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LONDON MARKET CLOSE: FTSE 100 fights off early losses in mixed trading

25th Oct 2023 17:07

(Alliance News) - Stock prices in London closed mixed on Wednesday, as concerns over monetary policy and developments in the Middle East lingered.

The FTSE 100 index closed up 24.64 points, or 0.3%, at 7,414.34. The FTSE 250 ended down 123.39 points, or 0.7%, at 16,870.71, and the AIM All-Share closed down 4.63 points, or 0.7%, at 673.82.

The Cboe UK 100 ended up 0.4% at 740.04, the Cboe UK 250 closed down 1.0% at 14,598.71, and the Cboe Small Companies ended down 0.3% at 12,660.52.

In European equities, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended up 0.1%.

European stocks struggled, despite sentiment in Asia getting a boost after China unveiled plans for USD137 billion in extra debt to boost infrastructure spending.

The country approved a plan to issue CNY1 trillion in sovereign bonds to be distributed to local governments to support national disaster prevention and recovery.

Leaders rarely alter the budget mid-year, but it did happen in 2008 after the Sichuan earthquake and during the Asian financial crisis in the late 1990s.

"Chinese stocks initially surged on the back of Beijing's new stimulus measures and President Xi Jinping's visit to the central bank, but the gains were short-lived," said SPI Asset Management analyst Stephen Innes.

"Skepticism and concerns over the troubled property sector weighed on investor sentiment, causing stocks to pare back their earlier advances."

There was some upbeat news on the Germany economy, too. According to data from the Ifo, economic sentiment in the Germany improved more than expected in October.

The ifo Business Climate Index rose to 86.9 points in October from 85.8 points in September. October's print was better than markets had expected, with the index predicted to edge up to only 85.9 points month-on-month, according to FXstreet-cited consensus.

However, the United Nations Secretary-General Antonio Guterres warned that the situation in the Middle East is growing more dire by the hour, with the risk of the Gaza war spreading through the region increasing as societies splinter and tensions threaten to boil over.

Egyptian President Abdel Fattah al-Sisi urged steps "to avoid a ground invasion" of the Gaza Strip as Israel battles Hamas militants in the Palestinian enclave.

Meanwhile, French President Emmanuel Macron said that "France does not practise double standards", pushing back against criticism of his government's response to war between Israel and Hamas militants.

He was responding to claims by Arab leaders who have accused Western nations of overlooking harm to Palestinians.

CMC Markets analyst Michael Hewson commented: "Today's bias has remained very much tilted towards the downside with a distinct risk off tone, with US markets pulling Europe into the red in the afternoon session."

The pound was quoted at USD1.2143 on Wednesday at the London equities close, down compared to USD1.2163 on Tuesday. The euro stood at USD1.0590, higher against USD1.0588. Against the yen, the dollar was trading at JPY149.93, up compared to JPY149.90.

In London's FTSE 100, Lloyds gained 2.2%.

The bank maintained annual net interest margin guidance and reported consensus-topping third-quarter profit, though top-line growth fell just shy of loftier expectations.

In the third quarter of 2023, the lender's net income rose 0.7% on-year to GBP4.51 billion from GBP4.48 billion. This was below company-compiled consensus of GBP4.56 billion, however.

Net interest income alone was 1.5% higher at GBP3.44 billion, though this also fell short of consensus of GBP3.45 billion.

Looking to the rest of 2023, Lloyds backed its aim of a banking net interest margin "greater than" 3.10%. It would top the 2.94% achieved in 2022.

"The confidence in the full-year forecast came despite the net interest margin coming in a touch below expectations for the three-month period to September 30, which may explain why there is some lingering scepticism reflected in the reaction to today’s statement," said AJ Bell analyst Danni Hewson.

"The key question for investors is how long the company can continue to enjoy some sort of benefit from the higher cost of borrowing and if or when the strain on household finances becomes so acute the level of loans gone bad starts to balloon."

Reckitt Benckiser lost 4.0%.

In the third quarter of 2023, the Dettol maker said like-for-like sales ticked up 3.4% to GBP2.60 billion. This was driven by 8.1% and 5.4% growth in its Hygiene and Health arms, respectively, and was offset by a 12% fall in its Nutrition division.

Reckitt also said it is beginning its GBP1 billion share buyback programme, which will commence imminently and last over the next 12 months.

Miners fared better on Wednesday, as the price of oil and gold firmed. Rio Tinto was among the best performing FTSE 100 stocks, rising 1.9%. Antofagasta closed up 1.4%, while Glencore was up 1.2%.

Brent oil was quoted at USD87.71 a barrel at the London equities close on Wednesday, up from USD86.37 late Tuesday. Gold was quoted at USD1,982.33 an ounce, up against USD1,963.03.

In the FTSE 250, Bytes Technology rose 6.3%.

The Surrey, England-based computer software posted a 23% rise in pretax profit to GBP33.3 million for the six months that ended August 31 from GBP27.0 million a year earlier. Revenue rose 16% to GBP108.7 million, from GBP93.5 million.

Against the backdrop of robust earnings, Bytes Technology boosted its interim dividend by 13% to 2.7 pence from 2.4p.

Chief Executive Neil Murphy described the first-half performance as "another strong financial" result. He said that "we have continued to see strong demand from our corporate and public sector customers for security, cloud adoption, digital transformation, hybrid data centres and remote working solutions".

Essentra lost 2.7% as it lamented a "softer trading environment".

Essentra, which provides components to customers in the manufacturing, automotive, electronics and construction fields, said it "experienced market softening" in the Europe, Middle East and Africa region.

In the third quarter of 2023, like-for-like and trading day adjusted group revenue fell 7.1% on-year. The decline eased from 12% in the second quarter.

On AIM, Ethernity Networks shares multiplied to 1.75 pence, as investors continued to react to Tuesday's news that it no longer considers 5G Innovation's USD90,000 settlement notice, related to a subscription agreement, as issued validly due to notification of an event of default.

The supplier of data processing semiconductor technology for networking appliances said it is now seeking to come to an agreed position on the treatment of the subscription while proceedings remain suspended.

Stocks in New York were mixed at the London equities close, with the DJIA up 0.2%, the S&P 500 index down 0.8%, and the Nasdaq Composite down 1.5%.

In Thursday's UK corporate calendar, StanChart releases its third quarter results.

The economic calendar has the latest interest rate decision from the European Central Bank. It is expected to decide against a rate hike.

By Greg Rosenvinge, Alliance News reporter

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