30th May 2023 12:06
(Alliance News) - The FTSE 100 was lower at midday in London on Tuesday, as traders and investors nervously await a vote in Congress on raising the US debt ceiling later this week.
The large-cap index was down 32.11 points, or 0.4%, at 7,595.09. The mid-cap FTSE 250 was up 59.01 points, 0.3%, at 18,853.10. The AIM All-Share was down 0.69 of a point, 0.1%, at 791.02.
The Cboe UK 100 was down 0.5% at 758.07, whilst the Cboe UK 250 was up 0.3% at 16,386.76. The Cboe Small Companies was up 0.4% at 13,616.25.
On Sunday, US President Joe Biden and the Republican leader of the House of Representatives, Kevin McCarthy, reached a tentative agreement, after weeks of negotiations.
The basic framework of the deal lifts the federal debt ceiling, which is currently USD31.4 trillion, for two years — enough to get past the next presidential election in 2024.
The bill faces opposition from the progressive and hard-right wings of the Democratic and Republican parties, respectively. It will be voted on on Wednesday this week.
"A deal may have been done between President Biden and Republican Speaker of the House Kevin McCarthy, but there was still a sense of unease around the US debt ceiling as markets await sign-off from Congress," said AJ Bell investment director Russ Mould.
"Disquiet from various wings of the Democratic and Republican parties was enough to suggest that the agreement cannot be declared a slam dunk just yet, even if an eventual sign-off is by far the likeliest outcome."
Stocks in New York were called higher, as they reopened from the Memorial Day holiday weekend. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 1.2%.
In Europe, economic sentiment in the eurozone took a hit in May, according to Eurostat survey data released on Tuesday. The economic sentiment indicator fell to 96.5 points in May from 99.0 in April.
Industry confidence continued to weaken, with a deterioration of managers' production expectations and assessments of current order books.
"The eurozone likely saw negative growth over the winter. Economic sentiment in May unfortunately does not suggest that a vibrant recovery is underway. Weak growth and a falling inflation outlook both add to expectations that the peak in ECB rates is getting near," ING commented.
On Thursday, the European Central Bank's meeting minutes will be released.
At the start of May, the ECB had slowed the pace of its interest rate increases. The 25-basis-point hike took the interest rate on the main refinancing operations, the interest rate on the marginal lending facility, and the deposit facility to 3.75%, 4.00% and 3.25%.
In European equities on Tuesday, the CAC 40 index in Paris was down 0.3%, while the DAX 40 in Frankfurt was up 0.6%.
The dollar was weaker.
The pound was quoted at USD1.2422 at midday on Tuesday in London, up compared to USD1.2325 at the London equities close on Friday. The euro stood at USD1.0730, higher than USD1.0703.
Against the yen, the dollar was trading at JPY140.27, down compared to JPY140.65.
In the FTSE 100 index, Diageo lost 0.6%, after it confirmed it has delisted from the Euronext Dublin.
Diageo is a London-based brewer and distiller with brands including Guinness, Baileys, Tanqueray, Johnnie Walker, Smirnoff and Captain Morgan.
The company in April announced that it plans to delist from Euronext Paris and Euronext Dublin on or around Tuesday. In its release on Tuesday it only mentioned that it delisted from Euronext Dublin.
"The decision by Diageo to delist was taken following a review of the trading volumes, costs and administrative requirements related to its listings on Euronext Paris and Euronext Dublin," the company said last month.
The delisting from Dublin and Paris does not affect Diageo's share listings on the London Stock Exchange and the New York Stock Exchange, nor its operations in Ireland and France.
In the FTSE 250, RHI Magnesita jumped 23%, making it the best performer in the index at midday.
Ignite Luxembourg Holdings, a company indirectly managed by Rhone Holdings VI, offered to buy a 20% stake in RHI Magnesita at GBP28.5 per share in cash, a 39% premium to the stock's close on Friday.
Rhone said it aims to buy a non-controlling minority stake in the Vienna-based supplier of refractory products. It said the offer is "an opportunity for shareholders of the company to crystallise their investment in the company as a compelling valuation and significant premium".
The offer values all of RHI Magnesita at GBP1.34 billion, or at GBP1.38 billion including a GBP0.95 per share dividend recently declared by RHI Magnesita.
RHI Magnesita said its board is "considering its response to the partial offer and a further announcement will be made in due course".
Hunting jumped 16%, after it said it has won a new contract.
The contract is worth up to USD91 million and is for an estimated 100 wells, the London-based international energy services group said. With this order, Hunting's sales order book now is about USD575 million.
Based on the timing of the first deliveries of this order, Hunting now anticipates 2023 earnings before interest, tax, depreciation and amortisation to be in the range of USD92 million to USD94 million. It would be a jump of at least 77% from Ebitda of GBP52.0 million posted for 2022.
Brent oil was quoted at USD76.04 a barrel at midday in London on Tuesday, down from USD76.63 late Friday. Gold was quoted at USD1,955.10 an ounce, up against USD1,939.81.
In this week's economic calendar, there is a US consumer confidence reading on Tuesday, before the key nonfarm payrolls report for May on Friday.
By Sophie Rose, Alliance News reporter
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