckitt Benckiser weighing on the FTSE 100 index and Moonpig tugging on the mid-cap FTSE 250.
To come is a deluge of tech earnings in the US after the New York market close, with Wall Street looking wobbly ahead of reports from Apple, Alphabet and Microsoft.
The FTSE 100 index closed down 29.35 points, or 0.4%, at 6,996.08. The FTSE 250 ended down 56.18 points, or 0.2%, at 22,877.01, and the AIM All-Share closed down 2.57 points, or 0.2%, at 1,231.11
The Cboe UK 100 ended down 0.3% at 697.19, the Cboe UK 250 closed flat at 20,656.01, and the Cboe Small Companies ended up 0.2% at 15,234.94.
In European equities on Tuesday, the CAC 40 in Paris fell 0.7% and the DAX 30 in Frankfurt ended down 0.6%.
"The rout in Chinese markets continued today with the Hang Seng sliding to a nine-month low, which in turn has bled into wider market sentiment in Europe today," said CMC Markets chief market analyst Michael Hewson, though he noted that the fallout "looks contained" for now.
London's FTSE 100 index ended with moderate losses after Reckitt Benckiser shares slumped 8.4% as the consumer goods firm cautioned on cost inflation.
CMC's Hewson commented: "Having seen Unilever shares take a nosedive after reporting their latest numbers last week over concern about their margins, Reckitt Benckiser shares have also tumbled for the same reason."
The Dettol disinfectant maker swung to a first half pretax loss of GBP1.94 billion, from a GBP1.44 billion profit a year earlier. Reckitt suffered a GBP3.00 billion hit related to the remeasurement of IFCN China, the infant nutrition business that it has agreed to sell to Beijing-based investment firm Primavera Capital Group for USD2.2 billion.
Chief Executive Laxman Narasimhan cautioned that cost inflation accelerated during the second quarter and that it will "take time to offset this headwind", with productivity and pricing actions planned for the back half of the year and early next year.
Helping to balance out Reckitt's losses somewhat was Croda International, which rallied 5.6% as it boosted full-year guidance.
The Yorkshire, England-based company said adjusted pretax profit jumped by 51% year-on-year to a record GBP229.5 million from GBP152.5 million. Sales are now "well above 2019 levels", Croda said, soaring to GBP934.0 million in the first half, 39% higher than the GBP672.9 million collected in 2020.
Croda continued its 30-year string of increasing returns, raising its interim payout by 10% to 43.5 pence per share from 39.5p last year.
Adjusted profit after tax in 2021 is expected to be "significantly ahead" of current market expectations, Croda added, after a strong start to the year.
In the FTSE 250, Moonpig shares slumped 9.3%. The company posted a sharp revenue hike in its maiden set of annual results since its float, though the greetings card retailer warned the new financial year will be less lucrative.
In the 12 months to April 30, revenue more than doubled to GBP368.2 million from GBP173.1 million. Pretax profit inched up 1.1% to GBP32.9 million from GBP31.8 million.
"As restrictions have eased, we have seen customer purchase frequency start to normalise from elevated levels, and we expect this to continue until frequency is approximately 5% ahead of pre-Covid-19 levels, in line with previous expectation," the company said.
For the current year, it expects revenue between GBP250 million and GBP260 million, so as much as a 32% decline from financial 2021. Moonpig noted this would represent up 50% growth from financial 2020, however.
Ascential fell 6.5% as it raised GBP153 million in a share placing priced at 432 pence per share, a 4.9% discount to its closing price on Monday.
Ascential had unveiled plans for the placing alongside interim results late Monday, which showed revenue jumped 37% to GBP175.1 million from GBP127.9 million a year ago. The media business anticipates that the raised funds will offer it "balance sheet flexibility" and extra cash for its M&A strategies.
Mitie rose 6.2% on a strong start to its financial year, with the Glasgow-based outsourcing and energy services company notching up to GBP1.4 billion in new contract wins and renewals in the three months that ended June 30. Revenue soared to GBP930 million in the first quarter, doubling from GBP455 million the year prior.
A busy day for UK earnings will be followed by a bumper Wall Street session, which sees results from iPhone maker Apple, Google parent Alphabet, software firm Microsoft and payments technology company Visa after the New York market close.
Stocks in New York were in the red ahead of the earnings deluge, with the Dow Jones down 0.5%, the S&P 500 index down 0.8%, and the tech-heavy Nasdaq Composite down 1.8%.
Dragging on the Nasdaq was Tesla, slumping 2.8% despite bosting USD1 billion in quarterly net income for the first time in the luxury electric car marker's history. However, it also warned on chip supply challenges.
Revenue for the second quarter of 2021 surged 98% to USD11.96 billion from USD6.04 billion a year ago. As the firm's operating margin strengthened to 11.0% from just 5.4% a year prior, GAAP net income rocketed to USD1.14 billion from USD104 million a year ago.
However, it cautioned that with global vehicle demand at "record levels", component supply will have a "strong influence" on its rate of delivery growth for the rest of the year.
"Supply chain challenges, in particular global semiconductor shortages and port congestion, continued to be present in Q2," said Tesla.
As well as Tuesday's earnings dump, US investors will also be eyeing the start of the Federal Reserve's two-day policy meeting.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
The dollar was shaky heading into the Fed meet.
The pound was quoted at USD1.3882 at the London equities close Tuesday, higher compared to USD1.3820 at the close on Monday. The euro stood at USD1.1834, up against USD1.1809 at the same time on Monday. Against the yen, the dollar fell to JPY109.66 compared to JPY110.31 late Monday.
Gold advanced as the dollar softened, quoted at USD1,802.67 an ounce at the London equities close Tuesday against USD1,799.56 at the close on Monday.
Brent oil was quoted at USD74.58 a barrel at the London equities close Tuesday, rising from USD73.99 late Monday.
Alongside the Fed decision, Wednesday's economic calendar has the BRC's shop price index overnight and then UK Nationwide house prices at 0700 BST. German import prices are due at 0700 BST and Irish retail sales at 1100 BST.
A jam-packed UK corporate calendar on Wednesday has half-year results from lender Barclays, cigarette maker British American Tobacco, precious metals miner Fresnillo, broadcaster ITV, sports car maker Aston Martin Lagonda and pharmaceutical firm GlaxoSmithKline.
By Lucy Heming; lucyheming@alliancenews.com
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