(Alliance News) - Stock prices in London opened higher on Thursday after the US Federal Reserve raised interest rates for the first time since 2018, while Ocado sank after its online grocery joint venture with Marks & Spencer warned on inflationary pressures.
Fed Chair Jerome Powell said there was little chance of a recession in the next year and noted that it was "very strong and well-positioned to handle tighter monetary policy".
Powell said the Fed was committed to using its "powerful tools" to prevent that, while a gauge of future rate hikes suggested another six could be on the cards before the end of the year.
The FTSE 100 index was up 30.54 points, or 0.4%, at 7,322.22 early Thursday. The mid-cap FTSE 250 index was up 147.34 points, or 0.7%, at 21,052.88. The AIM All-Share index was up 4.15 points, or 0.4%, at 1,019.46.
The Cboe UK 100 index was up 0.3% at 727.81. The Cboe 250 was up 0.6% at 18,574.65, and the Cboe Small Companies up 0.1% at 14,529.01.
In mainland Europe, the CAC 40 stock index in Paris rose 0.4% while the DAX 40 in Frankfurt was flat.
In the FTSE 100, Diageo was up 2.2% after JPMorgan raised the distiller to 'overweight' from 'neutral'.
At the other end of the large-caps, Ocado was the worst performer, down 7.5%. Ocado Retail, the joint venture between Ocado Group and Marks & Spencer, said revenue declined by 5.7% in the 13 weeks that ended February 27 from a year before but was up 32% from 2020.
M&S shares were off 3.0% - the worst mid-cap performer.
Retail revenue fell to GBP564.7 million from GBP599.1 million a year before. Average orders per week rose by 12% to 367,500 from 329,500, but average basket size shrank by 15% to GBP124, "as customer behaviours return towards pre-Covid levels".
Further, Ocado Retail reported inflationary pressures in the quarter. The grocer said significant increases in raw materials and product cost prices, as well as in the prices for energy, utilities and dry ice, added further cost headwinds for the grocery industry.
Ocado Retail's revenue growth, previously expected to be in the "mid-teens" will likely be closer to 10% for the full year, the company said, pointing to inflation, the war in Ukraine and a return to more normal shopping patterns.
M&G was down 4.8% and NatWest was down 2.5% after the stocks went ex-dividend meaning new buyers no longer qualify for the latest payout.
In the FTSE 250, OSB Group was the top gainer, up 12%, after the specialist lender reported robust annual results and launched a share buyback programme.
For 2021, total income rose 24% to GBP629.0 million from GBP508.6 million in 2020 and pretax profit jumped 78% to GBP464.6 million from GBP260.4 million.
OSB declared a total dividend of 26.0 pence per share, up from 14.5p paid out in 2020. In addition, OSB said it intends to commence a share repurchase programme to return up to GBP100 million to shareholders, starting on Friday.
National Express was up 1.7% after the transport operator outlined its case for its previously agreed all-share merger with public transport peer Stagecoach.
National Express said its offer presents a superior value creation opportunity compared to that of DWS, which the Stagecoach board now supports. National Express said its all-share offer for Stagecoach is worth 125p to 170p per share compared to 105p in cash from DWS.
The FTSE 250 firm said the DWS cash offer "materially undervalues Stagecoach" and asked Stagecoach shareholders to take no action on the DWS cash offer. National Express made no change to its own offer, saying it "will remain disciplined in its assessment of its options going forward".
Stagecoach was up 1.2%.
Elsewhere, Deliveroo was up 3.8% after the food delivery firm said 2021 was a year of strong growth and strategic progress, which it believes will lead to long-term profitability.
For 2021, revenue was GBP1.82 billion, up 57% from GBP1.16 billion in 2020, but Deliveroo's pretax loss widened to GBP298.2 million from GBP212.6 million. Deliveroo said delivery orders totalled 300.6 million last year, up 73% from 173.7 million orders in 2020, and gross transaction value was GBP6.63 billion, up 67% from GBP3.98 billion in 2020.
Looking ahead, Deliveroo guided for 15% to 25% growth in GTV at constant currency in 2022, with a higher growth rate in the second half than in first half, due to a stronger comparative for the first half.
Deliveroo expects to reach adjusted Ebitda breakeven at some point in the second half of 2023 or first half of 2024.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 3.5%. In China, the Shanghai Composite ended up 1.4%, while the Hang Seng index in Hong Kong gained a hefty 7.0%. The S&P/ASX 200 in Sydney closed up 1.1%.
The Hong Kong market has been off to the races over the past two days, the Heng Seng having closed up 9.1% on Wednesday. Chinese authorities on Wednesday said they would maintain capital market stability and adopt measures to handle risks for troubled property developers.
The pound was quoted at USD1.3187 early Thursday, up from USD1.3098 at the London equities close Wednesday, ahead of the Bank of England interest rate decision at midday in London.
The BoE is widely expected to enact its third successive rate hike, which would take the key Bank Rate to 0.75%.
The euro was priced at USD1.1052, higher against USD1.1005. Against the Japanese yen, the dollar was trading at JPY118.68, up from JPY118.50.
Brent oil was quoted at USD101.12 a barrel Thursday morning, up sharply from USD99.33 late Wednesday. Gold stood at USD1,940.55 an ounce, higher against USD1,908.85.
The economic events calendar on Thursday also has the latest weekly US jobless claims numbers at 1230 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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