London close: Stocks rise despite some weak data

by | Mar 30, 2023

London stock markets closed in positive territory on Thursday, as investors processed the latest data releases from the US.
The FTSE 100 rose 0.74% to end the day at 7,620.43, and the FTSE 250 index added 1.48% to 18,907.74.

Market participants appeared to shrug off slightly higher-than-expected initial jobless claims in the US, as well as a revision down in the country’s GDP growth rate for the fourth quarter, in afternoon data releases.

In currency markets, sterling gained 0.47% on the dollar to last trade at $1.2372, although it was 0.07% weaker against the euro to change hands at €1.1348.

“Fresh from their triumph yesterday, stocks have barrelled into a second day of gains, with the catalyst being the much weaker Spanish inflation reading this morning,” said IG chief market analyst Chris Beauchamp.

“Tech has led the way in the US, providing an indication of how strong risk appetite appears to be at present.

“A few more days of this and we could see investors really start to pile back into equities.”

Beauchamp noted that a rise in jobless claims and lower fourth quarter GDP growth in the US was also boosting hopes for those expecting the Fed to pause at its next meeting and beyond.

“The dollar index continues to trade in a bearish fashion, and is on the cusp of a break towards the February lows.”

UK private sector contracts further, US initial jobless claims rise

In economic news, a fresh survey showed the UK’s private sector shrinking for the eighth consecutive quarter, with the service sector leading the decline.

According to the CBI’s monthly service sector survey, activity across the private sector as a whole fell in the three months to March, with a weighted balance of -4.

There was, however, some cause for optimism, with private sector activity forecast to return to growth with a balance of +5 in the coming months, marking the first positive growth expectations since April last year.

“It’s encouraging that the private sector is expected to return to growth in the months ahead, chiming with a range of other data indicating some resilience in economic activity,” said Alpesh Paleja, lead economist at the CBI.

“But let’s be clear, at best this illustrates an economy skirting stagnation-like conditions rather than delivering the strong, sustainable growth we need.”

Meanwhile, UK car production saw a 13.1% year-on-year increase in February, with strong demand for electric vehicles and improvements in supply chains cited as the reasons for the boost.

The Society for Motor Manufacturers and Traders reported that 56,634 cars were made for export, with most going to the European Union.

“February’s growth in UK car production signposts an industry that is on the road to recovery,” said Mike Hawes, SMMT chief executive.

“The fundamentals of the sector are strong.

“To take advantage of global opportunities, however, we must scale up at pace and make the UK the most attractive destination for automotive investment by addressing trading and fiscal costs and delivering low carbon, affordable energy.”

On the continent, economic sentiment in the eurozone dipped slightly in March, with the European Commission’s sentiment indicator falling to 99.3 from 99.7 a month earlier.

Economists had been expecting a slight uptick, to 99.8.

The fall was put down to lower confidence in industry, retail trade, and construction, while sentiment in services and among consumers remained virtually unchanged.

Elsewhere, inflation in Germany and Spain moved in opposite directions in March, with Germany recording a minor decline in headline inflation and an increase in core inflation, while Spanish inflation fell significantly due to a decline in energy prices.

Finally on data, the US economy grew at an annual pace of 2.6% in the fourth quarter, slightly less than previously estimated, with downward revisions to exports and consumer spending cited as the main reasons.

“The slight downward revision to Q4 GDP shows the economy ended 2022 with marginally less momentum,” noted analysts at Oxford Economics.

“Looking ahead, the economy will face the full brunt of tighter credit conditions and Fed policy this year, and inflation is set to stay above its historical trend.

“The recent banking sector turmoil will affect the economy mainly through tighter lending standards and a reduction in the availability of credit.”

Initial jobless claims in the US meanwhile rose slightly to 198,000 in the week ended 25 March, remaining at a historically low level, but suggesting a still-tight labour market.

Petrofac rockets on biggest-ever contract, Ocado adds to recent gains

On London’s equity markets, energy firm SSE rallied 4.14% after it lifted its full-year earnings per share guidance.

The company cited a strong performance from its flexible generation plant and said it now expected adjusted earnings per share of more than 160p for the 2023 financial year.

Petrofac rocketed 69.89% after it and Hitachi Energy were awarded a €13bn framework agreement by Dutch-German electricity grid operator TenneT, marking the firm’s largest-ever contract.

Ocado Group and Moonpig Group were also among the top performers, with their shares up by 10.29% and 10.65%, respectively.

Moonpig backed its full-year guidance after reporting a record Mother’s Day performance, while Ocado continued to build on its recent gains.

Michael Hewson at CMC Markets said the gains of the last two days came despite the shares tumbling after the online grocer and warehousing technology developer published its first quarter numbers.

“At the time there was a sense that the fall seemed overdone given the weakness we’d already seen since January, begging the question as to whether a lot of the bad news was already in the price,” Hewson noted.

“The reaction of the last two days would appear to suggest that there is a degree of that, hence the gains seen in the last couple of days.”

Elsewhere, Warehouse REIT rose 6.78% after announcing the sale of two distribution estates for nearly £30m.

Drax Group saw a reversal of earlier losses, with its shares up by 5.48% after it insisted it still plans to install carbon capture technology at its power plants, despite the government rejecting its plans to introduce the technology at a power plant in England.

On the downside, Ithaca Energy saw a decline of 4.27% after lowering annual production and capital expenditure guidance, citing the UK government’s windfall tax, operational delays, and lower volumes.

Phoenix Group Holdings, Aviva, Abrdn, Taylor Wimpey, Smith & Nephew, Mondi, and Moneysupermarket Group all fell as they traded without entitlement to the dividend.

Reporting by Josh White for

Market Movers

FTSE 100 (UKX) 7,620.43 0.74%
FTSE 250 (MCX) 18,907.74 1.48%
techMARK (TASX) 4,558.61 0.62%

FTSE 100 – Risers

Ocado Group (OCDO) 522.40p 10.29%
Land Securities Group (LAND) 623.40p 4.49%
JD Sports Fashion (JD.) 175.40p 4.28%
SSE (SSE) 1,809.50p 4.14%
Unite Group (UTG) 941.00p 4.09%
International Consolidated Airlines Group SA (CDI) (IAG) 148.60p 3.86%
British Land Company (BLND) 388.50p 3.85%
SEGRO (SGRO) 761.00p 3.82%
Entain (ENT) 1,250.00p 3.65%
Burberry Group (BRBY) 2,541.00p 3.50%

FTSE 100 – Fallers

Phoenix Group Holdings (PHNX) 543.40p -4.13%
Aviva (AV.) 405.50p -3.48%
Abrdn (ABDN) 203.10p -2.68%
Taylor Wimpey (TW.) 119.20p -1.77%
Mondi (MNDI) 1,283.50p -1.61%
Smith & Nephew (SN.) 1,102.50p -1.61%
BAE Systems (BA.) 975.20p -1.14%
British American Tobacco (BATS) 2,848.50p -0.92%
Haleon (HLN) 321.10p -0.73%
Pearson (PSON) 815.80p -0.61%

FTSE 250 – Risers

TUI AG Reg Shs (DI) (TUI) 656.40p 20.03%
ASOS (ASC) 806.50p 8.40%
IWG (IWG) 163.55p 6.82%
Hammerson (HMSO) 24.35p 6.80%
Warehouse Reit (WHR) 99.20p 6.78%
W.A.G Payment Solutions (WPS) 93.90p 5.98%
Tullow Oil (TLW) 31.02p 5.87%
Urban Logistics Reit (SHED) 124.00p 5.49%
Drax Group (DRX) 606.00p 5.48%
Wizz Air Holdings (WIZZ) 2,882.00p 5.05%

FTSE 250 – Fallers

Ithaca Energy (ITH) 148.00p -4.27%
Digital 9 Infrastructure NPV (DGI9) 63.70p -3.34%
Apax Global Alpha Limited (APAX) 152.00p -2.81%
Trainline (TRN) 252.50p -2.62% Group (MONY) 250.00p -2.27%
Man Group (EMG) 242.00p -1.98%
Vanquis Banking Group 20 (VANQ) 232.40p -1.69%
Tate & Lyle (TATE) 779.40p -1.57%
CMC Markets (CMCX) 172.80p -1.48%
Primary Health Properties (PHP) 101.20p -1.36%

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