LONDON MARKET OPEN: Auto Trader and Johnson Matthey bookend FTSE 100

(Alliance News) - Stock prices in London opened higher on Thursday, shrugging off inflation fears, with Auto Trader leading the FTSE 100 after positive interim results, while Johnson Matthey fell sharply.

The UK flagship index was up 12.12 points, or 0.2%, at 7,352.27 early Thursday. The mid-cap FTSE 250 index was up 34.49 points, or 0.2%, at 23,467.74. The AIM All-Share index was up 3.98 points, or 0.3%, at 1,247.88.

The Cboe UK 100 index was up 0.2% at 727.80. The Cboe 250 was down 0.1% at 20,962.10 and the Cboe Small Companies down 0.1% at 15,610.29.

In mainland Europe, the CAC 40 stock index in Paris was up 0.1% and the DAX 40 in Frankfurt up 0.1%.

In the FTSE 100, Auto Trader was the standout performer, up 12%. The digital automotive marketplace said it delivered its highest ever six-monthly revenue and profit, with consumer engagement and retailer numbers at record levels.

For the half year to September 30, revenue was GBP215.4 million, up 82% from GBP118.2 million last year, and pretax profit more than doubled to GBP150 million from GBP66.2 million.

Auto Trader declared an interim dividend of 2.7 pence per share, having paid none in the prior year.

At the other end of the large-caps, Johnson Matthey was the worst performer, down 10%, after the speciality chemicals company said it would exit an underperforming business and announced the departure of its chief executive.

Johnson Matthey said that after a detailed review it has concluded that the potential returns from its Battery Materials business would not "be adequate to justify further investment".

The London-based firm said it has decided to pursue the sale of all or parts of the business with the intention of exiting "swiftly".

Johnson Matthey also said CEO Robert MacLeod will retire early next year, with Liam Condon hired from Germany's Bayer to succeed him. MacLeod will step down in February after eight years and will stay on until July to help with the transition.

In addition, Johnson Matthey said half-year results - to be released on November 24 - will be in line with market expectations, but full-year results will be at lower end of expectations. It cited supply chain shortages for its auto industry customers and labour shortages in the US hurting its Health business.

Burberry Group was down 10% on fears that sales at the fashion house's high growth market of China will be hurt by regional lockdowns in the second half.

For the 26 weeks to September 25, revenue jumped 38% to GBP1.21 billion from GBP878 million last year. Operating profit surged to GBP207 million from GBP88 million, and pretax profit more than doubled to GBP191 million from GBP73 million.

Burberry declared an interim payout of 11.6p per share having paid none in prior year due to the pandemic. Looking ahead, Burberry maintained medium-term guidance for high single-digit top line growth.

"The initial share price reaction to the numbers reflect a weakening of sales during the second quarter, even though numbers for the first-half as a whole are in comfortably positive territory, and generally high expectations. The move takes some sheen from a share price which had risen by 22% over the last year, as compared to a hike of 15% for the wider FTSE 100, although yet to regain pre-pandemic levels, having dipped by 4% over the last two years," explained interactive investor's Richard Hunter.

Beijing authorities have sealed off a mall and locked down several residential compounds over a Covid flare-up, as the latest outbreak spread to the Chinese capital's central districts. Six new cases were found in Beijing's central districts of Chaoyang and Haidian Thursday morning, local media reported, all close contacts of people infected recently in northeastern Jilin province.

Raffles City mall in Dongcheng – also a central district in the capital – was sealed off Wednesday evening after a close contact of a person with Covid-19 was found to have visited the mall, the Beijing Youth Daily reported. Its exits were closed, and all staff and customers inside were not allowed to leave until they got tested.

B&M European Value Retail was down 6.7% despite the variety store chain reporting upbeat interim results.

For the 26 weeks to September 25, revenue increased by 1.2% to GBP2.27 billion from GBP2.24 billion last year, and pretax profit rose 2.4% to GBP241.4 million from GBP235.6 million.

B&M declared an interim dividend of 5.0 pence up 16% from 4.3p paid last year.

J Sainsbury, BP, Royal Dutch Shell 'A and Shell 'B' were down 1.2%, 0.8%, 1.2% and 1.0% respectively after the stocks went ex-dividend - meaning new buyers no longer qualify for the latest payout.

On Wall Street on Wednesday, the Dow Jones Industrial Average closed down 0.7%, S&P 500 down 0.8% and Nasdaq Composite down 1.7%.

The US consumer price index surged 6.2% on an annual basis in October, an over 30-year high amid rising oil, auto and housing prices, according to data released before the New York market open on Wednesday.

This has led to growing concern that the US Federal Reserve will have to be more aggressive to contain prices, pulling back more quickly on its bond-buying programme and potentially raising the key US borrowing rate multiple times next year.

However, in Asia, the mood was a little lighter after Bloomberg reported that Chinese property company Evergrande had once again avoided a default after meeting a bond-payment due by the end of Wednesday.

The Japanese Nikkei 225 index closed up 0.6%. In China, the Shanghai Composite ended up 1.2%, while the Hang Seng index in Hong Kong finished up 0.4%. The S&P/ASX 200 in Sydney closed down 0.6%.

The dollar was higher across the board. The pound was quoted at USD1.3388 early Thursday, down sharply from USD1.3492 at the London equities close on Wednesday.

On the economic front, UK economic growth lost momentum in the third quarter of 2021, compared to the second quarter when many lockdown restrictions had been lifted, according to the Office for National Statistics.

On an annual basis, the UK economy grew 6.6% in the third quarter, slowing sharply from 24% in the second quarter. The latest reading missed the market forecast, cited by FXStreet, of 6.8%.

More positively, UK gross domestic product advanced 0.6% in September, picking up pace from 0.4% in August. The September print beat the market estimate of 0.4%.

Analysts at ING commented: "At face value, September's UK GDP figures look quite good. Activity grew by 0.6% during the month, though as has often been the case through the pandemic, the majority of this comes from the way health spending is documented in the GDP figures. Once you strip out the effect of people returning to in-person doctor appointments and also other pandemic-related spending, UK growth appears less exciting... Having said all of that, the economy is still growing - albeit slowly."

The euro was priced at USD1.1475, down from USD1.1529. Against the Japanese yen, the dollar was trading at JPY114.07, up from JPY113.86.

Brent oil was quoted at USD82.64 a barrel Thursday morning, down sharply from USD84.12 late Wednesday. Gold stood at USD1,854.25 an ounce, lower against USD1,856.96.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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