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(Alliance News) - The FTSE 100 started Wednesday's session with just marginal gains after a dramatic tumble for Netflix shares kept investors cautious.
The FTSE 100 index was up just 1.14 points at 7,602.42 early Wednesday. The mid-cap FTSE 250 index was down 22.50 points, or 0.1%, at 20,939.67. The AIM All-Share index was down 0.89 of a point, or 0.1%, at 1,054.83.
The Cboe UK 100 index was down 0.1% at 756.79. The Cboe 250 was down 0.1% at 18,432.11, and the Cboe Small Companies flat at 15,343.24.
In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 40 in Frankfurt was up 0.1% early Wednesday.
European markets edged higher "despite the unravelling earnings season providing mixed messages", said Interactive Investor's Richard Hunter.
Eyes will be on Netflix when New York opens on Wednesday. The streaming service's shares tanked 26% after-hours on Tuesday on a loss in subscribers for the first time in more than a decade.
Netflix posted first-quarter net income of USD1.60 billion, or USD3.53 diluted earnings per share, down from USD1.71 billion, or USD3.75 diluted EPS. For the three months ended March 31, revenue was up 9.9% to USD7.87 billion from USD7.16 billion in the first quarter last year.
However, Netflix highlighted revenue growth had slowed considerably. The firm pointed to a large number of households sharing accounts, combined with rising competition from the likes of Hulu, Apple and Walt Disney, which has stifled revenue growth.
Netflix reported a loss of 200,000 subscribers during the first quarter, having previously guided to add 2.5 million net subscribers during the period.
"While rising interest rates have made investors much more discerning about valuations, the main streaming platforms had already been coming under pressure from increased competition with the likes of Disney+, Amazon Prime and Apple TV+ , these companies are now having to contend with evidence of slowing growth in subscriber numbers, amidst rising inflation levels," said Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 edged up in early trade with CRH leading the gainers, shares up 1.9% in opening dealings.
The building materials firm reported a good start to 2022 with first-quarter sales, earnings and margins ahead of a year ago. Sales growth has been supported by improved activity levels and "continued execution" of its integrated solutions strategy.
CRH expects sales, earnings before interest, tax, depreciation and amortisation, and margin for the first half of 2022 to be ahead of a year before, with the positive demand backdrop in North America to continue.
"The continued delivery of our solutions strategy resulted in a good start to the year. Although a number of challenges and uncertainties continue, our demand backdrop remains favourable and absent any major dislocations in the macroeconomic environment, we expect first-half sales, Ebitda and margin to be ahead of the prior year period," said Chief Executive Albert Manifold.
Dragging on the blue-chips was Rio Tinto, falling 2.7% to be the worst performing FTSE 100 stock early Wednesday. The miner reported a "challenging" quarter for its key Pilbara iron ore operations, though the company left annual guidance unchanged.
In the first three months of 2022, total iron ore shipments from the Western Australia-located asset fell 8% annually to 71.5 million tonnes. Quarter-on-quarter, shipments declined by 15%. Iron ore production from Pilbara fell 6% yearly to 71.7 million tonnes and 15% from the fourth quarter of 2021.
"Pilbara operations had a challenging first quarter, as expected, as ongoing mine depletion was not offset by mine replacement projects, with delayed commissioning of Gudai-Darri (first ore still forecast for the second quarter of 2022) and ongoing commissioning challenges at the Mesa A wet plant continuing to impact production ramp up at Robe Valley," Rio Tinto said.
The miner also noted Covid-19 hit labour supply at Pilbara.
"We experienced increased cases on-site in the Pilbara following the Western Australian border opening in March," Rio Tinto said.
Towards the bottom of the FTSE 250 was John Wood Group, down 6.4%. The consulting and engineering firm reported a narrowed annual loss and revealed Chief Executive Robin Watson intends to retire.
Watson was appointed CEO in January 2016, having joined the board in 2013 as CEO of Wood's PSN division. The process to appoint his replacement will now commence, and Watson will remain in his role until the successor is in place.
Turning to the results, John Wood posted revenue of USD6.40 billion for 2021, down 15% from USD7.56 billion in 2020. Pretax loss narrowed to USD80.6 million from USD148.6 million. The year was described as "challenging" amid the pandemic and pressures across end markets.
QinetiQ rose 2.2% after guiding to annual results marginally ahead of both previous guidance and current market consensus.
The defence technology firm said order intake for the year to March 31 was "very strong" at more than GBP1.2 billion, and it expects to deliver organic revenue growth of 5% with an underlying operating profit of at least GBP135 million. For the 2021 financial year, QinetiQ delivered underlying operating profit of GBP151.8 million.
Petropavlovsk tumbled 24% after saying Russian lender Gazprombank, which is on the UK sanctions list, has sent a notice demanding the repayment of loans.
Gazprombank wants immediate repayment of USD201.0 million due under Petropavlovsk's committed term facility agreement with the bank and repayment by Tuesday next week of UD87.1 million due under the company's Russian subsidiaries' revolving credit facilities.
"The company is considering the implications of these notices with its advisers," said Petropavlovsk.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.9%. In China, the Shanghai Composite ended down 1.4%, while the Hang Seng index in Hong Kong was down 0.3% in late trade. The S&P/ASX 200 in Sydney closed up 0.1%.
Stocks in Shanghai moved lower despite the city allowing four million more people to leave their homes as Covid restrictions ease. A total of almost 12 million people in the city of 25 million are allowed to go outdoors following the first round of easing last week, health official Wu Ganyu said at a news conference, adding the virus was "under effective control" for the first time in some parts of the city.
On Wednesday, the Beijing government reported 19,927 new cases in China's mainland, all but 2,761 of which had no symptoms. Shanghai accounted for 95% of the total, or 18,902 cases, of which only 2,495 had symptoms.
Sterling was quoted at USD1.3014 early Wednesday, higher than USD1.2997 at the London equities close on Tuesday.
The euro traded at USD1.0812 early Wednesday, up from USD1.0785 late Tuesday. Against the yen, the dollar was quoted at JPY128.57, down versus JPY128.77.
Gold was priced at USD1,944.00 an ounce early Wednesday, down from USD1,953.33 on Tuesday. Brent oil was trading at USD108.65 a barrel, firm on USD107.80 late Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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