LONDON MARKET OPEN: Stocks mixed pre-Fed minutes, amid Asia losses

Wed, 03rd Jan 2024 08:58

(Alliance News) - Stock prices in London opened mixed on Wednesday, ahead of US Federal Reserve meeting minutes and manufacturing PMI data for the US in the evening and afternoon respectively.

Investors bought FTSE 100 stocks despite a largely downbeat performance in Asian equities overnight, while US stocks also ended largely in the red on Tuesday.

"As ever, the minutes will be closely scrutinised for any changes in Fed rhetoric, with particular regard to its current stance on the likelihood of rate cuts," said interactive investor analyst Richard Hunter.

"Currently, the consensus is overwhelming that the Fed will keep rates unchanged this month, with the majority expecting the first cut to be announced in March."

The FTSE 100 index opened up 12.16 points, 0.2%, at 7,733.68. The FTSE 250 was down 21.86 points, 0.1%, at 19,489.94, and the AIM All-Share was down 1.69 points, 0.2%, at 759.86.

The Cboe UK 100 was up 0.3% at 772.52, the Cboe UK 250 was down 0.1% at 16,956.54, and the Cboe Small Companies was up 0.2% at 14,986.45

In European equities, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was marginally down.

"Caution has returned, as investors have begun to re-assess the prospects for interest rates and just how resilient economies will be over the months to come," said Hargreaves Lansdown analyst Susannah Streeter.

"There is also fresh nervousness about the prospects for conflict in the Middle East to escalate after a drone strike killed Hamas deputy leader Saleh al-Arouni in Lebanon. Israel is bracing for retaliatory action from Hezbollah, another twist in an already highly complex and tragic situation in the Middle East."

Sterling was quoted at USD1.2645 early Wednesday, higher than USD1.2620 at the London equities close on Tuesday.

The euro traded at USD1.0957, higher than USD1.0955. Against the yen, the dollar was quoted at JPY142.57, higher than JPY141.74.

Meanwhile, the UK grocery sector had its busiest festive period since the onset of the Covid-19 pandemic four years ago, numbers from Kantar showed, while price inflation worries for consumers abated.

Kantar said grocery sales in the 12 weeks to December 24 rose 6.9% to GBP36.45 billion from GBP34.10 billion a year before. In the final four weeks of that period alone, sales totalled GBP13.7 billion.

Annual grocery price inflation in December eased to 6.7% from 9.1% in the four weeks to November 26. December's figure was the tamest level since April 2022, and Kantar said it was the sharpest monthly slowdown it has ever recorded.

By UK market share, Tesco remained the largest grocer. Its share edged up to 27.6% during the recent 12 weeks from 27.5% a year before. Its sales rose 7.5% to GBP10.07 billion. Sainsbury's recorded market share growth to 15.8% from 15.5%. Its sales were 9.3% higher at GBP5.77 billion.

Tesco and Sainsbury's shares were up 1.3% and 1.7% respectively.

In the FTSE 100, Entain rose 2.2%, after the sports betting and gambling operator appointed Ricky Sandler, founder of activist investor Eminence Capital LP, to the Entain board as a non-executive director.

Entain also agreed to appoint an additional non-executive director "mutually agreeable to Eminence and the company".

Sandler will be considered a non-independent non-executive director, and his three-year appointment is governed by a relationship agreement that limits Eminence to an 8% stake. Entain did not disclose Eminence's current holding, so it is less than 5%.

Meanwhile, UBS cut its price target for Entain to 1,355 pence from 1,420p, although still rating it at 'buy'.

GSK gained 2.2%, after Jefferies raised the pharmaceutical maker to 'buy' from 'hold', raising its price target to 1,900p from 1,550p.

In the FTSE 250, Wizz Air lost 1.1%, after the Budapest-based airline said it carried 5.0 million passengers in December, up 19% from 4.2 million the year prior. Capacity for the month was 22% higher at 6.0 million seats, compared to 4.9 million seats in December 2022.

Its load factor was lowered year-on-year to 82.1% from 84.5%.

Ryanair also said it carried 12.5 million passengers in December, up 8.7% from 11.5 million in the corresponding month last year. Its load factor fell by one point to 91% from 92% the year before.

On AIM, C4X Discovery surged 50%, after the drug discovery company said it received a USD11.0 million milestone payment from FTSE 100-listed pharmaceutical firm AstraZeneca, following trials of the C4X respiratory disease therapy treatment. AstraZeneca inched up 0.1%.

The payment stems from preclinical progress of C4X's NRF2 Activator programme, an oral therapy for the treatment of inflammatory and respiratory diseases which AstraZeneca is developing following a agreement between the two in November.

In addition to a USD2.0 million upfront payment, the global licencing agreement for the NRF2 Activator entitles C4X to receive up to USD400.0 million in payments following preclinical, clinical development and commercial milestones. The deal also will grant C4X tiered mid-single digit royalties on future sales of the NRF2.

Getech soared 23%, after the geo-energy and green hydrogen company said it won eight new contracts worth an aggregate GBP1.8 million.

The deals comprise of subscriptions to Getech's Globe platform, geoscience data and the purchase of expert consulting services. It expects to recognise GBP600,000 of revenue from these contracts in its 2023 earnings.

In Asia on Wednesday, financial markets in Tokyo remained closed for the New Year's holiday. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney closed down 1.4%.

In the US on Tuesday, Wall Street ended largely lower, with the Dow Jones Industrial Average up 0.1%, the S&P 500 down 0.6% and the Nasdaq Composite down 1.6%.

Gold was quoted at USD2,061.36 an ounce early Wednesday, lower than USD2,064.66 on Tuesday.

Brent oil was trading at USD75.38 a barrel, lower than USD77.75.

By Greg Rosenvinge, Alliance News senior reporter

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