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(Alliance News) - Equity trading is set to remain cautious in London on Wednesday, as investor sentiment continues to steady after the recent turbulence in the banking sector.
In early economic news, consumer sentiment improved slightly in Germany. At 0930 BST, there will be UK figures for mortgage approvals and lending from the Bank of England.
"UK mortgage approvals have seen a sharp slowdown in the last few months as higher interest rates and the rising cost of living serves to crimp demand, even as the lead-up to Christmas tends to see a slowdown in demand," CMC Markets' Michael Hewson noted.
"In January mortgage demand fell to its lowest level since 2020 at 39,600, and today's February numbers aren't expected to see a significant pickup with expectations of around 40,000.
In UK company news, retailer Next reported modest annual growth but guided for a tougher year ahead, while Essentra suffered a wider annual loss but said orders in 2023 so far were ahead of the prior year's levels.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 9.5 points, 0.1%, at 7,493.75
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Hang Seng: up 2.2% at 20,215.49
Nikkei 225: closed up 1.3% at 27,883.78
S&P/ASX 200: closed up 0.2% at 7,050.30
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DJIA: closed down 37.83 points, 0.1%, at 32,394.25
S&P 500: closed down 0.2% at 3,971.27
Nasdaq Composite: closed down 0.5% at 11,716.08
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EUR: flat at USD1.0836 (USD1.0839)
GBP: down at USD1.2317 (USD1.2339)
USD: up at JPY131.86 (JPY130.98)
GOLD: down at USD1,963.42 per ounce (USD1,967.14)
OIL (Brent): up at USD79.04 a barrel (USD78.09)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 BST UK lending to individuals
09:45 BST UK Chancellor Jeremy Hunt appears before Treasury Committee of Parliament
UK BoE MPC Member Catherine Mann speaks
07:00 EDT US MBA weekly mortgage applications survey
US House Financial Services Committee hearing on SVB and Signature Bank failures
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German consumer sentiment "painted a mixed picture" in March, according to the latest Growth for Knowledge survey. Income expectations continued to improve, but the propensity to buy did not change much. Economics expectations fell slightly, after four consecutive increases. In April, GfK forecasts minus 29.5 points, up slightly from minus 30.6 points in March. "Income expectations are currently benefiting from the recent noticeable drop in energy prices, especially for gas and heating oil. Nevertheless, inflation will remain high this year," explained GfK consumer expert Rolf Burkl.
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The Irish economy is set to grow into next year as inflation is forecast to stabilise, according to the ESRI. The think tank has predicted that Ireland's domestic economic activity will grow by 3.8% in 2023 and by 3.9% in 2024, leading to a Irish government budget surplus in both years. In its latest quarterly economic report, the ESRI said it expects inflation "to moderate considerably" due to falling energy costs, dipping to an average of 4.5% in 2023 and down further to 3.5% next year.
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BROKER RATING CHANGES
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Barclays cuts Smith & Nephew to 'underweight'
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UBS raises Spirent Communications to 'buy' (neutral) - price target 244 (280) pence
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Berenberg raises ITM Power to 'hold' (sell) - price target 95 (100) pence
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COMPANIES - FTSE 100
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Clothing and homewares retailer Next hailed a "good year" in 2022 despite various challenges, but expects a "difficult" year ahead. In the financial year that ended in January, revenue rose 8.8% to GBP5.03 billion from GBP4.63 billion the year before, as total trading sales rose 8.4% to GBP5.15 billion. Total pretax profit edged up 5.7% to GBP869.3 million from GBP823.1 million. The board proposed a final dividend of 140 pence, taking the total payout for the year to 206p. Next said it intends to maintain the 206p payout for the new financial year, based on achieving its pretax profit guidance of GBP795 million. It expects total full price sales to decline by 1.5% in financial 2024 from financial 2023, with the first half performance to be weaker than the second half. "Selling price inflation is forecast to be more benign that previously thought," Next said.
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COMPANIES - FTSE 250
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Components company Essentra said annual revenue in 2022 rose to GBP337.9 million from GBP301.7 million, as its pretax loss widened to GBP29.1 million from GBP7.1 million. Essentra recommended an final ordinary dividend of 1.0p per share, bringing the total payout to 3.3p, just over half of the 6.0p paid out in 2021. Essentra said it also will begin its GBP60 million buyback programme, to repurchase ordinary shares at 25p each. The programme, which returns the proceeds from its Packaging and Filters disposals, will run until no later than December 31. It intends to cancel the majority of the repurchased shares, reserving a portion for its share option schemes. It will also pay out a special dividend of 29.8p in relation to the disposal. Essentra said it outlook for 2023 remains unchanged. "Although we continue to see distributor destocking, trading in Europe continues to be robust and China's reopening will increasingly benefit our business in Asia," Essentra said. In the year to date, like-for-like orders are 8% ahead of 2022 levels.
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OTHER COMPANIES
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UBS has enlisted the help of its former chief executive officer, following its takeover of Credit Suisse. Sergio Ermotti, currently chair at reinsurer Swiss Re, will retake the helm of the Swiss bank next month. Ermotti was previously CEO of UBS from late 2011 to October 2020, during which time he "successfully repositioned UBS following the severe challenges arising from the global financial crisis", the bank asserted. Incumbent UBS CEO Ralph Hamers has "agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country", UBS said.
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Communications cloud platform LoopUp said it expects annual revenue to be ahead of market expectations at GBP16.5 million in 2022, but below GBP19.5 million in 2021. This is due to a "material jump" in fourth-quarter revenue following the PGi Connect transaction announced back in September. LoopUp expects adjusted earnings before interest, tax, depreciation and amortisation to be in line with market expectations at a loss of around GBP1.0 million, swung from positive earnings of GBP1.2 million in 2021.
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By Elizabeth Winter, Alliance News senior markets reporter
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