29th May 2018 17:18
LONDON (Alliance News) - Stocks in London ended lower on Tuesday following a downbeat session in Europe, as political jitters on the continent spooked investors.The FTSE 100 index closed down 1.3%, or 97.64 points at 7,632.64. The FTSE 250 ended down 1.7%, or 363.77 points, at 2,746.76, and the AIM All-Share closed down 0.8%, or 8.14 points, at 1,079.16.The Cboe UK 100 ended down 1.3% at 12,946.30, the Cboe UK 250 closed down 1.9% at 18,968.36, and the Cboe UK Small Companies ended flat at 12,706.52.The pound was lower quoted at USD1.3255 at the London equities close, compared to USD1.3311 at the close on Friday, trading around its lowest levels since December amid a strengthening greenback. "Political turmoil in Italy and Spain has rocked investor sentiment in Europe. Carlo Cotarelli will act as interim Italian prime minister to steady the ship, but we are likely to see a general election at the back end of this year or in early 2019," said CMC Markets analyst David Madden. In Italy, an attempt by two eurosceptic parties, the Five Star Movement and the League, to form a government failed over the weekend. As such, economist Carlo Cottarelli has now been tasked with setting up a new administration.The failure of the two parties to form a government sent ripples through financial markets in Europe and caused returns on 10-year Italian government bonds to rise sharply, exceeding 3% for the first time since mid-2014.In addition, Spanish Prime Minister Mariano Rajoy will face a vote of no confidence in parliament later this week, after former members of his centre-right People's Party were sentenced in a corruption case.Italy's benchmark FTSE MIB closed down 2.7% and Spain's blue chip IBEX 35 closed down 2.5%.In Paris the CAC 40 ended down 1.3%, while the DAX 30 in Frankfurt ended down 1.5%. In addition, Ignazio Visco, head of Italy's central bank, warned of a crisis in confidence in the country, amid the market turbulence caused by a failure to form a new coalition government.Speaking in Rome, Visco called on Italy's politicians to accept economic reforms suggested by the European Union. "Italy's future is in Europe," he said.Visco said that the current developments were neither the fault of the EU nor of speculators, and that Italy's trade and political ideas were the cause of shifts in the market both nationally and internationally.The euro was down at USD1.1553 at the European equities close, against USD1.1658 late Friday. The single currency fell to an intraday low of USD1.1510 in late afternoon trade - its lowest since July 2017."Investors don't like increased uncertainty, not when there is increased risk of a country leaving the euro. So, Italian bonds, stocks and the euro have all sold off further at the start of the week. The cost to protect against a default on Italian debt has risen sharply, as has the spread between the German and Italian yields," said Forex.com analyst Fawad Razaqzada.On the London Stock Exchange, Smiths Group ended as the second best blue chip performer, up 1.9% after the engineer confirmed it is in very early stage discussions about a potential combination of its medical division with ICU Medical.Smith Group operates in five units: John Crane, Smiths Medical, Smiths Detection, Smiths Interconnect and Flex-Tek.The stock set a record high of 1,803.00 pence in early trade amid hopes of a long-touted breakup. "There have frequently been calls for the company to be broken up or certain assets to be sold, on the basis these divisions would be worth more as individual entities. These calls have largely been resisted by management but there are now signs this resistance may be softening," said AJ Bell's Russ Mould. At the other end of the large cap index, Marks & Spencer ended as the second worst performer down 3.7% with the high street stalwart on the cusp of demotion from the FTSE 100 index in the quarterly index review on Wednesday.With a market capitalisation of GBP4.91 billion M&S could be in danger of losing its blue chip status for the first time since the index was established in 1984. Midcap online grocer Ocado Group looks set for promotion with a market value of around GBP5.79 billion.Royal Bank of Scotland ended down 3.4% amid a report that the UK government is likely to sell a multi-billion pound stake in the lender as soon as this week, Sky News reported Monday, citing "banking sources". The government currently owns a 70.5% stake in the Edinburgh-based lender. According to the news agency, the stake sale would be subject to wider stock market conditions and ministers' ability to demonstrate that the taxpayer was getting value for money, which could cause delays in the sale. Sky News, citing a city analyst, reported that a disposal could target proceeds of more than GBP3.00 billion, equating to roughly a 10% stake in the bank. RBS was rescued from collapse with capital injections from the Treasury totalling GBP45.50 billion at an average share price of 502 pence per share. In the FTSE 250, IWG closed up 2.1% as the second best performer after private equity firm Prime Opportunities Investment Group said it approached the office provider regarding a possible cash takeover bid, which was rejected. Prime Opportunities did not provide any financial details of its offer but said it will continue to "actively" consider the possibility of making a new offer for IWG.Languishing at the bottom of the midcaps, Dixons Carphone closed down 21% after the mobile phone and electrical goods retailer announced store closures in the wake of a profit warning. The group said it expects to report pretax profit for the year that ended April 28 of approximately GBP382 million, down 24% from GBP501 million the year before.In addition, the company added it would close 92 Carphone Warehouse standalone stores in the UK this year, as the embattled retailer seeks to cut costs. Stocks in New York were lower at the London equities close. The DJIA was down 1.7%, the S&P 500 index down 1.4% and the Nasdaq Composite 0.9%.Still to come, personal computer maker HP will report earnings after the New York close.Brent oil was lower quoted at USD74.61 a barrel at the London equities close from USD77.07 at the close Friday.Gold was quoted flat at USD1,304.15 an ounce at the London equities close against USD1,303.52 late Friday, despite the political turbulence in Europe.Optimism that the US-North Korea summit could be revived, took the shine off gold's safe haven appeal.US President Donald Trump and Japanese Prime Minister Shinzo Abe on Monday pledged to continue close coordination in advance of the "expected summit" between Trump and North Korean leader Kim Jong Un. Trump and Abe spoke by phone about recent developments to resolve the conflict with North Korea, a White House statement said.In Wednesday's corporate calendar, there are full-year results from bank note printer De La Rue and from property developers Londonmetric Property and Telford Homes. There is also half year results from software company Oxford Metrics.In the economic calendar on Wednesday, the BRC shop price index is at 0001 BST, with Japan's retail sales at 0050 BST, Germany's import price index at 0700 BST - with retail sales due at the same time - and South Africa's private sector credit at 0700 BST. France's GDP is at 0745 BST.German CPI is at 0800 BST, with the unemployment rate at 0900 BST. Eurozone consumer confidence and business sentiment is at 1000 BST, with US ADP employment change at 1315 BST and GDP at 1330 BST, with personal consumption expenditures due at the same time.Related Shares:
IWGOcadoDC..LMarks & SpencerRBS.LSmiths Group