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LONDON MARKET MIDDAY: Stocks shrug off continued US Fed rates concerns

Investors in London were not deterred by continuing concerns of higher for longer US interest rates, as stocks were up heading into the afternoon.

The FTSE 100 index was 14.38 points higher, 0.2%, at 7,862.37. The FTSE 250 was up 63.75 points, 0.3%, at 19,403.89. The AIM All-Share was up 0.59 of a point, 0.1%, at 743.71.

The Cboe UK 100 was a touch higher at 785.28, the Cboe UK 250 was up 0.1% at 16,800.79, and the Cboe Small Companies was down 0.1% at 14,764.93.

Against the dollar, sterling rose to $1.2479 early Thursday afternoon, from $1.2447 late Wednesday. The euro was up at $1.0677, from $1.0637. Against the yen, the buck bought JP¥154.39, down from JP¥154.67.

In New York, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite, are all called 0.3% higher on Thursday.

‘The risk on sentiment being felt today has helped drive the dollar lower, following a period of gains that saw the greenback reach a five-month high yesterday. What has been notable over recent months has been the outperformance of European indices compared with their US counterparts, as their lofty valuations bring greater profit taking. The Federal Reserve are facing elevated inflation pressures and a solid economy, raising the likeliness of a divergence this year as European central banks cut rates ahead of their US counterparts,’ Scope Markets analyst Joshua Mahony commented.

‘Market sentiment appears to be heavily entrenched with the trajectory of crude oil, with the slump in oil prices helping to lift sentiment today. While oil is priced in dollars, the classic inverse relationship has switched of late to reflect the concern that higher oil prices will spur a second wave of inflation.’

A barrel of Brent oil slumped to $86.27 early Thursday afternoon from $88.68 late Wednesday. The weaker oil price sent BP and Shell 1.6% and 0.9% lower in London on Thursday.

In European equities on Thursday, the CAC 40 in Paris rose 0.4% and the DAX 40 in Frankfurt was flat.

Share price falls for Rheinmetall and Sartorius hurt the DAX.

Arms and automotive manufacturer Rheinmetall lost 4.1%. Fellow defence firm BAE Systems fell 2.8% in London.

Shares in the duo have enjoyed a rip-roaring gain over the past two years, on the expectation that there will be a rise in military spending amid intensifying geopolitical tensions.

Sartorius plunged 12%. The laboratory equipment supplier said net profit in the first-quarter of 2024 totalled €36.7 million, down 61% from €93.1 million in the first quarter of 2023.

In London, easyJet shares rose 2.2%. It reported a ‘positive outlook’ for the remainder of its financial year, and said its ‘seasonal’ losses eased in the first half. Sales amounted to €819.6 million in the quarter, down 9.3% from €903.2 million a year prior.

In the six months to March 31, revenue surged 22% to £3.27 billion from £2.69 billion. Its headline pretax loss slimmed to £350 million from £411 million.

‘Easter demand was particularly strong, benefitting March due to its early timing. Operational performance was good with peak daily flights broadly in line with summer levels,’ it said. ‘Bookings for summer 2024 continue to build well, with an increase in volume and pricing compared to the same period last year, underpinned by strong demand for easyJet’s primary airport network.’

Chief Executive Johan Lundgren said the firm is ‘well set up operationally’ for the upcoming summer season.

Shares in British Airways parent International Consolidated Airlines Group added 4.0% in a positive read-across. Budget carrier Wizz Air rose 5.3%.

Hipgnosis Songs Fund jumped 30% to 91.66 pence. It has agreed to a $1.40 billion cash takeover from music rights acquirer Alchemy Copyrights, which trades as Concord.

Concord will pay $1.16, or 93.2 pence, in cash per Hipgnosis Songs Fund share. The price is a 32% premium to its Wednesday close.

Concord said Higpnosis Songs Fund shareholders will stand to receive up to an extra $25 million in total, if the investment adviser deal with Hipgnosis Song Management is ended.

Hipgnosis Songs Fund is in dispute with its investment adviser, alleging misconduct against Hipgnosis Songs Management and its founder Merck Mercuriadis.

The dispute was sparked by an arrangement, later rejected by Hipgnosis Songs Fund shareholders, to sell part of the fund’s portfolio to a joint-venture between Hipgnosis Songs Management and private equity firm Blackstone. This triggered board changes at the fund.

AJ Bell analyst Russ Mould commented: ‘An end is in sight for one of the most chaotic events to unfold in the world of investment trusts for years. After much hype led to great disappointment, soundtracked by questionable corporate governance, Hipgnosis Songs Fund is now the recipient of a takeover bid from Concord. This might be the final chapter in the trust’s life as a listed entity, one that’s been filled with many dud notes.

‘Whether it will be a smooth exit is another thing. It’s worth noting that chairman Robert Naylor has pleaded with the trust’s investment adviser Hipgnosis Songs Management and HSM’s majority owner Blackstone to agree an orderly termination of the investment advisory agreement.’

Elsewhere in London, LBG Media, which owns the Ladbible news and entertainment and viral video site, shot up 12%. It hailed a positive outlook in the US.

It said revenue in 2023 rose 7.5% to £67.5 million from £62.8 million in 2022. Its pretax profit, however, fell 19% to £5.9 million from £7.3 million.

LBG added: ‘Our positive revenue momentum and platform for growth in the US leaves the group at a significant juncture in its evolution and provides a clear line of sight to achieving £200 million of revenue. We have made a good start to 2024, entering our second quarter with positive momentum.’

Jubilee Metals fell 6.0%. It said it delivered an ‘exceptional’ performance in the first nine months of its financial year, though its platinum output declined and it cut its copper production outlook.

Platinum group metals production dropped 18% to 8,339 ounces quarter-on-quarter in the third quarter to March 31, from 10,131 ounces, mainly due to a reduction in available stock of lower-grade feed material, Jubilee said.

Nine-month PGM production was 3.6% lower at 28,583 ounces, compared to 29,645 ounces.

Chrome production rose 7.2% to 408,710 tonnes for the third quarter, from 381,114 tonnes in the second. For the nine months that ended March 31, chrome concentrate output jumped 19% to reach 1.1 million tonnes.

Copper production declined 8.4% to 691 tonnes in the third quarter from 749 tonnes in the second, but it surged 69% to 2,374 tonnes in the nine months from 1,409 tonnes a year before.

Jubilee revised down its copper production guidance to between 3,250 and 4,000 tonnes, from 5,850 predicted previously. For 2023, copper production was 2,923 tonnes.

Still to come on Thursday is a US initial jobless claims reading at 1330 BST.

Gold traded at $2,382.63 an ounce midday Thursday, down ever-so-slightly from $2,383.47 at the London equities close on Wednesday.

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