25th Sep 2019 11:54
(Alliance News) - London stocks dipped in step with global counterparts on Wednesday as sentiment was damped by political drama in Westminster and Washington.
Share price gains for J Sainsbury on cost cutting measures were unable to lift the FTSE 100, as TUI eased following two consecutively strong sessions.
The FTSE 100 index was down 75.02 points, or 1.0%, at 7,216.41 Wednesday midday. The FTSE 250 was down 226.81 points, or 1.1%, at 19,692.26. The AIM All-Share was down 0.8% at 874.39.
The Cboe UK 100 index was down 1.0% at 12,245.79. The Cboe UK 250 was down 1.2% at 17,612.43, and the Cboe UK Small Companies flat at 10,874.72.
In mainland Europe, the CAC 40 in Paris was down 1.5% and while the DAX 30 in Frankfurt was 1.1% lower in early afternoon trade.
"European stocks are on the slide this morning, as any optimism over the US-China relationship faded with each word muttered on the subject by Donald Trump yesterday," said Joshua Mahony, senior market analyst at IG.
"From a US perspective, we are seeing the focus shift towards the impeachment process launched by Nancy Pelosi yesterday, drawing some of his attention away from China relations," he added.
In the US on Wednesday, stocks are pointed towards a downbeat open with the Dow Jones and S&P 500 both called 0.2% lower and the Nasdaq set to slide 0.4%.
House Speaker Nancy Pelosi launched a formal impeachment inquiry against US President Donald Trump on Tuesday, yielding to mounting pressure from fellow Democrats and plunging a deeply divided nation into an election-year clash between Congress and the commander in chief.
The probe focuses partly on whether Trump abused his presidential powers and sought help from a foreign government to undermine Democratic foe Joe Biden and help his own re-election.
In a summer phone call with Ukrainian President Volodymyr Zelenskiy, he is said to have asked for help investigating former vice president Biden and his son Hunter. In the days before the call, Trump ordered advisers to freeze USD400 million in military aid for Ukraine - prompting speculation that he was holding out the money as leverage for information on the Bidens.
Trump has authorised the release of a transcript of the call, which is to be made public on Wednesday.
"Given that the Republicans currently hold the Senate with 53 seats and a supermajority of 2/3rds or 67 seats are needed to convict the aforementioned odds look extremely short and the base case in our opinion is that this would fail at that hurdle even if it gets that far," said David Cheetham at XTB.
In the UK, parliament resumed at 1130 BST following a Supreme Court ruling on Tuesday that Boris Johnson's prorogation was unlawful.
Prime Minister Johnson, who cut short his trip to the United Nations in New York, will make a statement to MPs on Wednesday afternoon, according to the Labour whips office. His RAF flight arrived in London a little over an hour before the scheduled reopening of the Commons.
Johnson faced demands for his resignation from furious opposition parties determined to hold him to account over his Brexit plans. Despite calls for the prime minister to quit, opposition leaders appear split over how to proceed and there appears little prospect of an imminent motion of no confidence to oust him.
Sterling was quoted at USD1.2431 Wednesday midday, down compared to USD1.2469 at the London equities close on Tuesday.
In London, TUI was retreating following two consecutive sessions of strong gains on the back of rival Thomas Cook's collapse. The Anglo-German tour operator was down 5.0% at midday, though remaining 8.5% higher since the week began.
Halma was down 3.7% despite the hazard detection firm reporting "good" progress in its first half.
Halma said its performance was in line with expectations in the period from April to date and included further organic constant-currency revenue growth. Last year, for the six months to the end of September 2018, Halma delivered revenue of GBP585.5 million.
The company explained that all sectors delivered organic constant-currency revenue growth in the recent period. The Environmental & Analysis division performed well, while the Medical and Infrastructure Safety units saw more modest rates of growth. Revenue growth in Process Safety was in line with the second half of last year, Halma said.
At the top of the index was J Sainsbury, up 2.0% as it set out a raft of cost savings measures at its capital markets day.
The company said an internal review resulted in plans to launch 10 new supermarkets but close between 10 to 15. Roughly 100 new convenience stores will be built but between 30 and 40 will be closed. It also plans to open roughly 80 new Argos stores but close between 60 and 70.
Turning to financial services, the firm said it will "immediately stop new mortgage sales" and have no more "capital injections" after a GBP35 million investment in the year ending February 2020. It also aims to cut the cost to income ratio by around 50%.
Sainsbury's said it expects the closures to deliver an ongoing net operating profit benefit of roughly GBP20 million per year. In total, the company aims to structurally reduce costs by GBP500 million over five years as it brings its businesses together in addition to ongoing cost savings.
Richard Hunter, head of markets at Interactive Investor, said the strategic review will need "careful management".
"In a notoriously competitive sector and as seen in the past on numerous occasions, rivals move on rapidly, which can leave a company in the midst of a transformation behind," he cautioned.
In the FTSE 250, Aston Martin Lagonda Global Holdings shares skid 5.1% after a pricey debt raise.
The luxury car maker has completed the pricing of USD150.0 million in 12% senior secured notes due mid-April 2022.
Aston Martin Capital Holdings, its subsidiary issuing the debt, also has an option to issue up to USD100.0 million in additional notes. If these notes are issued unsecured, the interest will accrue at the rate of 15% per annum, the company explained.
Babcock International rose 4.5% after reaffirming its annual expectations. The defence outsourcer said trading is in line with expectations with its marine business performing well despite headwinds in its Nuclear segment.
By Lucy Heming; [email protected]
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