LONDON MARKET OPEN: Halma rises after raising annual profit guidance

(Alliance News) - Stock prices in London opened lower on Wednesday on fears that lockdowns in Europe will stifle economic recovery, while Halma bucked the trend after lifting profit guidance.

Europe's two biggest economies, Germany and France, as well as a number of other countries, have been forced to reimpose more stringent restrictions to battle the spread of Covid-19, at the same time as they struggle to get their vaccination programmes off the ground.

The FTSE 100 index was down 32.37 points, or 0.5%, at 6,666.82. The mid-cap FTSE 250 index was down 66.08 points, or 0.3%, at 21,266.45. The AIM All-Share index was 0.1% lower at 1,198.89.

The Cboe UK 100 index was down 0.6% at 664.32. The Cboe 250 was down 0.5% at 18,905.66, and the Cboe Small Companies down 0.1% at 13,726.44.

In mainland Europe, the CAC 40 in Paris was 0.5% lower, while the DAX 30 in Frankfurt was down 0.7%.

In Asia, the Japanese Nikkei 225 index closed down 2.0%. In China, the Shanghai Composite ended down 1.3%, while the Hang Seng index in Hong Kong finished down 2.1%.

Hong Kong shares closed with hefty losses Wednesday after the city had halted its Pfizer-BioNTech vaccine rollout over a packaging problem, hitting its already slow inoculation programme.

In the FTSE 100, Halma was the best performer, up 3.0%, after the hazard detection and life protection firm raised its annual profit guidance.

Halma said it has made good progress in the second half of the financial year and now expects adjusted pretax profit for financial 2021 to be similar to levels in financial 2020, compared to prior guidance of around 5% below the prior year. It posted adjusted pretax profit of GBP267.0 million in financial 2020.

At the other end of the large-caps, HSBC was the worst performer, down 1.7%, tracking falls in Asia. The stock had closed down 2.2% in Hong Kong.

BHP Group was 0.9% lower after Morgan Stanley downgraded the Anglo-Australian miner to Equal Weight from Overweight.

In the FTSE 250, Softcat was the standout performer, up 13%, after the IT infrastructure provider delivered a strong performance in the first half of the financial year.

For the six months to January 31, revenue was GBP577.0 million, up 10% from GBP524.1 million the same time the year before, pretax profit rose 41% to GBP57 million from GBP40.5 million.

Softcat declared an interim dividend 6.4 pence, up from 5.4p.

Looking ahead, Softcat said the second half has begun well, and it is confident it will deliver a full-year result significantly ahead of previous expectations.

At the other end of the midcaps, Cineworld was the worst performer, down 6.3%, after Walt Disney Co confirmed late Tuesday that it will be releasing several of its upcoming big-name movies on its streaming service Disney+ over the next few months, as the Covid-19 pandemic continues to cause uncertainty over cinema reopening worldwide.

Disney said the long-awaited Black Widow movie will launch on the streaming service alongside a theatrical release in July. In addition, Pixar's next movie Luca will stream exclusively on Disney+ in June. Walt Disney closed 2.1% lower in New York on Tuesday.

Bellway was 1.9% lower in London on Wednesday. The housebuilder said it delivered a good first-half trading performance, achieving record interim revenue due to its strong brought forward sales position, alongside strong customer demand.

For the six months to January 31, Bellway posted revenue of GBP1.72 billion, up 12% from GBP1.54 billion the year before, but pretax profit was GBP280.2 million, down 4.0% from GBP291.8 million.

Bellway said its forward order book on March 14 was GBP1.64 billion, up 8.4% from GBP1.52 billion at the same time the year before. It also expects the full-year average selling price to rise to GBP295,000 from GBP293,054.

In addition, Bellway reinstated its interim dividend at 35.0 pence per share, having made no interim payout last year.

The pound was quoted at USD1.3694 early Wednesday, down sharply from USD1.3778 at the London equities close Tuesday - trading at its lowest levels since early February.

UK inflation eased annually in February with the country in lockdown, according to the latest figures from the Office for National Statistics on Wednesday.

On an annual basis, UK consumer prices rose 0.4% in February, slowing from a rise of 0.7% in January. The reading missed market consensus, cited by FXStreet, for an 0.8% increase.

On a monthly basis, consumer prices rose 0.1% in February, rebounding from deflation of 0.2% in January. However, the figure missed the consensus estimate for an 0.5% rise.

At its policy meeting last week, the Bank of England's Monetary Policy Committee said it "does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2.0% inflation target sustainably".

Beaufort Investment Chief Executive Officer Derrick Dunne commented: "While today's fall shows the precarious nature of the recovery from the pandemic, the longer-term outlook isn't looking very rosy for those with lots of savings in cash. Inflation eats away at the real value of savings when it is higher than the interest rate - which is particularly worrying with experts predicting inflation could peak at 2.5% when lockdown restrictions ease.

"Though it's expected The Bank of England will adjust the base rate to offset rising inflation over the coming months, exploring different types of investment which do well in an inflationary environment would be a good idea for those who want to safeguard their savings over the long-term."

The euro was priced at USD1.1820, lower from USD1.1861. Against the yen, the dollar was trading at JPY108.62, marginally lower from JPY108.67.

Brent oil was quoted at USD61.00 a barrel Wednesday morning, sharply lower against USD62.09 at the London equities close Tuesday. Gold was trading at USD1,730.15 an ounce, higher from USD1,727.16.

The economic events calendar on Wednesday has PMI readings from the UK at 0930 GMT, while there is the same from the US at 1345 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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