LONDON MARKET MIDDAY: High inflation in UK and EU leaves stocks flat

(Alliance News) - Europe's blue-chip stock benchmarks were drifting aimlessly at midday on ...

Alliance News 18 May, 2022 | 11:18AM
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(Alliance News) - Europe's blue-chip stock benchmarks were drifting aimlessly at midday on Wednesday, as markets seemed unsure how to react to hot inflation figures in the UK and the eurozone.

In the UK, consumer prices shot up in April, pushing annual inflation up to a 40-year high.

Versus the prior month, consumer prices were up 2.5% in April, accelerating from March's 1.1% rise, but they fell short of market forecasts - according to FXStreet - of a 2.6% month-on-month rise. Annually, consumer prices jumped 9.0%, accelerating from March's 7.0% rise, but again this was slightly behind market expectations of 9.1%.

Turning to the continent, annual inflation in the eurozone remained steady in April but quickened in the European Union.

Eurostat's harmonised index of consumer prices in the eurozone rose 7.4% in April on an annual basis, unchanged from the annual rise in March. This came in slightly below FXStreet-cited market consensus estimates of 7.5%.

In the EU, annual inflation was 8.1%, picking up speed from 7.8% the month prior.

On a monthly basis, prices rose 0.6% in the eurozone, slowing from the 2.4% rise in March. This was in line with market estimates. Monthly inflation in the EU was 0.8% in April, decelerating from 2.4% in March.

In London, the FTSE 100 index was down 10.96 points at 7,507.39 midday Wednesday. The mid-cap FTSE 250 index was up 132.79 points, or 0.7%, at 20,198.54. The AIM All-Share index was up 0.95 of a point, or 0.1%, at 962.67.

The Cboe UK 100 index was down 0.1% at 748.30. The Cboe 250 was up 0.6% at 17,852.02, and the Cboe Small Companies up 0.1% at 14,797.22.

In Paris, the CAC 40 stock index was down 0.1% and the DAX 40 in Frankfurt was flat.

The pound was quoted at USD1.2404 midday Wednesday, down from USD1.2465 at the London equities close on Tuesday. The euro was priced at USD1.0519, down from USD1.0534 on Tuesday evening in London.

In London, insurer Aviva was up 2.2%. It reported first-quarter growth and said it is well-placed to navigate "current uncertain economic conditions".

UK & Ireland Life sales were GBP8.4 billion in the period, up 2% on the GBP8.3 billion posted a year before, with growth in Annuities & Equity Release and Protection & Health partly offset by Wealth. UK&I Life value of new business was GBP144 million, up 31%.

Meanwhile, General Insurance gross written premiums were up 5% to GBP2.1 billion, "another record first quarter", with premiums in the UK&I arm up 3% and in Canada up 10%.

British Land advanced 4.2%. The landlord posted a swing to profit in its recent financial year, as the commercial property market recovered from the hit of the pandemic.

At the conclusion of the year that ended March 31, the London-based property development and investment company said EPRA net tangible assets per share stood at 727 pence, up 12% year-on-year from 648p.

Net asset value per share grew 13% to 722p from 641p, as the value of its portfolio rose 6.8% to GBP6.73 billion.

British Land swung to a pretax profit of GBP958 million from a loss of GBP1.05 billion the year before. Revenue fell by 12% to GBP410 million from GBP468 million.

Reckitt Benckiser was 1.6% higher after Royal Bank of Canada raised the consumer goods firm to 'outperform' from 'sector perform'.

AstraZeneca, however, was suffering from a broker downgrade, as Kepler Cheuvreux cut the parmaceutical stock to 'hold' from 'buy'. Astra shares were down 1.6%.

Experian gave back 3.9%, despite posting higher annual profit, as credit checking firm guided for slowing organic revenue growth.

Pretax profit surged 34% in its financial year ended March 31 to USD1.45 billion from USD1.08 billion a year ago. Revenue grew 17% to USD6.29 billion from USD5.37 billion.

The company declared a second interim dividend of 35.75 US cents per share, up 10% from 32.5 cents a year ago. As a result, it will pay a total dividend of 51.75 cents per share for the financial year, up from 47.00 cents a year ago.

Organic revenue grew by 12%. For the year ahead, Experian expects organic revenue growth to slow to 7% to 9% with modest margin improvement at constant exchange rates.

Among London mid-caps, Premier Foods was the best performer, up 8.1% after the food manufacturer exceeded its profit guidance for financial 2022 and upped its shareholder payout.

Premier Foods shares were trading 6.0% higher in London on Wednesday morning at 113.00 pence each, making it the best FTSE 250 performer.

The St Albans, England-based maker of Bisto gravy, Bird's custard and Mr Kipling cakes recorded a pretax profit of GBP102.6 million in the year ended April 2, down 16% compared to GBP122.8 million the year before.

Annual adjusted pretax profit amounted to GBP128.5 million, reflecting a 38% increase from GBP115.3 million. Further, Premier Foods exceeded the adjusted pretax profit guidance of around GBP125 million that it gave in January.

Trading profit was flat at GBP148.3 million, while revenue fell 4.9% to GBP900.5 million from GBP947.0 million.

Premier Foods proposed a full-year dividend of 1.2 per share, a 20% increase from 1.0p the year before.

Vistry gained 7.2%. The housebuilder reported "strong demand" in 2022 to date.

Vistry, ahead of its annual general meeting being held on Wednesday, said it has seen an average weekly private sales rate of 0.86 since the start of 2022, up 15% on a year before.

Along with demand remaining robust, the firm added that price increases are continuing to more than offset build cost inflation.

While noting an uncertain backdrop, the firm said it now expects adjusted pretax profit for 2022 to be at the top end of market forecasts. It placed the top of end of these forecasts at GBP415.0 million, which would be up 20% from GBP346.0 million generated in 2021.

At the other end of the FTSE 250, Tui slumped 11%. The Anglo-German tour operator raised EUR425 million from placing of 162.3 million shares at a price of EUR2.62 each. It was trading at EUR2.88 in Frankfurt prior to the placing.

The fundraise, first announced on Tuesday, will be used to pay back the German government's Covid-19-related aid of EUR671 million.

Tui noted once this is done, it may resume paying dividends.

Looking ahead to the US open, Wall Street is lined up for a gloomy start to the session. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.6%.

Against the yen, the dollar was trading at JPY129.14, down from JPY129.29.

Brent oil was quoted at USD112.92 a barrel midday Wednesday, down sharply from USD115.10 late Tuesday. Gold stood at USD1,817.40 an ounce, lower against USD1,820.68.

By Paul McGowan;

Copyright 2022 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Premier Foods PLC 112.00 GBX -3.11 -
Aviva PLC 401.40 GBX -3.37
Experian PLC 2,413.65 GBX -0.43
British Land Co PLC 449.00 GBX -3.09 -
Reckitt Benckiser Group PLC 6,153.48 GBX -0.91
AstraZeneca PLC 10,784.00 GBX -2.44
TUI AG 132.08 GBX -4.60 -
TUI AG 1.54 EUR -5.19 -

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