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LONDON MARKET MIDDAY: Europe heads lower amid political turmoil in EU

10th Jun 2024 12:06

(Alliance News) - Stock prices in London were lower at midday Monday, along with the rest of Europe, as investors digest uncertainty from the latest EU elections.

The FTSE 100 index was down 23.67 points, 0.3%, at 8,221.70. The FTSE 250 was down 66.99 points, 0.3%, at 20,488.38, and the AIM All-Share was down 4.26 points, 0.5%, at 789.27.

The Cboe UK 100 was down 0.3% at 819.76, the Cboe UK 250 was down 0.4% at 17,914.09, and the Cboe Small Companies was up 0.2% at 16,873.84.

In European equities on Monday, the CAC 40 in Paris was down 2.0%, while the DAX 40 in Frankfurt was down 0.8%.

Over the week, the EU election has shaken up politics. It has seen French President Macron calling a snap election, amid the rise of right wing parties in Europe. The election will be held in the next 30 days.

"This injects a big dose of the uncertainty which markets hate – with the euro dropping sharply in response to the developments," said AJ Bell's Russ Mould.

The euro stood at USD1.0736 at midday on Monday, down against USD1.0812 at the equities close on Friday.

The pound was quoted at USD1.2691 at midday on Monday in London, lower compared to USD1.2724 at the equities close on Friday. Against the yen, the dollar was trading at JPY156.86, up slightly compared to JPY156.82.

Also effecting sentiment at the start of the week are nerves around the US Federal Reserve's next moves.

The Fed will announce its latest interest rate decision on Wednesday this week. At the central bank's fourth meeting of 2024, the Fed is expected to leave interest rates unchanged.

The decision will be announced after the US May consumer price inflation data is out.

According to FXStreet CPI is expected to stick at 3.4% in May, the same level recorded in April. It remains above the Fed's 2% target.

Analysts at ING think the Fed on Wednesday will indicate that September will be "the earliest opportunity to seriously consider an interest rate cut."

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 index down 0.2%, and the Nasdaq Composite down 0.1%.

With the political turmoil in Europe and nerves ahead of the Fed's interest rate decision, only a handful of companies were in the green on the FTSE 100.

Notably, M&G rose 2.3% to the top of the index.

M&G said it will take a series of actions to reduce debt by up to GBP450 million, including buying back bonds and not replacing them.

The London-based investment manager said the action plan was part of its commitment to reduce its Solvency II leverage ratio to 30% or less by 2025.

M&G said it will redeem its GBP300 million in 3.875% resettable dated Tier 2 notes in full next month and not replace these. It also will make tender offers for up to GBP150 million in its four other Tier 2 notes.

Ashtead Group lost 0.7%.

On Saturday, the Telegraph reported that Ashtead is eyeing a move across the pond, in what would be a fresh blow to the London Stock Exchange.

Ashtead Group, a London-based provider of equipment hire, makes by far the most of its money in the US via its Sunbelt arm.

In the FTSE 250, ME Group International fell 4.7%.

The Epsom, England-based vending machine operator, formerly known as Photo-Me International, said positive trading momentum has continued throughout the first half of financial 2024 compared with a year prior.

"The board is confident in delivering record profitability for the year, in line with market expectations," ME Group said in a statement.

Chemring edged up 0.6%, after it said it has signed a 15-year partnering agreement with US defence and aerospace firm Northrop Grumman.

This latest agreement will see Chemring support efforts to expand munitions production in response to growing customer demand by providing Northrop Grumman with HMX energetic material used in its missile programmes.

Amongst London's small-caps, Gulf Marine Services rose 4.5%.

Gulf Marine said it has signed the second phase of four-year contract announced in March. The contract with an unnamed customer is for one of GMS's vessels operating in the Middle East.

On AIM, Arecor Therapeutics dived 22%, after it said it now expects to require new funding in the third quarter of this year.

Arecor said its working capital requirements have accelerated primarily as a result of the timing of potential pipeline revenue and an increase in costs. The firm now expects funding to be required in the third quarter of 2024.

Brent oil was quoted at USD79.71 a barrel at midday in London on Monday, down from USD79.81 late Friday. Gold was quoted at USD2,295.80 an ounce, lower against USD2,312.90.

By Sophie Rose, Alliance News senior reporter

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