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LONDON MARKET MIDDAY: FTSE 100 flat, peers and pound up before US data

10th Aug 2023 11:59

(Alliance News) - London's FTSE 100 underwhelmed on Thursday, as a slew of its heavyweights went ex-dividend, though blue-chip equities in mainland Europe were higher, showing no signs of pre-US inflation data angst and overlooking an acceleration in tensions between the world's two largest economies.

The FTSE 100 index went into Thursday afternoon just 3.58 points lower at 7,583.72. The FTSE 250 was down just 4.05 points at 18,933.15, and the AIM All-Share was down 1.69 points, 0.2%, at 756.29.

The Cboe UK 100 was up 0.1% at 756.47, the Cboe UK 250 was up 0.3% at 16,637.94, and the Cboe Small Companies was up 0.1% at 13,610.77.

In European equities on Thursday, the CAC 40 in Paris was up 0.8%, while the DAX 40 in Frankfurt was 0.3% higher.

Ahead of the US inflation data reported at 1330 BST, the dollar was largely weaker.

The pound was quoted at USD1.2772 early Thursday afternoon in London, climbing from USD1.2717 at the London equities close on Wednesday. The euro traded at USD1.1027, up from USD1.0977. Against the yen, the dollar rose to JPY143.80, from JPY143.60.

According to FXStreet cited consensus, the US annual inflation rate is expected to heat up to 3.3%, from 3.0% in June. The core inflation rate, which excludes food and energy, is expected to remain at 4.8%.

"The last reading provided a positive surprise as it undershot expectations for the first time in a long time. A repeat could revive a flagging equity rally, but a negative shock could accelerate recent selling," AJ Bell analyst Russ Mould commented.

A hotter-than-expected reading could mean the Federal Reserve continues with its hiking cycle.

Oanda analyst Craig Erlam commented: "It will take something big for the Fed to consider hiking again you would think, having shifted to a more gradual approach in recent months."

In London, share price falls of 1.2% and 1.3% for lenders HSBC and NatWest, 1.1% for drugmaker AstraZeneca and 3.0% for miner Rio Tinto hurt the FTSE 100. The stocks went ex-dividend, meaning new buyers do not qualify for the latest payouts.

Spirax-Sarco fell 5.0%, sitting at the bottom of the large-cap index.

The Cheltenham, England-based thermal energy management and pumping company said pretax profit fell 18% to GBP114.0 million, from GBP138.5 million a year ago.

The firm reported revenue of GBP850.8 million in the first half of 2023, up 13% from GBP750.1 million the year prior.

Spirax warned destocking in Biopharm, which refers to sales from the Watson-Marlow division to pharma and biotech, "is now expected to continue into 2024".

Looking ahead, the company said it expects its revenue group sales to be between flat and 4% higher for the year, when compared to 2022's pro-forma sales of GBP1.73 billion. Back in a May trading update, it predicted "double-digit sales growth for the group in 2023, representing mid-single-digit sales growth over 2022 pro-forma sales".

Savills slumped 8.7% as it reported a decline in first-half earnings.

The estate agent said pretax profit in the half-year ended June 30 plunged 88% to GBP6.0 million from GBP50.4 million 12 months earlier. Revenue declined 2.5% to GBP1.01 billion from GBP1.04 billion.

Chief Executive Mark Ridley said: "Savills has weathered both the inflationary cost conditions and reduced transaction volumes well, increasing market share and, supported by our strong balance sheet, continuing to undertake selective business development activities to further the group's long term growth strategy. We are seeing some positive signs in markets such as the UK and continued strength in certain Asia Pacific markets including Japan; in Continental Europe and mainland China we now expect reduced market volumes to continue through much of the year."

Elsewhere in London, Eco Atlantic jumped 12%, as it struck a deal to buy Tullow Oil's stake in a block in Guyana. Tullow was 1.2% higher.

Oil and gas explorer Eco will buy an additional 60% stake in the Orinduik block and will hold 75% as a result. TOQAP Guyana, a joint venture between TotalEnergies and QatarEnergy owns the remainder. Tullow no longer has a stake.

Eco Atlantic will pay USD700,000 to Tullow upfront, USD4 million in the event of commercial discovery and USD10 million upon the issue of a production licence from the government of Guyana. In addition, Tullow will have a royalty on future output.

Analysts at Peel Hunt commented: "We see this as a good deal for both parties, as it allows Tullow to continue to focus on its strategy of monetising its high-quality production assets with continued exposure to Guyana upside, while exploration-focused Eco has picked up a material stake in this high-potential licence for a relatively small upfront consideration. The deal also gives Eco additional optionality with regards bringing a new partner into the licence."

Stocks in New York are called to open higher on Thursday. Both the Dow Jones Industrial Average and S&P 500 are called up 0.5%, and the Nasdaq Composite 0.6% higher.

Beijing hit back on Thursday after the US restricted investments in Chinese technology.

US President Joe Biden hours earlier announced an executive order directing the Treasury Department to restrict certain US investments in China in sensitive high-tech sectors including semiconductors, quantum computing and artificial intelligence.

China's foreign ministry blasted the move as an attempt to "engage in anti-globalisation and de-sinicisation", warning that China would "resolutely safeguard its own rights and interests".

Analysts at UBS commented: "We expect tensions in the US-China bilateral relationship to remain elevated. A regime of increasing restrictions on technology transfer and capital flows between the two nations is likely to take hold and become a persistent irritant."

Gold was quoted at USD1,922.05 an ounce early Thursday afternoon, rising from USD1,916.66 on Wednesday. Brent oil was trading at USD87.38 a barrel, higher than USD86.92.

By Eric Cunha, Alliance News news editor

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