LONDON MARKET MIDDAY: FTSE 100 limps behind as downbeat miners weigh

(Alliance News) - The FTSE 100 was the session's laggard on Thursday, with the heady ascents posted elsewhere in Europe out of reach in London due to the index's heavyweight mining sector, which dragged following some underwhelming production reports.

Outside of corporate updates, investors are keeping tabs on central bankers on Thursday. US Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde will be panellists at an IMF seminar. Meanwhile, Bank of England Governor Andrew Bailey will speak in Washington DC.

"Markets expect Powell to strike a hawkish tone during his communications today, not only paving the way for another interest rate hike at the Fed's next meeting in May, but all but confirming it will raise rates by an unconventionally large 50 basis points. Yet, with a highly aggressive pace of hikes already priced in, and the dollar trading at very elevated levels, we may see a scenario where investors 'buy the rumour, sell the fact'," said Matthew Ryan, senior market analyst at Ebury.

The FTSE 100 index was up 9.60 points, or 0.1%, at 7,638.82 on Thursday. The mid-cap FTSE 250 index was up 155.44 points, or 0.7%, at 21,239.44. The AIM All-Share index was up 2.34 points, or 0.2%, at 1,058.57.

The Cboe UK 100 index was up 0.2% at 760.59. The Cboe 250 was up 1.2% at 18,750.00, and the Cboe Small Companies up 0.3% at 15,395.60.

"It's been a bad start to the year operationally for the big mining companies and their latest updates have served to act as a drag on the FTSE 100," said Russ Mould, investment director at AJ Bell.

London's heavyweight mining sector was bunched at the bottom of the large-cap list in midday trade, with Anglo American down 8.9%, Antofagasta down 8.3% and Glencore down 5.0%.

Anglo American reported a 10% decline in output in its "normally slower" first quarter amid Covid-related absences, high rainfall in South Africa and Brazil, and operational challenges at metallurgical coal and iron ore operations.

Copper production was down 13% year-on-year, platinum group metals production was down 6%, metallurgical coal production dropped by 32%, and iron ore production decreased by 19%. The only category to see an increase was diamonds, with output up by a quarter.

Peer Antofagasta was down after the miner posted a 24% year-on-year decline in copper output in the first quarter, amounting to 138,800 tonnes, though the company said this was in line with expectations.

"Production reflected the impact of the ongoing drought at Los Pelambres and the expected lower grades at Centinela Concentrates," said Chief Executive Ivan Arriagada.

Glencore, which reports on its first quarter output next week, found itself mired in Thursday's negative sentiment towards the sector. On Thursday, it said its "responsible stewardship" of coal assets was the "correct" way to meet its green ambitions, reaffirming its commitment to slash its carbon emissions footprint and become net-zero by 2050.

The miners were offsetting gains for British Airways-parent International Consolidated Airlines, which rose 6.7% on the back of a positive update from US air carrier United Airlines.

United late Wednesday said it is still dealing with the fallout from Covid restrictions - seeing another steep loss in the first quarter - but believes it is primed to return to profitability in the second quarter.

The airline said it has a "bullish" outlook and is seeing indications that business travel is "rapidly returning". United shares were trading 7.5% higher pre-market in New York.

Other European long-haul operators such as Germany's Lufthansa and Air France were up 3.8% and 4.0% respectively as part of a positive read-across.

In mainland Europe, the CAC 40 in Paris was up 1.7%, while the DAX 40 in Frankfurt was up 1.4% in early afternoon trade.

Looking to New York, all three major indices are pointed to a positive start. The Dow Jones was called up 0.6%, the S&P 500 up 0.8%, and the Nasdaq Composite up 1.1%.

As well as United trading higher before the opening bell, Tesla shares were up 7.3%. The car maker reported a sharp rise in first-quarter earnings as demand for electric vehicles continued, though the Elon Musk-led firm flagged supply chain issues ahead.

Tesla posted first-quarter net income of USD3.74 billion, or USD3.22 per diluted share, up sharply from USD1.05 billion, or USD0.93 diluted EPS, the year before.

Back in London, Rank Group shares fell 7.9% by midday Thursday after cutting earnings guidance following a soft end to financial third-quarter trading.

"For both our UK venues businesses there was a softness in visits at the end of the quarter consistent with the rise in new Covid-19 cases reported across the UK," said Rank.

The company anticipates an improvement in performance after April, but cautioned it "remains to be seen how the trends in the rate of return of office workers to city centres and overseas customers to London will develop towards the summer." As such, it lowered its full-year earnings before interest and tax guided range to between GBP47 million and GBP55 million from a prior range of GBP55 million to GBP65 million.

Ibstock was up 7.6% after first-quarter fortunes topped expectations. The clay and concrete manufacturer also announced a GBP30 million buyback.

Leicester, England-based Ibstock said demand remained "firm" in the first three months of 2022. For all of 2022, it expects its performance to be "modestly ahead of its previous expectations".

Card Factory jumped 31% after successfully completing a refinancing, removing a commitment to raise funds. The greeting cards retailer has agreed revised terms on reduced facilities of GBP150 million, previously GBP225 million.

"The best efforts commitment given by Card Factory to its banks, to raise net equity proceeds of GBP70 million by 30 July 2022 has been removed from the revised facilities. The board has no current intention of completing an equity raise," it added.

THG shares soared 16% after reporting annual earnings growth, a decent start to 2022 and adding that it has received "numerous" takeover proposals in recent weeks.

The online beauty products platform said it rejected all the proposals as they do not reflect its fair value. It also confirmed it is not currently in receipt of any approaches.

The update came alongside THG's annual results, which showed revenue in 2021 jumped 35% to GBP2.18 billion from GBP1.61 billion the year before. Its pretax loss slimmed to GBP186.3 million from GBP534.6 million.

"The current valuation appears like a distressed valuation to us, which is inappropriate for THG. Surely if this persists then some form of corporate activity will be on the horizon, as evidenced by the recent approaches the company has received," said broker Liberum.

THG shares remain down 78% from its listing price back in 2020.

Gold was quoted at USD1,944.43 an ounce on Thursday, soft from USD1,952.11 on Wednesday. Brent oil was trading at USD108.12 a barrel, higher than USD107.55 late Wednesday.

Sterling was quoted at USD1.3072 on Thursday, higher than USD1.3045 at the London equities close on Wednesday.

The euro traded at USD1.0906, up against USD1.0860 late Wednesday. Against the yen, the dollar was quoted at JPY128.02, up from JPY127.70.

The economic events calendar has the latest US jobless claims numbers at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

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