LONDON MARKET MIDDAY: Stocks Mixed As Focus Turns To US Data And Fed

LONDON (Alliance News) - Stocks in London were flat to lower at midday on Wednesday, giving back some gains from Tuesday, as market attention shifts to US inflation data and the latest minutes from the US Federal Reserve.

The FTSE 100 index was down 0.3%, or 19.64 points at 7,247.08. The FTSE 250 was flat at 19,683.79, and the AIM All-Share was flat at 1,027.37.

The BATS UK 100 was down 0.1% at 12,306.64, the BATS 250 was up 0.2% at 18,013.95, and the BATS Small Companies was up 0.5% at 12,062.04.

In Paris the CAC 40 was down 0.3%, while the DAX 30 in Frankfurt was also down 0.3%.

"European stock markets are a mixed bag today as dealers await the next development in the geopolitical situation. Although tensions between the US and China over the trade dispute have cooled, it is still on traders' minds, and that is why we are seeing a small bit of profit-taking this morning," said David Madden, market analyst at CMC Markets.

On the London Stock Exchange, Tesco was the best blue chip performer at midday up 5.5% after the UK's largest supermarket chain's earnings beat analyst expectations and it restored its final dividend.

Peers WM Morrison Supermarkets and J Sainsbury were up 1.1% and 0.5% respectively.

The FTSE 350 Food & Drug Retailers sector, which houses London-listed grocers, was the best performing sector up 3.5%.

BHP Billiton was up 1.1% after Deutsche Bank raised the Anglo-Australian miner to Buy from Hold.

In the FTSE 250, BCA Marketplace was the best performer, up 9.8% after the owner of British Car Auctions said it expects profit to rise in its recently ended financial year, as it traded ahead of expectations.

BCA said the positive outlook reported in its first half-year results has continued and it traded ahead of market expectations with strong profit growth. In addition, it said it expects its debt position lower than market forecasts. In the prior year, BCA posted pretax profit of GBP56.4 million while net debt stood at GBP260.5 million.

BCA, which also owns the webuyanycar.com platform, said its remarketing division was "successful" in winning a number of new contracts along with continuing contract renewals. It also made "good progress" in growing and integrating its services business. "With the above stated successes, the board believes the business is on a strong footing as it enters its next financial year and for the future," the group said.

At the other end of the midcap index, McCarthy & Stone was down 3.6% after the retirement property developer reported moderate revenue growth and that profit more than halved due to significant increase in costs.

McCarty & Stone said pretax profit in the six months ended February 28 more than halved to GBP10.5 million compared with GBP21.87 million for the same period the year before. This was caused by a revaluation of its shared equity portfolio, the company said. As a result, finance expenses nearly doubled to GBP3.1 million from GBP1.6 million the prior year, reflecting an adverse change in forward-looking house price index assumptions.

In addition, administrative expenses also increased to GBP19.3 million from GBP17.5 million the year earlier. Revenue grew 1.0% year-on-year to GBP239.6 million from GBP238.2 million, supported by a "significant" improvement in average selling price, which rose 15% to GBP298,000 from GBP260,000. Legal completions totalled 760, down 12% from 864 the year before.

On AIM, ASOS was down 3.3% at 6,800.00p, having fallen to an intraday low of 6,178.00p in early trade, after the online fashion retailer raised its guidance for capital expenditure for its full financial year.

ASOS increased its guidance for capital expenditure for the full financial year 2018 to the range of GBP230.0 million to GBP250.0 million for the current financial year and the next in order to achieve GBP4.0 billion in net sales capacity. However, both the sales and earnings before interest and tax guidance for the current year remained unchanged, remaining at 20% to 25% sales growth and a 4.0% Ebit margin.

For the six months to the end of February, ASOS reported pretax profit at GBP29.9 million, up 10% from GBP27.3 million for the same period the year before, on revenue of GBP1.16 billion, up an even stronger 27% from GBP911.0 million. UK retail sales rose by 22% to GBP414.5 million from GBP340.8 million, and international retail sale increased by 31% to GBP716.8 million from GBP548.4 million.

The pound was firm against the dollar quoted at USD1.4199, compared to USD1.4159 at the London equities close Tuesday.

In economic news, UK industrial production grew at a slower pace on weak mining and manufacturing output in February, the Office for National Statistics said.

Output of mining and quarrying sector decreased 2.7% and oil and gas extraction fell 3.2%.

Industrial output edged up 0.1% month-on-month in February, compared to January's 1.3% increase. Production was expected to climb 0.4%. On a yearly basis, growth in industrial production accelerated to 2.2% in February from 1.2% in January. Nonetheless, this was slower than the expected 2.9%.

Manufacturing output dropped 0.2%, confounding expectations for a growth of 0.2% on a monthly basis. This was the first decrease since March 2017. Output had remained flat in January. Annual manufacturing output growth improved to 2.5% from 2.2% a month ago. Economists had forecast a faster 3.3% growth for February.

Meanwhile, the UK visible trade deficit narrowed to a five-month low in February, the Office for National Statistics said.

The trade in goods showed a shortfall of GBP10.20 billion in February versus a GBP12.20 billion deficit posted in January. This was the lowest shortfall since last September. In the same period of 2017, the visible trade gap totaled GBP10.90 billion. The expected level of deficit was GBP11.90 billion.

"This morning has seen a somewhat mixed bag of data for the UK, with a drastic improvement in the UK trade picture being counterbalanced by a lower than expected rise in industrial and manufacturing production. That being said, while we were expecting more, the industrial and manufacturing production data pointed towards an impressive rate of yearly growth, highlighting a clear willingness of companies to push on despite Brexit doom and gloom," said IG market analyst Joshua Mahony.

The euro was firm at USD1.2375 at midday, against USD1.2338 at the European equities close Tuesday, amid weakness in the greenback.

Elsewhere, Brent oil hit its highest level since late 2014 of USD71.39 a barrel in mid morning trade, sharply higher compared to USD70.56 at the London equities close Tuesday.

"The latest [oil price] bid comes on the back of Xi's positive comments on trade and some bullish rhetoric from Saudi Arabia with the kingdom believed to be targeting USD80 a barrel ahead of the state energy giant Aramco's IPO," said XTB chief market analyst David Cheetham.

Stocks in New York are called for a lower open on Wednesday, following a strong close on Tuesday. The DJIA is set to open down 0.5%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.3%.

In US corporate news, Sprint Corp and T-Mobile US have rekindled merger talks, the Wall Street Journal reported citing people familiar with the matter, as the wireless rivals explore a combination for the third time in four years.

The latest discussions come just five months after a previous courtship collapsed largely over who would control the combined firm. The talks also come in the midst of an antitrust fight between the US government and AT&T Inc.

It is unclear what terms the two sides are considering, and it is possible, as before, that they could fail to reach an agreement. The latest discussions are at a preliminary stage, the newspaper said.

Ahead in the economic calendar on Wednesday, US consumer price inflation data will be delivered at 1330 BST and the Federal Open Market Committee releases the minutes of its most recent policy meeting at 1900 BST.

The Fed releases minutes of its March 20 to 21 meeting, the first under Chairman Jerome Powell. At the meeting, the policy makers raised interest rates by 25 basis points and signaled two more rate hikes for this year, dampening hopes for aggressive rate hike path.

By Arvind Bhunjun; [email protected]

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