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(Alliance News) - Stock prices in London closed lower on Wednesday, with some poorly-received updates from high profile names keeping a lid on enthusiasm, ahead of a key US inflation reading on Thursday.
Negative headlines from China's real estate sector also hurt stock markets.
The FTSE 100 index ended down 58.04 points, 0.8%, at 7,624.98. The FTSE 250 closed down 150.08 points, 0.8%, at 19,013.58, and the AIM All-Share fell 7.61 points, 1.0%, at 738.04.
The Cboe UK 100 ended down 0.8% at 763.50, the Cboe UK 250 closed down 0.9% at 16,375.33, and the Cboe Small Companies lost 0.8% to 14,456.21.
In European equities on Wednesday, the CAC 40 in Paris added 0.1%, while the DAX 40 in Frankfurt rose 0.3%.
The pound was quoted at USD1.2656 late on Wednesday in London, down compared to USD1.2693 at the equities close on Tuesday. The euro stood at USD1.0835, lower against USD1.0854. Against the yen, the dollar was trading at JPY150.73, higher compared to JPY150.41.
The dollar was on the up as traders digested data showing the US economy enjoyed slightly weaker, though still lofty, fourth-quarter growth.
The US economy grew at a slightly weaker pace than previously expected in the final quarter of 2023, according to data on Wednesday.
According to a second estimate from the Bureau of Economic Analysis, real gross domestic product increased by 3.2% quarter-on-quarter on an annualised basis in the three months to December 31.
"This is the second reading of GDP and there is one more release to go, but so far it looks like a soft landing has already happened for the US economy. But, far from make life easy for the Fed, it actually makes it harder, as this data doesn't give a clear signal about when the Fed should cut rates," XTB analyst Kathleen Brooks commented.
"It is also worth noting that GDP is backward looking data, and the Fed will be watching more timely indicators from 2024 before it decides policy. The economic data this week has been mixed so far. Durable goods orders were weaker than expected, confidence indicators also slipped considerably."
Eyes now turn to a key US inflation reading on Thursday. According to FXStreet-cited consensus, the headline annual personal consumption expenditures inflation rate is to ease to 2.4% in January, from 2.6% in December. The core reading, the Fed's preferred inflationary gauge, is to ebb to 2.8% from 2.9%.
In New York, the Dow Jones Industrial Average was down 0.2%, the S&P 500 fell 0.1% and the Nasdaq Composite down 0.3%.
In London, shares in St James's Place tumbled 22%. The stock added to a precipitous fall suffered in recent months, after the wealth manager was sent to an annual loss and forced to chop its dividend by a provision for client refunds.
The company swung to an annual attributable pretax loss of GBP4.5 million, compared to a GBP503.9 million profit in 2022. This was almost entirely due to a provision of GBP426.0 million for "potential client refunds linked to the historic evidencing and delivery of ongoing servicing".
On the back of the results, St James's Place declared a final dividend of 8.00 pence, cut from 37.19p. This lowered its full-year dividend to 23.83p from 52.78p.
Looking at its dividend going forward, St James's Place said the annual dividend will be 50% of underlying cash result. It plans to pay a fixed annual dividend of 18.0p in the years 2024 to 2026, with share buybacks making up the remainder returns.
Reckitt dropped 12%.
The firm, which owns brands such as painkiller Nurofen and disinfectant Dettol, said like-for-like sales in the three months to December 31 fell 1.2%, compared to growth of 5.6% in the same quarter a year ago.
This was below the market consensus, which had expected growth of 1.8%.
Revenue in the period declined 7.0% to GBP3.56 billion from GBP3.83 billion a year ago.
For 2023 as a whole, revenue edged up by 1.1% to GBP14.61 billion from GBP14.45 billion.Pretax profit fell 25% to GBP2.40 billion from GBP3.01 billion.
AJ Bell analyst Russ Mould remarked: "So much for the idea that big brand owners are bulletproof during periods of higher inflation."
Also on the decline, Taylor Wimpey fell 4.8% as a tough week for housebuilding stocks continued. The market was disappointed by its guidance on completions for the new year.
The housebuilder expects completions in the range of 9,500 to 10,000 homes in 2024, up to 12% lower year-on-year. Completions in 2023 fell 23% to 10,766 homes.
Davy said the outlook was 6% below consensus, and 5% below the broker's own forecast.
Shares in housebuilders were already under the pressure this week, with the UK Competition & Markets Authority investigating an under-delivery of homes by construction companies.
Halfords plummeted 27%.
Halfords cut its annual profit forecast, after seeing "further material weakening" in three of its four core markets, which has resulted in a "significant" drop in like-for-like revenue growth in its Retail business.
The retailer now expects underlying pretax profit for the 52-week period to March 29 to be between GBP35 to GBP40 million, a downgrade from its guidance of GBP48 to GBP53 million last month.
On the up, Direct Line Insurance jumped 23% after receiving a takeover approach from Belgium's Ageas.
The terms of the bid from the Brussels-based insurer were 100 pence per share cash plus one new Ageas share for every 25.24047 Direct Line share. As at closing on February 27, the proposal implied a value of 233p per Direct Line share.
Bromley, England-based Direct Line labelled the takeover tilt as "unattractive" and "uncertain", however.
Elsewhere in London, Anglo American fell 3.0%, one of the worst performers in a tough day for mining shares.
The stock was hit by news that a petition to wind up debt-hit Country Garden Holdings has been filed in a Hong Kong court, the latest Chinese property developer to face possible liquidation.
The petition, filed by a lender demanding payback of approximately HKD1.6 billion, or USD204 million, came weeks after Hong Kong's High Court granted a similar petition against peer Evergrande, which is more than USD300 billion in debt, kickstarting its offshore assets liquidation and management replacement.
Brent oil was quoted at USD81.78 a barrel at the time of the London equities close on Wednesday, down from USD82.25 late Tuesday. Gold was quoted at USD2,033.68 an ounce, down against USD2,033.79.
A petition to wind up debt-hit Country Garden has been filed in a Hong Kong court, the company said Wednesday, the latest Chinese property developer to face possible liquidation.
Thursday's economic calendar has the US PCE index reading at 1330 GMT. Before that, there is the latest UK Nationwide house price index at 0700 GMT. There is an inflation reading from Germany at 1300 GMT.
In the local corporate calendar, there are annual results from London Stock Exchange Group, British Airways owner International Consolidated Airlines Group and property investor Hammerson.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
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