FTSE 100 lower after UK inflation data and ahead of Fed meeting, Burberry hit by Kering warning, Prudential delivers strong results and Computacenter warns of second-half weighting in 2024

“The FTSE 100 dipped at the open despite UK inflation numbers falling more than expected for February,” says AJ Bell Investment Director Russ Mould.

“The market is now pricing in a higher chance of a June rate cut, even if today’s reading is extremely unlikely to have any influence on the Bank of England’s decision making later this week.

“British luxury brand Burberry was down on a read across from a downbeat first quarter forecast from European counterpart Kering, pegged on weaker demand from China. The Chinese market is extremely important to Burberry.

“Focus tonight will switch to the US with the Federal Reserve set to announce its latest decision on rates. No move is expected so all the focus will be on any surrounding commentary and clues the market can draw about when the Fed will finally pivot to lower rates.”

Prudential

“The whole idea behind Prudential’s pivot east was to benefit from the growth opportunities in less mature insurance and savings markets in Asia and Africa.

“However, the recent sticky patch for the Chinese economy has undermined the business and, to an even greater degree, sentiment towards it. Today’s results should go some way to redressing the balance.

“The company delivered more beats than a Keith Moon drum solo and, crucially for markets which are always looking forward, reported strong trading in the first two months of 2024 too.

“The reopening of the border between Hong Kong and mainland China has been supportive as the operation in the former benefits from strong demand from the latter.

“The generosity in the dividend will be welcome to shareholders, both on its own terms but also for what it says about management’s confidence in the outlook for the business.

“Vocal confidence in the company’s 2027 targets should also help address any market scepticism about its ability to meet these goals.”

Computacenter

“It always provokes some discomfort on the part of investors when a company flags a second-half weighting for the year ahead and that, plus a strong run for the shares for the past year, explains the negative reaction to IT reseller Computacenter’s latest results.

“Judged purely by looking in the rear-view mirror today’s announcement was cause for celebration. Computacenter posted record revenue and profit as businesses and organisations look to digitise their operations and draw on the company’s computer systems and software services.

“The company is also taking market share, which is encouraging for its longer-term prospects. However, a stellar 2023 will be a hard act to follow in 2024 and the guidance for growth to be weighted towards the second half will provoke fear that ultimately any first-half shortfall cannot be made up and the result will be a cut to guidance. Typically, this is how such situations play out.

“Although to be fair, the reason for the second-half weighting is tough comparison with a particularly strong first half of 2023.

“There may be some impatience about the company’s failure to clarify what it will do with a growing cash pile, with only a modest increase in the ordinary dividend delivered.”

These articles are for information purposes only and are not a personal recommendation or advice.