- FTSE 100 closes down 33 points at 7,595
- Unilever, BAT, Compass rise after updates
- DS Smith climbs after Mondi approach
4:40pm: AstraZeneca fall weighs on FTSE 100
The FTSE 100 closed near its worst levels for the day weighed down by falls in AstraZeneca, Persimmon and SSE.
At the close, London's blue-chip index was down 33.27 points, 0.4%, at 7,595.48 and the FTSE 250 ended flat at 19,102.72.
Chris Beauchamp, Chief Market Analyst at online trading platform IG noted a big drop for AstraZeneca has wiped 40 points off the FTSE 100 today, with the result that the index has been left behind as other European markets make headway today.
Astra’s poor performance since the summer has been a key driver for the FTSE 100’s inability to keep up with its peers, and today’s numbers suggest that weight will continue for the time being, he added.
Elsewhere, there is potential for another big deal as Mondi confirmed it had approached DS Smith about a merger while shares in BAT lit up 7% after it said it was considering the sale of its stake in India's ITC.
7,595.48−33.27 (0.44%
3:10pm: Entain climbs after top-end revenue from BetMGM
Entain PLC (LSE:ENT) on Thursday reported a strong financial performance in 2023 from its US joint venture BetMGM.
The owner of Ladbrokes and Coral said net revenue from operations at BetMGM grew 36% year over year to USD1.96 billion, at the upper-end of the USD1.8-USD2.0 billion guidance range.
Entain said key metrics across both iGaming and online sports betting improved year over year, including average monthly actives, first time deposits, hold percentages, bonus levels, net gaming revenue and cost per acquisition.
BetMGM was earnings before interest, tax, depreciation and amortisation positive in the second half of 2023 with an expected full-year 2023 Ebitda loss of around USD67 million.
Entain reiterated guidance from December 2023 of an Ebitda target of around USD500 million in 2026.
Shares in Entain rose 1.5% to 987.00 pence in London.
2:40pm: Subdued start in the US
Stocks in New York made a mixed start to trading after robust jobs data further dented hopes of a near-term cut in interest rates.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.1% at 38,715.35, the S&P 500 was down slightly at 4,993.07 while the Nasdaq Composite was also flat at 15,758.77.
US initial jobless claims fell by more than expected in the most recent week, numbers on Thursday showed.
According to the US Department of Labor, new jobless claims came in at 218,000 in the week ending February 3, down from 227,000 a week earlier. The previous week's level was revised up by 3,000 from 224,000.
The reading was lower than FXStreet consensus of 220,000. The four-week moving average was 212,250, an increase of 3,750 from the previous week's revised average.
1:34pm: Mondi says DS Smith deal an "exciting opportunity"
Mondi has issued a statement regarding the possible merger with DS Smnith.
It said it believes that a possible all share combination with DS Smith represents an exciting opportunity to create an industry leader in European paper-based sustainable packaging solutions.
A merged firm would well positioned to benefit from structural growth trends in sustainable packaging, benefit from enhanced vertical integration, have greater earnings resilience through the cycle and enhanced security of paper supply.
It would also benefit from substantial synergies.
Mondi's strategy is to deliver value accretive growth and, as noted above, adopts a disciplined approach to acquisitions and investment within its capital allocation framework, it said.
Mondi said it remains committed to maintaining a strong and stable financial position supported by a solid investment grade credit rating and a dividend policy aimed at offering shareholders long-term dividend growth within the context of its stated cover policy.
1:06pm: German house prices fall at fastest annual pace in 60 years
Over in Germany, house prices have dropped at the fastest pace on record.
The German Real Estate Index, published by the Kiel Institute for the World Economy, shows that property prices tumbled sharply in Europe’s largest economy last year.
Sale prices of apartments fell by 8.9% during 2023, while single-family home price fell 11.3%. The price of multi-family homes dropped 20.1% during the year.
There were smaller declines in the fourth quarter after some banks lowered their mortgage rates.
“It might be that we are seeing the beginning of a stabilisation in real estate prices,” said Moritz Schularick, president of the Kiel Institute, adding mortgages “should become cheaper again, thereby stimulating demand.”
12:27pm: UBS cuts LSEG on forex, Credit Suisse hit
UBS has taken London Stock Exchange Group off its 'buy' list, citing hits from foreign exchange movements and the loss of business at Credit Suisse.
The Swiss Bank downgraded its investment rating to 'neutral' from 'buy' and reduced its share price target by 5% to 10,000 pence per share.
UBS also lowered 2023/24/25 earnings per share estimates by 2%/5%/6% respectively.
About half of the EPS cut is driven by foreign exchange movements, it said, as the USD weakened by 3-4% in late 2023 with the other half of the cut was driven by the impact of the loss of Credit Suisse business.
Ironically, UBS rescued Credit Suisse last year.
Shares are trading 1.0% lower.
12:06pm: US stocks seen edging lower
US stocks are expected to open slightly lower on Thursday as traders speculate as to whether the S&P 500 can break the 5,000 landmark.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.1%, while those for the S&P 500 eased 0.2% and contracts for the Nasdaq 100 futures fell 0.2%.
On Wednesday, the S&P hit a new intra-day high, just failing to hit 5,000 as technology stocks such as Meta, Nvidia and Microsoft pushed higher once more.
Investors will have another slew of earnings to unpick with Philip Morris, ConocoPhillips (NYSE:COP, ETR:YCP), Apollo Global Management (NYSE:APO), Kenvue, Hershey, T Rowe Price, Spirit Airlines and Ralph Lauren among those rporting before the opening bell.
Pinterest, Illumina and Expedia will post their results after the market closes.
Before the open, new applications for US state unemployment aid, a proxy for lay-offs, are expected to have ticked down to 220,000 last week from 224,000 in the previous week.
11:30am: AstraZeneca slips after earnings miss
Shares in AstraZeneca PLC (LSE:AZN) are down 5.5% now after fourth quarter results fell short of expectations.
Shore Capital analyst Sean Conroy said while revenue was in line with consensus expectations, core EPS was 3% behind forecasts.
Oncology sales were 1% behind estimates, with Tagrisso missing by around 4%, he said.
Core operating income came in well behind expectations, he noted, 14% below forecast, with both research and development, and selling, general and administrative expense higher than expected in the quarter.
Nonetheless, Conroy remains positive on the stock - reiterating a 'buy' rating and 13,000 pence share price target.
"We continue to believe a premium is warranted based on its earnings growth and pipeline prospects," he said.
11:04am: NatWest to poach UBS executive to join Coutts
Sky News reported that NatWest Group PLC (LSE:NWG) has poached Emma Crystal from UBS to join its wealth management division, which includes Coutts private-banking.
Crystal will join the state-backed lender from the Swiss banking giant to replace a top Coutts executive who was forced out during last year's 'debanking' row involving Nigel Farage.
Crystal, who has also worked for Credit Suisse, will become the next chief executive of its wealth management division, which includes Coutts, replacing Peter Flavel, who left NatWest last summer.
10:22am: DS Smith jumps after Mondi approach
We mentioned the bid rumours earlier and DS Smith has now confirmed that it has received a "highly preliminary expression of interest" from Mondi PLC (LSE:MNDI) regarding a combination with DS Smith.
"The board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage," it said.
Shares are up 13% after the announcement with Mondi now down 2.2%.
Smurfit Kappa is up 5.6% - also supported by positive comments from JPMorgan.
9:50am: DS Smith climbs on vague bid talks
Shares in DS Smith have spiked on bid rumours - Betaville has suggested there was takeover interest in the company, potentially including a private-equity firm.
The report has been enough to push the share price nearly 6% to the good, with Smirfit Kappa, up 5.3% and Mondi up 2.7%.
Elsewhere, BAT, Unilver and Compass remain ind emand after their updates Thursday.
On Unilever, Richard Hunter at interactive investor, said the firm is "at the beginning of what it hopes will be a transformational path to a more streamlined and focused business."
He pointed out growth in the past has largely been driven by price increases to its products rather than volume growth, and this particular mix is one on which the group has a keen eye.
For the fourth quarter the picture improved somewhat, with volume growth of 1.8% contributing to an overall number of 4.7%, he explained.
Hunter thinks the next phase of the strategy from the relatively new CEO will be to simplify the operating model, but this may take some time to wash through fully.
"For investors, the jury remains out as signs of the strategy emerge, although today’s update provides some promising signs," he added.
9:15am: BAT mulls sale of stake in ITC
BAT is now up 6.0% and another factor providing support was a comment that the firm was looking at its stake in ITC in India.
"We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding and will update you at the earliest opportunity," the firm said.
This could worth around £15 billion, analysts think.
Analysts at Jefferies said: "In summary, with the ITC comments, as well as no change to the divi policy with the speculation on this into the print, we see this as a net positive for sentiment."
8:45am: BAT up on earnings beat, Compass gains on upbeat trading
The FTSE 100 remains in positive territory - just - now up around5 points at 7,634.16.
BAT is up 4.1% after its results which analysts said were better-than-expected, boosted by growth in new category products, such as vapes, e-cigarettes and nicotine patches.
Adam Vettese, analyst at investment platform eToro said: “It's been evident for some time that cigarette companies will need to reinvent themselves as smoking rates decline and non-combustible alternatives become more and more popular.”
“British American Tobacco has been going through this process for a few years now, and after a tough 2024 which saw 30% trimmed off its share price, its latest profits have beat estimates,” he noted.
Compass Group PLC (LSE:CPG) is also going well, up 3.4%, after reporting a double-digit percentage organic increase in revenue in its financial first quarter, while saying recent acquisitions hold the promise of more growth ahead.
The Surrey, England-based food catering firm said revenue grew by 12% organically in the three months that ended December 31.
This was led by its Europe region, with a 13% rise, and Rest of World at 12%. North America growth was 11%.
Like-for-like volume was better than anticipated in the recent quarter, especially among Business & Industry clients, the firm added.
8:15am: FTSE 100 opens higher as investors digest earnings
The FTSE 100 opened higher as investors digested results from a number of index heavyweights.
At 8:15am, London’s blue-chip index was up 0.2% at 7,644.03.
With AstraZeneca, Unilever and British American Tobacco reporting earnings today, plus Compass, Anglo American and SSE, that’s equivalent to almost 20% of the FTSE 100 in terms of weighting.
Early reactions were mixed
AstraZeneca fell 1.9% despite reporting a rise in sales and profits in the fourth quarter.
Derren Nathan, head of equity research, Hargreaves Lansdown said: “AstraZeneca has shrugged off falling sales of COVID-19 medicines with a strong 2023 performance. And with three new medicines approved since the third quarter, it’s not resting on its laurels.”
Unilever rose 3.0% after reporting a return to volume growth for sales, alongside a new share buy back.
SSE is down 2.2% although the company maintained its earnings forecast but said that turbine installation at the Dogger Bank wind farm has been hit by weather conditions, which may mean full operation is not achieved until 2025.
7:51am: Unliever in new buyback but performance "needs to improve"
Unilever PLC (LSE:ULVR) reported underlying sales growth in the fourth quarter as it launched a new $1.5 billion share buyback.
The FTSE 100-listed firm which makes Hellmann’s mayonnaise and Dove soap said underlying sales in the fourth quarter rose 4.7% to €14.2 billion, although on a GAAP reported basis sales fell 3.0%.
For 2023 as a whole, underlying sales growth was 7% to €59.60 billion while operating profit fell 9.3% to €9.76 billion.
Chief Executive Hein Schumacher said there was more to do.
"Today's results show an improving financial performance, with the return to volume growth and margins rebuilding.”
“However, our competitiveness remains disappointing and overall performance needs to improve.”
Beauty & Wellbeing saw underlying sales rise 7.9% compared to last year, Personal Care sales rose 6.4% and Nutrition sales rose 4.7%. Ice cream sales dropped 0.4%.
A new €1.5 billion buyback was approved to be conducted during 2024.
Unilever said the 30 Power Brands (around 75% of turnover) were accretive to growth and margin, with underlying sales up 8.6%.
The company expects underlying sales growth for 2024 to be within its multi-year range of 3% to 5%, with more balance between volume and price.
7:45am: BAT sees progress in new category sales
British American Tobacco PLC (LSE:BATS) on Thursday reported modest progress in underlying profitability as new category sales, such as vapes, increased.
The FTSE 100-listed company adjusted sales in 2023 rose 1.6% to £27.28 billion supported by growth in new categories of 15.6% and resilient pricing.
BAT posted a reported loss from operations of £15.75 billion impacted by a £27.6 billion non-cash impairment charge mainly related to its US business.
Excluding this the firm reported an operating profit rose 3.1% to £12.47 billion.
Underlying diluted EPS rose 4.0% to 375.6p while the dividend was increased 2.0% to 235.52p.
Total combustibles organic revenue grew 0.6%, with an organic price/mix of plus 6.1% offset by lower volume and geographic mix mainly due to macro-economic pressures in the US impacting the premium segment
Chief Executive Tadeu Marroco said: “New Categories delivered continued volume-led revenue growth and increased profitability, driven by Vuse and Velo.”
“As a result, our New Categories portfolio has turned profitable two years ahead of our original target.”
“In combustibles, our commercial plans in the U.S. are enabling early signs of portfolio recovery,” he added.
7:00am: FTSE 100 expected to edge higher while S&P 500 closes in on landmark
The FTSE 100 is expected to open slightly higher on Thursday after US markets hit new record highs driven by gains in tech stocks.
Spread betting companies are calling London's lead index up by around 4 points after closing down 52.26 points at 7,628.75 on Wednesday.
On Wall Street, the S&P 500 hit a new intra-day high, rising 0.8%, taking it within a whisker of the 5,000 landmark - gains in technology stocks such as Nvidia, Microsoft and Meta Platforms supported the latest rise.
In Asia, Chinese consumer prices fell in January at their quickest rate in more than 14 years, data showed Thursday, as the country's leaders struggle to revive buying sentiment in the world's second-biggest economy.
The figures will add to calls for a stimulus to revive the economy.
"In plain English, it means that the Chinese efforts to boost growth and bring inflation back are not working according to the plan," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Back in London, and results from a number of FTSE 100 companies will provide the early focus - Compass, BAT, AstraZeneca, Unilever, SSE and Anglo American will report updates.