Stock prices in London declined on Tuesday morning, with trading remaining muted following a public holiday in the US on Monday, though banking stocks were a bright spot for the FTSE 100.
The FTSE 100 index opened down 7.57 points, 0.1%, at 7,720.93. The FTSE 250 was down 51.49 points, 0.3%, at 19,165.41, and the AIM All-Share was down 1.89 points, 0.3%, at 754.44.
The Cboe UK 100 was down 0.1% at 772.89, the Cboe UK 250 was down 0.3% at 16,583.62, and the Cboe Small Companies down 0.1% at 14,499.28.
In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.4%.
Sterling was quoted at $1.2582 early Tuesday, down slightly from $1.2589 at the London equities close on Monday. The euro traded at $1.0773, higher than $1.0764. Against the yen, the dollar was quoted at JP¥150.32, up versus JP¥150.17.
In the FTSE 100, Barclays was by far the top performer, up 5.5%.
Barclays said its total income in 2023 rose 1.7% year-on-year to £15.38 billion from £24.96 billion, with growth in Barclays UK of 4.5% to £7.59 billion. However, pretax profit fell 6.5% to £6.56 billion from £7.01 billion, as its credit impairment charge widened to £1.88 billion from £1.22 billion. In the fourth quarter, total income fell 3.5% to £5.60 billion, while pretax profit plunged 92% to £110 million, after restructuring costs of £927 million.
For 2023, the total dividend rose to 8.0 pence from 7.25p the year before. The bank plans to begin another share buyback worth £1.0 billion, bringing total capital distributions for the year to £3.0 billion, which is up around 37% on 2022. It is also planning at least £10 billion in capital returns to shareholders between 2024 and 2025.
Barclays’ return on tangible equity fell to 9.0% in 2023 from 10.4% in 2022, but the bank is targetting a RoTE of over 10% in 2024.
Barclays announced it will now be managed and report via five focused operating divisions, allowing it to provide an ‘enhanced and more granular disclosure’ on its performance. It will unveil its new three-year plan at an investor update later in the day.
‘Barclays strategic review was punchy, and it essentially boils down to two things: cut costs aggressively and boost profits and continue to return capital to shareholders, to the tune of £10bn by 2026. This is exactly the type of message that shareholders love at the moment, and it is why the market has reacted with glee on Tuesday morning,’ explained Kathleen Brooks, research director at XTB.
NatWest added 1.0% in a positive read-across. Lloyds and HSBC edged up 0.4% and 0.3% respectively.
Airtel Africa struggled in early trading, falling 5.1%, as JPMorgan cut its price target for the stock by 28%.
In the FTSE 250, Mobico dropped 6.6%.
The transport provider - formerly known as National Express - announced a delay to the publication of its annual results for 2023, which were due on February 29. This is due to account judgements relating to its German Rail business which ‘should be subject to further review’.
Mobico said it continues to expect adjusted earnings and interest for tax for 2023 to be in the guided range of £175 to £185 million. However, it warned its onerous contract provision as at the end of December is expected to increase by between £40 million and £70 million, resulting from issues within its German Rail arm.
‘The German Rail business has been impacted by industry-wide driver shortages, energy price volatility and lower energy cost recovery than previously anticipated,’ Mobico explained. The firm now expects results to be published ‘before the end of March’.
Among London’s small-caps, Superdry was up 13%.
According to a Sky News report, the British clothing retailer’s founder Julian Dunkerton is courting prominent US investor Davidson Kempner - who owns Oak Furnitureland - to take the embattled firm private. Sky reported that the talks are at an early stage, with no guarantee of any deal being sealed.
On AIM, Horizonte Minerals plunged 62%.
After the market close on Monday, the mineral developer provided an updated capital expenditure outlook for its 100%-owned Araguaia nickel project in Brazil. Following a review, it now estimates the capital required to complete construction, commission the project and deliver first metal is around $454 million. The estimate at completion now stands at $1.00 billion, which is some 87% higher than its previously disclosed capex budget of $537 million. Mechanical completion is expected in the first quarter of 2026.
‘It is important to note that while completing the Cost-to-Complete estimate is a significant milestone, resuming and completing construction activities at Araguaia are still subject to the successful completion of a full financing solution, which the company will seek to develop in the coming weeks, but with no guarantee of success,’ Interim CEO Karim Nasr warned.
Meanwhile, US financial markets will reopen on Tuesday, after being closed on Monday for Washington’s birthday. There will be annual results from retailers Home Depot and Walmart, which will give insight into the health of consumer spending. Investors are also keenly awaiting Nvidia’s annual results, which are due on Wednesday after the closing bell in New York.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.3%. In China, the Shanghai Composite added 0.4%, while the Hang Seng index in Hong Kong was up 0.6%.
China’s central bank cut a key benchmark lending rate used to price mortgages, as Beijing seeks to rescue its housing market from a deepening crisis and boost flagging growth in the country’s economy.
The five-year loan prime rate was lowered to 3.95% from 4.2%, the People’s Bank of China announced, in the first cut since June. It is the largest cut to the rate since it was introduced in 2019, according to Bloomberg, deeper than that expected by economists polled by the financial newswire. The one-year LPR, which serves as a benchmark for corporate loans, remained unchanged at 3.45%.
‘The cut to the 5-year LPR is likely aimed at supporting the recovery of the property market, and could improve affordability for buyers by lowering the mortgage rates. However, banks were already facing record low net interest margins as of the third quarter of 2023, and have been tasked with extending loans to support troubled property developers. The 5-year LPR cut could add further pressure to Chinese bank margins,’ said ING.
The S&P/ASX 200 in Sydney closed down 0.1%.
Gold was quoted at $2,021.47 an ounce early Tuesday, higher than $2,013.67 on Monday. Brent oil was trading at $83.48 a barrel, little changed from $83.53.
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