15th Oct 2018 12:12
LONDON (Alliance News) - Despite posting some gains in early trade, London's FTSE 100 index had slipped back below the 7,000 mark by midday on Monday, the victim of multiplying global political risks.The mid-chip FTSE 250 index was posting steeper losses, shedding nearly 200 points following profit warnings by ConvaTec and Superdry."Markets remain in risk aversion mode at the start of the week...While the losses being reported are more modest than those seen last week, which investors will hope represents some stability and normality returning to markets, it will remain a source of concern for now," said Oanda senior market analyst Craig Erlam.Risks remain "plentiful", Erlam said, citing US trade relations with China, Brexit, Italy's budget, and political concerns in Germany after weekend election.The FTSE 100 was flat, just 0.36 of a point lower at 6,995.55 by midday. The blue-chip index slipped once again below the 7,000 mark after hitting an intraday high of 7,018.85. On Thursday last week, the index fell below 7,000 for the first time since April.The FTSE 250, meanwhile, tumbled 1.1% on Monday as the index shed 198.72 points to be quoted at 18,774.73 at midday. The AIM All-Share was down 0.5% at 987.43.The Cboe UK 100 was down 0.1% at 11,864.03, with the Cboe UK 250 down 0.2% at 17,163.48 and the Cboe UK Small Companies 0.1% higher at 11,687.09.In mainland Europe, the CAC 40 stock index in Paris was down 0.3% though the DAX 30 in Frankfurt was up 0.2%.The pound had recovered from some earlier lows to be quoted at USD1.3149 at midday, flat with USD1.3156 late Friday.This was despite government sources claiming Brexit talks have run into a "significant problem" over the contentious issue of the Northern Ireland border.Negotiations are on a knife-edge after a hastily arranged meeting on Sunday between EU chief negotiator Michel Barnier and Brexit Secretary Dominic Raab broke up without a breakthrough.Discussions were said to have broken down after EU negotiators demanded a "backstop to the backstop" to prevent a return of a "hard border" between Northern Ireland and the Republic. It is understood the EU is insisting it should be backed up by the original Northern Ireland-only backstop as it first proposed.That could lead to customs checks on goods travelling between Northern Ireland and the rest of the UK, something Prime Minister Theresa May - and the Northern Irish Democratic Unionist Party propping up her government - has said is unacceptable.The impasse threatens to throw into disarray carefully choreographed plans which would have seen EU leaders meeting in Brussels on Wednesday give the green light to a special summit in November to finalise the terms of the UK's withdrawal from the bloc."Brexit feels parochial but it's got the pound on the back foot. We know the night's darkest just before the dawn, but this feels like a windy, and wet, pre-dawn and the temptation is to get back under the duvet," said Kit Juckes, strategist at Societe Generale. "Talks between the UK and EU negotiators are still short of a breakthrough that can deliver a deal for EU ministers to discuss, and if they do manage to find a way forwards, it's still uncertain that the prime minister can deliver UK approval," he added.In the FTSE 100, gold miners were continuing to benefit as the price of the precious metal gained amid wider risk-off sentiment.An ounce of gold was quoted at USD1,230.62 Monday midday as investors fled to the safe haven asset, compared to USD1,218.81 late Friday. Fresnillo was up 3.2% at midday, while Randgold Resources was 3.8% higher.In the red on Monday was asset manager Schroders, down 2.3% after reporting a marginal rise in assets under management in the third quarter. The investment manager recorded total assets under management of GBP439.1 billion as at September 30, up from GBP435.7 billion at the start of the year.In the FTSE 250, NEX Group was up 4.8% after announcing late Friday the US Department of Justice has approved its acquisition by CME Group. The tie-up is still awaiting clearance from the UK Competition & Markets Authority. Th GBP3.90 billion deal was announced in March, with CME offering 500 pence in cash as well as 0.0444 of a new CME share for every NEX share held.Keeping the mid-cap index pinned in its own half on Monday were sharp losses for ConvaTec and Superdry, both issuing profit warnings.ConvaTec shares slumped 33% after the medical technology firm said organic revenue growth is to be lower than expected for 2018 and, compounding the negative trading update, said Chief Executive Paul Moraviec has stepped down effectively immediately.ConvaTec said the revised guidance was largely to due its Infusion Devices franchise, with a change in the inventory policy of the unit's biggest customer expected to hit fourth quarter revenue by around USD18 million to USD23 million.Organic revenue growth for 2018 is now expected to be between flat and 1.0%, having been previously guided to a range of 2.5% to 3.0% before. The company's adjusted earnings before interest and tax margin is now predicted to be between 23% and 24%, down from between 24% and 25% seen previously."While three of the company's four divisions saw revenue growth in the third quarter, the fact that the company is now looking for a new CEO and faces other challenges means that investors should expect the shares to remain volatile for some time to come," said Ian Forrest, investment research analyst at The Share Centre.Superdry shares, meanwhile, dropped 20% as an "unseasonably" hot summer and autumn to date saw consumers shun the retailer's sweats and jackets.The company said the weather is expected to hit profit for its current financial year by GBP10 million, while Superdry also expects to book GBP8 million in additional foreign exchange costs.The hot summer, which extended into the autumn, has knocked demand for sweats and jackets - which together account for 45% of Superdry's annual sales."We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities," said Chief Executive Euan Sutherland.On London's junior AIM market, shares in Patisserie Holdings remain suspended. The troubled cafe chain raised GBP15 million on Friday through new shares, after Chairman Luke Johnson gave the firm a lifeline with a GBP20 million loan. Patisserie last Wednesday shocked the market by announcing what it called potentially fraudulent accounting irregularities, leading to an investigation by the UK Serious Fraud Office and arrest, and subsequent bail, of Finance Director Chris Marsh."I've never had an experience like this in my career and I hope never to repeat it. It's certainly been the most harrowing week of my life," Johnson told the Sunday Times.Patisserie Holdings's Chief Executive Paul May on Monday stepped down from his role as a non-executive director at Restaurant Group - which owns chains such as Frankie & Benny's and Garfunkels - with shares in the company down 2.3%.In retail trouble in the US, department store chain Sears Holdings filed for Chapter 11 bankruptcy as it looks to close 142 unprofitable stores near the end of the year. Edward Lampert has stepped down as chief executive officer, effective immediately, though will remain chairman of the board.In the US corporate calendar on Monday are earnings from Bank of America before the market opens, with results due from the likes of BlackRock, Goldman Sachs and Morgan Stanley on Tuesday.Ahead of Monday's earnings, Wall Street is pointed to open in the red, with the Dow Jones seen down 0.4%, the S&P called 0.5% lower and the Nasdaq set to shed 0.8%.In the economic calendar are retail sales at 1330 BST.Related Shares:
SchrodersConvaTecRandgold ResourcesPatisserie Holdings PlcFresnilloRTN.LSDRY.L