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LONDON MARKET MIDDAY: Shares mixed as investors await US inflation

10th Sep 2024 12:02

(Alliance News) - London's FTSE 100 traded lower on Tuesday, underperforming European peers, as index heavyweights in pharmaceuticals, mining, and oil were in the red.

The FTSE 100 index traded down 43.48 points, 0.5%, at 8,227.36. The FTSE 250 was up 32.47 points, 0.2%, at 20,683.35, and the AIM All-Share was down 0.69 of a point, 0.1%, at 746.04.

The Cboe UK 100 was down 0.4% at 823.76, the Cboe UK 250 rose 0.4% at 18,228.80, and the Cboe Small Companies was 0.1% lower at 18,228.80.

In New York, the Dow Jones Industrial Average and S&P 500 are called to open flat, and the Nasdaq Composite down 0.1%.

In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was flat.

"Dip buyers will undoubtedly search for clues over whether it is time to step in, with tomorrow's [US] CPI inflation report likely to represent the dominant event that will influence the FOMC ahead of next week's meeting," Scope Markets analyst Joshua Mahony commented.

The pound was quoted at USD1.3092 early Tuesday afternoon, up from USD1.3075 at the time of the London equities close on Monday. The euro traded at USD1.1036, a touch down from USD1.1039. Against the yen, the dollar rose to JPY143.16 from JPY142.93.

The UK unemployment rate edged lower in the three months to July, but wage growth abated, numbers on Tuesday showed.

According to the Office for National Statistics, the jobless rate faded to 4.1% in the three months to July, from 4.2% in the three months to June. The latest figure landed in line with FXStreet cited consensus.

Wage growth eased. Average earnings excluding bonuses rose 5.1% in the three month, cooling from 5.4% in the three months to June. The figure for July was in line with expectations.

"Growth was last lower than this in April to June 2022, when it was 4.7%," the ONS said.

Annual growth in total earnings, so including bonuses, was 4.0%, a figure the ONS said was skewed by NHS and civil service one-off payments made in June and July of 2023. Growth in earnings including bonuses eased from 4.6% in three months to June.

XTB analyst Kathleen Brooks commented: "It is worth noting that the BOE voted to cut interest rates last month by 5-4. Thus, there is still an important hawkish faction at the BOE who are resistant to rate cuts. This is why today's moderation in wage growth may not have a big impact on the UK's interest rates market. The market is still only pricing in 1 full rate cut for this year, although there is a decent chance of a second cut, with 46bps of cuts currently priced in between now and December.

"There are a further 89bps of rate cuts priced in for the first 8 months of next year, and this looks too rich for us at this stage. We think that the strength of the UK economy along with the prospect of sticky inflation down the line, due to an increase to public sector workers pay and the expected increase to the minimum wage, will mean that the BOE is more cautious than its central bank peers when it comes to rate cuts."

In London, AstraZeneca was down 4.2% after an underwhelming trial result mean US approval chances for a drug are in the balance.

Cambridge-based AstraZeneca said datopotamab deruxtecan, or Dato-Dxd, failed to reach "statistical significance" for overall survival in patients with metastatic non-small cell lung cancer.

Swiss bank UBS cut its "probability of success for Dato-DXd" to treat the form of cancer.

"Following the disappointing OS data, we see clear risks to approval for Dato-DXd in 2nd line NSCLC, with an FDA [advisory committee] now highly likely. We lower our probability of success from 80% to 40%," UBS added.

By market capitalisation, Astra is the FTSE 100's largest constituent. Oil major Shell, the second-largest, also declined, putting more pressure on the index. Shell was down 0.2%, while peer BP, another index powerhouse, was down 0.3%.

Miners were also falling, with Rio Tinto and Glencore falling 0.4%.

Rising in the FTSE 250, Centamin jumped 25%. It agreed to a cash and shares takeover offer from bigger peer AngloGold Ashanti, in a deal that values Centamin at about GBP1.9 billion.

Centamin operates the Sukari gold mine in Egypt, while AngloGold mines in Brazil, Democratic Republic of Congo, and Tanzania.

Under the terms of the proposed deal, Centamin shareholders will receive 0.06983 of a new AngloGold share and USD0.125 in cash for each Centamin share.

The transaction values Centamin shares at 163 pence, based on the closing price of USD28.80 per AngloGold share on Monday. The AngloGold offer represents premium of 37% to the closing price of 119.50p per Centamin share on Monday.

"This transaction is an endorsement of Centamin's achievement in re-establishing Sukari as a world-class operation and occurs as the Egyptian government has taken important steps to attract foreign investment to develop the country's significant geological potential," Centamin Chair James Rutherford said.

Elsewhere in M&A, suitor Praxis ruled out making an offer for the London-based real estate investment trust Capital & Regional. Capital & Regional was down 7.5%.

Praxis, a privately owned property company that specialises in shopping centres in the UK, in July became the third bidder that has shown interest in Capital & Regional this year. Capital & Regional said Praxis made the move on July 5.

IQE slumped 15%. The Cardiff-based supplier of compound semiconductor wafer products and advanced material solutions said pretax loss narrowed to GBP13.9 million in the six months that ended June 30 from GBP21.5 million a year previous. Revenue increased 27% to GBP66.0 million from GBP52.0 million.

"IQE delivered an improved performance in H1 and year-on-year growth is expected in both revenue and adjusted Ebitda for FY 2024. With some markets remaining in recovery in H2 2024, performance is expected to be at the lower end of the range of analyst forecasts for the full year," it cautioned.

It puts the analyst range of revenue expectations at GBP130.0 million to GBP153.7 million.

Gold rose to USD2,506.18 an ounce early Tuesday afternoon, from USD2,497.50 late Monday. A barrel of Brent oil faded to USD71.19 from USD71.25.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

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