Next Share News (NXT)

(Alliance News) - European markets hovered at the open on Wednesday, with investors deciding against big moves ahead of a monetary policy decision from the US Federal Reserve later.

The FTSE 100 index was up just 0.050 of a point at 7,274.86 early Wednesday. The mid-cap FTSE 250 index was up 25.53 points, or 0.1%, at 23,165.53. The AIM All-Share index was up 2.79 points, or 0.2%, at 1,230.38.

The Cboe UK 100 index was flat at 721.02. The Cboe 250 was little changed at 20,709.53, and the Cboe Small Companies flat at 15,574.62.

In mainland Europe, the CAC 40 in Paris was flat while the DAX 40 in Frankfurt was down 0.1% early Wednesday.

Europe followed the lead of a mixed Asian session, as investors cautiously await a likely QE taper announcement from the Fed.

The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its monetary policy decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.

A move this week was all but confirmed by Powell on Friday, when he said the central bank is "on track" to begin to pull back on its massive monthly bond purchases, which would be completed by mid-2022, he said. But "it would be premature to actually tighten policy by raising rates now with the effect and intent of slowing job growth."

Victoria Scholar, head of investment at Interactive Investor, said: "For taper tantrum limitation purposes, the Fed has been clearly signposting the matter in its policy meeting minutes. The Fed is likely to cut its Treasury bond buying by USD10 billion per month and downsize its mortgage-backed security purchases by USD5 billion a month, starting in November and winding up the entire stimulus programme by June."

The dollar nudged down ever-so-slightly into the Fed announcement.

Sterling was quoted at USD1.3616 early Wednesday, slightly higher than USD1.3614 at the London equities close on Tuesday. The euro traded at USD1.1587, firmer than USD1.1580 late Tuesday. However, against the yen, the dollar edged up to JPY113.87 versus JPY113.81.

In China, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong was down 0.3%. The S&P/ASX 200 in Sydney rose 0.9%. Tokyo was closed for a holiday.

Besides the Fed, the economic events calendar on Wednesday has services PMI readings from the UK at 0930 GMT and the US at 1345 GMT. There is US ADP hiring data at 1215 GMT.

Darktrace, down 6.0%, and Next, down 2.5%, were dragging on London's FTSE 100 in early trade.

A fund managed by Vitruvian Partners has sold 11.0 million shares in cybersecurity firm Darktrace at a price of 580 pence each, raising GBP63.8 million. The price was an 8.3% discount to Darktrace's closing price of 632.5p on Tuesday.

The sale, first announced after the market close on Tuesday, was carried out by Deep Defence, a wholly-owned subsidiary of Vitruvian Investment Partnership III, a fund managed by Vitruvian Partners. Vitruvian will retain just shy of a 3% stake in Darktrace following the placing and has agreed to a 60-day lockup for these shares. Darktrace will not receive any of the placing proceeds.

Next fell, meanwhile, as it expects growth to wane after a strong third quarter.

Total full price sales were up 17% on two years ago in the third quarter ended October 30, with sales in the last five weeks up 14%.

"As expected, sales growth has moderated in the last five weeks as the effect of pent-up demand begins to diminish," said Next.

It does not expect this pace of growth to continue, citing a likely easing of pent-up demand, "challenging" stock availability and a possible moderation in discretionary purchases after jumps in prices for essential goods, such as fuel.

Next now expects full-year sales to grow 11.0% on two years ago, as opposed to 10.7% guided previously, but its pretax profit guidance was held at GBP800 million, which would be up 6.9% on two years prior.

"During the last five weeks we have beaten our full price sales forecast by GBP14 million which generated around GBP4 million of profit. We anticipate that this will be largely offset by further investment in digital marketing and increased use of inbound air freight and other online distribution costs," the retailer said in its statement.

Anglo American rose 2.2% in a positive start for the broader mining sector after appointing Duncan Wanblad as chief executive officer, succeeding Mark Cutifani, who is leaving after nine years in the role.

Wanblad led the miner's Base Metals business as CEO from 2013 to 2019, and took on the Strategy & Business Development portfolio as group director in 2016. Anglo American Chair Stuart Chambers said Wanblad is "the standout and natural successor" to Cutifani.

Morgan Sindall rose 2.2%. The construction firm now expects to deliver a full-year performance slightly ahead of prior expectations following recent strong trading.

The company said it has had a "significant period" of winning work, with the total secured workload at the end of September standing at GBP8.9 billion, up 7% from the year-end position. Within this, the construction secured order book of GBP4.7 billion was up 20% from the 2020 year-end.

"Based on the performance to date and with good visibility of secured workload through to the end of the year, it is now expected that the group will deliver a full-year performance which is slightly above its previous expectations," said Morgan Sindall.

Pets at Home fell 2.4%. While the pet products retailer upgraded guidance, it said Chief Executive Peter Pritchard plans to step down after 11 years in the business following its "successful turnaround".

He will remain "fully engaged" in his CEO role until late May next year and the search for his replacement, across internal and external candidates, has started.

Alongside this, the retailer said strong trading has continued, and it now expects underlying pretax profit for the financial year ending March 31 to be at the top end of analyst expectations, ahead of previous guidance. It places the current analyst consensus range at GBP128 million to GBP135 million.

By Lucy Heming; lucyheming@alliancenews.com

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