LONDON MARKET MIDDAY: FTSE 100 stalls as AB Foods drags on index

(Alliance News) - The FTSE 100 traded modestly lower midday Thursday, weighed down by Associated British Foods and oil majors.

The index of London large-cap stocks was down 4.88 points, or 0.1%, at 7,584.78 midday Thursday. Smaller companies were faring better. The mid-cap FTSE 250 index was up 60.18 points, or 0.3%, at 22,715.20. The AIM All-Share index was up 3.70 points, or 0.3%, at 1,153.19.

The Cboe UK 100 index was flat at 752.97. The Cboe 250 was up 0.2% at 20357.94, and the Cboe Small Companies flat at 15789.53.

While the FTSE 100 flagged, futures were pointing to a positive start for key stock indices in New York after recent falls.

A sharp rise in bond yields sparked the sell-off in stocks on Tuesday, which continued into Wednesday. The US 10-year Treasury yield touched 1.9% on Wednesday, its widest since December 2019. but had narrowed to 1.84% on Thursday in London.

The Dow Jones Industrial Average was pointed to a 0.5% rise at the open on Thursday. The S&P 500 also was called up 0.5%. The tech-heavy Nasdaq Composite was set to advance 0.8%.

"Despite lingering concerns related to the prospect of higher interest rates and - more importantly - withdrawn liquidity in the US, investors have temporarily switched focus towards corporate results," said Pierre Veyret, an analyst at ActivTrades.

Sentiment was mixed following a "patchy" showing from the US banking sector, said Veyret, but Netflix kicks off tech earnings season after the New York market close on Thursday.

In a busy day for corporate news in London, Associated British Foods shares were down 3.4% with the stock weighing on the FTSE 100.

For the 16 weeks ended January 8, total sales grew 16% to GBP5.57 billion from GBP4.80 billion the same period a year before.

Nearly all of the group's segments delivered sales growth in the period, with its Retail arm - which houses low-cost clothing chain Primark - showing the highest growth rate with a 32% rise to GBP2.67 billion. This was due to a gradual improvement in footfall and the reopening of stores, which were mostly shut in the prior period.

However, like-for-like sales from UK retail stores were down 10% from the same period in its 2020 financial year, while like-for-like sales in Continental Europe suffered a 14% drop over a two-year comparison, as the Omicron variant of Covid-19 continues to hamper footfall.

Hargreaves Lansdown's Laura Hoy commented: "As things normalise all eyes are on retail for signs of a comeback. Compared to last year, when store closures kept sales painfully low, revenue rose considerably. But sales at Primark have yet to make their way to pre-pandemic levels."

Another faller was UK broadcaster ITV, down 2.2% after Goldman Sachs resumed the stock with a Sell rating.

GlaxoSmithKline shares fell 1.3% after consumer goods firm Unilever late Wednesday said it will not lift its bid for GSK's consumer unit above the current GBP50 billion offer.

Unilever said it has seen a set of financial assumptions on the GSK Consumer Healthcare business, outlined by current owner GSK. Unilever said the numbers do not "change our view on fundamental value".

Unilever shares were up 1.2% midday Thursday. The stock had tumbled 7.0% on Monday and a further 4.0% on Tuesday over worries it could end up paying too much for GSK Consumer Healthcare.

Oil majors were lower in London as Brent crude prices eased off recent multi-year highs. Brent oil was trading at USD88.20 a barrel at midday, with prices still elevated but below the USD88.68 registered late Wednesday. Oil prices have risen 13% since the start of 2022.

BP shares were down 1.7% at midday, while Royal Dutch Shell 'A' and 'B' shares both fell 2.0%.

Gold prices were lower as well. The precious metal was quoted at USD1,838.22 an ounce on Thursday, soft versus USD1,840.20 late Wednesday in London.

In the FTSE 250, Spirent Communications shares rose 6.6% after saying it expects to deliver full-year adjusted operating profit slightly ahead of market consensus, which it placed as USD116 million.

Premier Foods was up 6.2%. The Mr Kipling cakes maker boosted its annual profit expectations as it heads into its final quarter with "strong momentum".

The St Albans, England-based food manufacturer now expects adjusted pretax profit to be around GBP125 million for the year ending in April, which would top the current company-compiled consensus estimate of GBP119.3 million. The new figure would represent an 8.4% increase year-on-year from financial 2021's 52-week figure of GBP115.3 million.

Deliveroo advanced 3.2% on a strong end to the food delivery firm's 2021. Deliveroo said fourth quarter gross transaction value jumped 33% annually to GBP1.73 billion from GBP1.31 billion.

Wincanton rallied 13%. The logistics firm said it now expects full-year profit to top market expectations, following strong trading through the peak seasonal period.

In mainland Europe, the CAC 40 stock index in Paris was flat, while the DAX 40 in Frankfurt was up 0.3% on Thursday.

Data on Thursday confirmed the eurozone's annual inflation rate jumped to 5.0% in December from 4.9% in November. The highest contribution came from energy prices, which surged 26% annually in December. However, energy price growth ebbed slightly from 28% in November.

The euro traded at USD1.1356 midday in London, firming on USD1.1345 late Wednesday.

Sterling was quoted at USD1.3631 midday Thursday, flat on USD1.3630 at the London equities close on Wednesday. Against the yen, the dollar rose to JPY114.31 versus JPY114.25.

The economic events calendar on Thursday has the latest US jobless claims at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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