LONDON MARKET MIDDAY: Europe lower but tech earnings to lift New York

(Alliance News) - Stock prices in London were lower at midday on Wednesday, despite a strong performance from housebuilders in the FTSE 100, on the back of a well-received update from Persimmon.

The FTSE 100 index was down 26.69 points, or 0.4%, at 7,864.44. The FTSE 250 was down 48.52 points, or 0.3% at 19,166.87, and the AIM All-Share was down 4.00 points, or 0.5%, at 820.26.

The Cboe UK 100 was down 0.4% at 786.63, the Cboe UK 250 was down 0.2% at 16,785.98, and the Cboe Small Companies was down 0.4% at 13,733.82.

In European equities on Wednesday, the CAC 40 in Paris was down 1.0%, while the DAX 40 in Frankfurt was down 0.7%.

European markets are tetchy as poor quarterly results from US regional lender First Republic put banking sector worries back on the agenda.

Results from big technology firms late Tuesday lifted the mood enough to ensure shares in Europe have so far averted the sort of slides seen in New York overnight.

"The FTSE 100 and the other big European indices managed to avoid the big losses seen in the US overnight. Strong results from the tech sector after Wall Street had packed up and gone home for the day helped to steady nerves after renewed concerns about the banks," AJ Bell analyst Russ Mould commented.

Stocks in New York were called largely higher on Wednesday. The Dow Jones Industrial Average was called down 0.1%, while the S&P 500 index was called up 0.2%, and the Nasdaq Composite up 1.1%.

On Tuesday, the Dow lost 1.0%, the S&P dropped 1.6% and the Nasdaq slid 2.0%.

Microsoft reported increased revenue and earnings in its financial third quarter, boosted by solid growth in its cloud division, sending its shares 7.6% higher in the New York pre-market on Wednesday.

Alphabet said its first-quarter profit was down, despite rising revenue, as total costs and expenses widened.

In the three months that ended March 31, the Google parent company said net income fell to USD15.05 billion from USD16.44 billion a year earlier. Revenue rose to USD69.79 billion from USD68.01 billion.

Alphabet shares A shares were nonetheless 0.9% lower in New York during pre-market on Wednesday.

Microsoft's stock was up 7.0% in pre-market trade.

That was despite the UK's antitrust watchdog preventing its deal to acquire video game maker Activision Blizzard. Activision was down 11% in pre-market activity.

The UK Competition & Markets Authority said the deal was blocked to "protect innovation and choice in cloud gaming".

Still to come on Wednesday are earnings from Facebook owner Meta Platforms.

The dollar remained bruised from the sour sentiment around the US banking sector.

"The re-emergence of bank stress reverberated through the US markets yesterday, downgrading the perceived chances of a [US Federal Reserve] hike next week and sending the US 2-year yield sharply lower," Marc Chandler at Bannockburn, this, he added, "hobbled" the dollar.

The pound was quoted at USD1.2482 at midday on Wednesday in London, sharply higher compared to USD1.2404 at the close on Tuesday.

The euro stood at USD1.1051, higher against USD1.0983. Against the yen, the dollar was trading at JPY133.45, lower compared to JPY133.98.

In London, housebuilders remained the top performing stocks in the FTSE 100, with Persimmon the best blue-chip stock, up 5.5% at midday.

The housebuilder said it expects to reach the top end of its 2023 expectations, despite a drop in sales in the first quarter on an annual basis.

Numbers suggest that the housing market has picked up from the fourth quarter, however.

It reported net private sales per outlet of 0.62, down 37% from 0.98 a year ago, but up from 0.30 in the final quarter of 2022.

The firm noted that forward sales also dropped on a yearly basis to GBP1.7 billion, 30% less than GBP2.4 billion the year prior, but up compared to GBP1.0 billion in the final quarter of 2022.

Persimmon said it expects full-year new home completions at the top end of its 8,000-9,000 guidance, "if sales rates continue around the level seen year to date".

Fellow housebuilders Taylor Wimpey and Barratt Developments climbed 2.6% and 2.1%, respectively, in a positive read-across.

Putting pressure on the FTSE 100, meanwhile, was CRH, which fell 4.3% as it backed its half-year outlook but noted a challenging environment in Europe.

The building materials company said that reported sales in the first quarter of 2023 were up 7% year-on-year.

Reported sales increased in Americas Materials Solutions and Americas Building Solutions by 10% and 22%, respectively. However, in both Europe Materials Solutions and Europe Building Solutions sales fell by 1%.

Looking ahead, CRH said that it expects its Americas segment to experience "robust infrastructure demand, good activity in key non-residential segments, continued pricing progress and positive contributions from acquisitions" in the first half of the year.

However, the company expects a more challenging backdrop in Europe, driven by continued inflationary pressures and some slowdown in the new-build residential sector.

In the FTSE 250, Drax climbed 3.2% as the power generation firm set out a confident outlook despite a recent carbon capture blow in the UK.

Yorkshire, England-based Drax said it expects adjusted earnings before interest, tax, depreciation and amortisation for 2023 to be line with consensus of GBP1.2 billion. This would be up 64% from the GBP731 million achieved in 2022.

Drax also said a share buyback programme of GBP150 million will start during the current quarter.

Elsewhere in London, Trifast jumped 13%. The industrial fastenings and component manufacturer predicts that adjusted pretax profit for the financial year that ended March will be marginally ahead of its previous guidance.

It put this down to higher annual revenue and its pricing actions.

In Paris, Kering shares fell 2.9%. The luxury goods firm late Tuesday reported first-quarter sales growth, though the Gucci owner's progress fell well short from growth seen from its peers.

It said first-quarter revenue amounted to EUR5.08 billion, up 2% year-on-year. Kering noted "good momentum in Western Europe and Japan", though revenue weakened in North America. Growth resumed in Asia Pacific, amid a recovery in China - where Covid-19 curbs have eased.

Earlier in April, numbers from LVMH Moet Hennessey Louis Vuitton and Hermes International beat expectations. Quarterly reports from the duo, whose sprawling portfolios include brands such as Christian Dior and Terre d'Hermes, suggested that the current period of economic strife across the globe may yet be a fashionable one.

The improved first-quarter outturns were led by a re-opening of the Chinese economy.

Brent oil was quoted at USD80.45 a barrel at midday in London on Wednesday, down from USD80.52 late Tuesday. Gold was quoted at USD1,998.89 an ounce, higher against USD1,987.63.

By Heather Rydings, Alliance News senior economics reporter

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