FTSE 100 Rises as Sterling Falls After UK Inflation Data
The FTSE 100 rises 0.1% to 7585 points as sterling falls after data showed U.K. inflation accelerated to a higher-than-expected annual rate of 7.0% in March. The inflation data make another 25 basis points interest rate rise by the Bank of England in May more certain but will "exacerbate the cost of living squeeze highlighted by yesterday's labor market data, which showed average earnings growing at 4-5%, well below inflation," Kingswood investment strategist Rupert Thompson says. A weaker sterling lifts multinational stocks, which account for a large proportion of the FTSE 100. Mining shares rally as copper prices rise. Tesco falls 5.8% after the supermarket chain warned its profit will fall in the current year.
Companies News:
Tesco FY 2022's Pretax Profit, Revenue Rose; Launches GBP750 Mln Buyback
Tesco PLC said Wednesday that fiscal 2022 pretax profit rose as revenue including fuel increased ahead of market views, and said it is committed to buying back 750 million pounds ($975.1 million) of its shares.
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Darktrace 3Q Revenue Rose; Raises FY 2022 Revenue, Margin Guidance
Darktrace PLC on Wednesday reported a strong sales performance and improved revenue in its third quarter, and raised revenue growth and earnings margin expectations for the full year.
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GlaxoSmithKline to Acquire Sierra Oncology for $1.9 Bln
Pharmaceutical giant GlaxoSmithKline PLC said Wednesday that it is buying biopharmaceutical company Sierra Oncology Inc. for $1.9 billion, and backed its guidance.
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PZ Cussons 3Q Revenue Rose, Backs FY 2022 Guidance
PZ Cussons PLC said Wednesday that revenue rose in the third quarter of fiscal 2022, driven by strong progress in the Africa market in particular, and backed its full-year guidance.
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Anglo American's De Beers Diamond Sales Rose 26% in Third Cycle
Anglo American PLC said Wednesday that rough-diamond sales by its majority-owned De Beers Group rose 26% in 2022's third sales cycle compared with the year-earlier third cycle, though it cautioned about the impact on the industry from the war in Ukraine as well as Covid-19-related lockdowns in China.
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Ted Baker Confirms Sycamore Partner's Participation in Formal Sale Process
Ted Baker PLC on Wednesday confirmed that the U.S.-based private equity firm Sycamore Partners Management LP will participate in the formal sale process of the company.
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Steppe Cement 1Q Revenue Rose on Strong Sales, Higher Prices
Steppe Cement Ltd. said Wednesday that revenue for the first quarter rose as stronger cement-sales volumes were complemented by higher prices during the period.
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MaxCyte CFO Resigns, Ron Holtz Appointed in Interim; Sees 1Q Revenue Up
MaxCyte Inc. said on Wednesday that Chief Financial Officer Amanda Murphy has resigned effective Friday, and that Ron Holtz has been named interim CFO effective from Ms. Murphy's departure.
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Watkin Jones Expects 1H Profit Fell, Revenue Rose
Watkin Jones PLC said Wednesday that it expects both gross and operating profit for the first half of fiscal 2022 slipped in line with management expectations, though revenue rose.
Market Talk:
March UK Inflation Data Highlight Cost-of-Living Squeeze
0829 GMT - Consumer prices in the U.K. rose more than expected in March, squeezing consumers' real incomes further and warranting another rate rise by the Bank of England in May, says Rupert Thompson, investment strategist at Kingswood. The inflation rate rose to 7% in the 12 months to March, the highest rate since 1992 and up from 6.2% in February, official data showed. Thompson stresses that price gains were widespread, with core inflation, which excludes volatile food and energy prices, rising to 5.7% from 5.2% in the same timeframe. "The data make another 0.25% rate hike on 5 May all the more certain and will exacerbate the cost of living squeeze," he says in a note.
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Tesco's FY 2023 Views Lead to Downgrades Amid Rising Inflation
0824 GMT - Tesco's guidance for fiscal 2023 has driven Shore Capital's earnings-per-share estimates for the financial year down by around 4% to 5% to around GBP2 billion. Retaining a more positive stance feels like pushing water up a hill, Shore says. The British grocer's performance for fiscal 2022 was very good as it gained share market in its core U.K. market and performed well in Ireland, Shore says. But the U.K. investment group sees a consumer recession in the U.K. amid rising prices and downgrades its recommendation on the stock to hold from buy. Shares are down 6% at 254.30 pence.
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BOE On Track to Raise Rates as Inflation Hits 7% in March
0759 GMT - Data showing the annual U.K. inflation rate rose to 7% in March supports another interest rate rise by the Bank of England at the central bank's next meeting on May 5, says Jeremy Batstone-Carr, part of Raymond James European strategy team. The uptick in consumer prices was largely driven by transport costs, with average petrol prices rising by 12.6 pence per litre between February and March, the biggest single monthly increase since records began in 1990, he says. Inflation could hit 8% in April, reflecting the higher energy price cap raising gas and electricity prices. However, "there is some hope in that official forecasts suggest April's consumer price index data may represent the peak," he says.
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Tesco's Strategy Seen as Coming Together Despite Inflation Hit
0743 GMT - Tesco is a force to be reckoned with within its industry, as it shows few signs of taking its foot off the pedal in keeping its rivals at bay, Interactive Investor says. The British grocer hasn't been immune to the inflation environment given its lowered fiscal 2023 adjusted operating profit guidance, the U.K. investment platform says. However, as a supermarket, Tesco retains an element of being a defensive stock, given the need for its products regardless of the wider economic backdrop, Interactive Investor says. "The key metrics are testament to the success of the strategy and on most fronts have comfortably exceeded expectations," Interactive Investor says, noting that shareholder return shows the company's confidence in its prospects.
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UK 2Y Gilt Yields Jump on Above-Forecast UK Inflation
0735 GMT - Two-year U.K. government bond yields, which are more sensitive to changes in interest rate expectations, jump after official data showed inflation rose more than expected in March. The two-year gilt yield trades last at 1.564%, up from Tuesday's close of 1.511%, according to Tradeweb. The annual rate of inflation hit a fresh three-decade high of 7% in March, beating expectations in a WSJ poll of economists for a reading of 6.7% and rising from 6.2% in February. ING analysts predict inflation will peak at 8.5% or slightly above in April and is unlikely to fall below 7% this year if petrol prices stabilize around current levels.
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Darktrace's Strong 3Q Momentum Prompts Full-Year Upgrades
0734 GMT - Darktrace's third-quarter update brings annual recurring revenue growth of 46% and revenue growth of 50%, with guidance raised once again, Jefferies says. The U.K. cybersecurity company's metrics were supported by growth of 37% in customer numbers, implying a continued improvement in annual recurring revenue per customer, the U.S. bank says. Given Darktrace's strong momentum, the company increased its fiscal 2022 guidance for annual recurring revenue, revenue and adjusted Ebitda, Jefferies says. Jefferies withdraws its rating and price target on Darktrace's shares, noting that up to 20 million shares are likely to be placed soon given the post-IPO lock-up expires in May. Shares are up 3.6% at 465.6 pence.
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UK 10Y Gilt Yield Rises After Inflation Data
0717 GMT - U.K. 10-year borrowing costs rise after official data Wednesday showed inflation hit a new three-decade high of 7% in March. The 10-year gilt yield rose to 1.809% after the announcement, from the prior day's close of 1.802%, albeit failing to surpass Tuesday's intraday high of 1.906%, according to Tradeweb. Rising fuel prices drove the annual consumer price index up to 7% in March, up from 6.2% in February and beating economists' expectations in a WSJ survey of 6.7%.
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Tesco's Consensus Seen to Move to Bottom Half of FY 23 Guidance
0716 GMT - Tesco's investments to maintain the strength of its price position relative to the market will be well noted by competitors, Citi says. Consensus, however, will move to the bottom half of its guidance range of around GBP2.45 billion for fiscal 2023's adjusted operating profit as Tesco invests to drive value and share, the U.S. bank says. The debate over Tesco will progressively turn to its net income over a three-five year period amid the inflation environment, Citi says. The extent to which the British grocer can meet or beat the top of its profit guidance for fiscal 2023 will determine how much Tesco eventually rerates from here, Citi says. Tesco is well positioned to drive adjusted operating profit in its clubcard and online automation areas, Citi says.
Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com
(END) Dow Jones Newswires
04-13-22 0502ET
