Croda International shares were down heavily on Friday after the speciality biotechnology company said sales volumes were down double digits in early 2023 compared to the same period last year.

Croda shares were down 14% at the time of writing.

Croda International provides speciality ingredients with various end uses, including crop enhancement and pharmaceuticals.

Sales were hit by destocking by customers. Croda had originally predicted destocking would occur later in the year, but they said customers had conducted rapid destocking earlier than thought.

Favourable FX rates have helped offset lower volumes, and the company recorded revenue for the first five months of the year broadly in line with the same period last year.

Croad said they expect profit before tax for the 2023 full year to be between £370m and £400m – significantly lower than 2022.

The FTSE 100 was flat on Thursday as markets weighed the latest moves by the Canadian and Australian central banks to raise interest rates.

The FTSE 100 was trading down 1 point to 7,622 at the time of writing.

Investors had been looking forward to a pause in US rate hikes, but the decision by the two central banks to increase rates raises concerns about the Federal Reserves decision next week.

Equity markets have rallied this year on a Fed ‘pivot’ away from rate hikes.

“Canada and Australia don’t often have a central role in moving the markets, but the decision by both countries’ central banks to resume rate hikes this week has reverberated through the financial system and helped stoke fears about sticky inflation,” said AJ Bell investment director Russ Mould.

“Much of the narrative sustaining the uneven if material rally in stocks this year has been that the battle with inflation is nearly won by the central banks. If the Federal Reserve follows the lead of its Australian and Canadian counterparts then this could be badly undermined and the next Fed decision is now just a week away.”

The UK housing market was dealt another blow with a downbeat assessment of the UK property market by the Royal Institution of Chartered Surveyors.

“The monthly report by the Royal Institution of Chartered Surveyors (RICS) mirrors the gloom seen in yesterday’s house price data by Halifax although there were a few glimmers of hope,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“The fall in buyer enquiries was the lowest seen over twelve months although was still down 18%. The rate of decline in agreed sales also fell sharply. The report warned that “storm clouds are gathered’’, with the UK’s stubbornly high inflation undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises.”

FTSE 100 movers

The benign trade in the FTSE 100 index was reflected in little movement by its constituents.

Hargreaves Lansdown was the FTSE 100’s top riser, up 2%, as the stock broke to the highest levels since early March.

Stocks trading ex-dividend dominated the fallers, with Sainsburys and Vodafone trading without eligibility for their upcoming dividend payments.

The Lloyds share price has been trading in a tight range in 2023, with the price trending backwards and forwards between 45p-55p.

The FTSE 100 banking giant reported solid results for 2022 as rising borrowing costs helped increase Lloyds net interest margin – a key measure of profitability.

Trade in Lloyds shares has been subdued since the release as investors assess the implications of earnings guidance for the year ahead, which suggests 2023 may not provide as much growth as 2022. Lloyds reaffirmed their guidance in Q1’s interim management statement.

Lloyds weighed the trajectory for interest rates and guided banking net interest margin (NIM) to be greater than 305 basis points in the 2023FY. This could be lower than the 3.22% NIM recorded in Q1.

It was a similar story for other FTSE 100 banks. However, those banks with significant markets and investment banking divisions and exposure to Asia were slightly more confident in growth throughout the remainder of 2023. This may make Lloyds shares less attractive, given their focus on the UK and exposure to the housing market.

This is demonstrated in the year-to-date performance of the FTSE 100’s banks.

Concerns about the UK housing market are likely behind Lloyds shares currently trading near the lowest levels of 2023.

An overview of key ratios and income characteristics provides the opportunity to further assess Lloyds shares’ attractiveness compared to peers.

The constituents of the FTSE 100 banking sector trade broadly in line with the peer average providing little opportunity for significant rerates towards the mean in any individual stock.

FTSE 100 banks have long trades at a discount to book value, and if this should discount move to a premium, the sector is likely to move in unison. This doesn’t provide an opportunity to pick one bank over another.

Income seekers may lean towards Lloyds due to their higher yield of 5.3%, which is gently increasing.

Whether Lloyds is the best FTSE 100 bank to buy depends on individual investment objectives and the required balance of growth and income. Lloyds offers the best yield of FTSE 100 banks but the immediate growth outlook is cloudy.

Long-term investors may see the current 45.5p Lloyds share price as an entry to achieve the 5.3% yield. However, further deterioration in the UK housing market and lower interest rates later this year may provide a better entry price.