31st May 2023 12:02
(Alliance News) - Stock prices in London were down at midday Wednesday, ahead of a vote on the US debt ceiling bill.
The FTSE 100 index was down 9.62 points, 0.1%, at 7,512.45. The FTSE 250 was down 30.59 points, 0.2%, at 18,776.78, and the AIM All-Share was down 4.22 points, 0.5%, at 782.54.
The Cboe UK 100 was down 0.2% at 749.88, the Cboe UK 250 was down 0.3% at 16,342.03, and the Cboe Small Companies was down 0.4% at 13,545.56.
US lawmakers will vote on a debt ceiling bill on Wednesday. At the weekend, US President Joe Biden and Republican House Speaker Kevin McCarthy agreed tentatively to cut federal spending and raise the debt ceiling until 2025.
The deal passed its first major test in Congress on Tuesday, surviving a crucial procedural vote in the House Rules Committee with a tight 7-6 voting margin.
"The deadline for an agreement on the US debt ceiling may have been pushed back from tomorrow to next Monday but with some hardliners in the Republican party coming out against the agreement its passage through Congress could be bumpy," said AJ Bell investment director Russ Mould.
The outlook for eurozone financial stability remains fragile, the European Central Bank reported in its May Financial Stability Review on Wednesday.
In its six-monthly report, the ECB referred to "weak macro-financial conditions and unexpected stress in the banking sectors of some mature economies."
It highlighted the recent failures of three US regional banks and the takeover of Switzerland's Credit Suisse Group by its competitor UBS Group in a deal backed by the Swiss government.
These events had "invited closer scrutiny of bank exposure to long-term fixed income securities, the stability of wholesale uninsured deposit funding and latent business model challenges," the ECB said.
At midday Wednesday, banking stocks were down. HSBC lost 0.7%, Barclays shed 0.9%, and NatWest was down 0.3%.
In European equities on Wednesday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.5%.
German unemployment was stable in April, while import prices fell, official data showed on Wednesday.
B&M continued to lead the FTSE 100 at midday, jumping 7.5%.
The Luxembourg-based variety goods value retailer reported revenue of GBP4.98 billion for the year ended on March 25, up 6.6% from GBP4.67 billion the year before. The company said the rise in revenue was due to positive like-for-like in all businesses, which includes inflation and mix effects, and by strong trading from new stores.
Pretax profit, however, fell by 17% to GBP436 million from GBP525 million, as earnings per share dropped by 18% to 34.7 pence from 42.1p.
B&M recommended a final dividend of 9.6p per share, down 17% from 11.5p a year prior. This brings the company's full-year dividend to 14.6p, down 12% from 16.5p.
Looking ahead, B&M said it expects to grow sales and profits in financial 2024, despite economic uncertainty.
Prudential lost 3.0%, after it announced the resignation of Chief Financial Officer James Turner, after he "fell short" of the company's "high standards."
The London-based, Asia-focused insurer said Turner's resignation relates to a code of conduct probe in regard to "a recent recruitment situation", but did not disclose further details.
Turner will be replaced by Ben Bulmer, the current CFO for the Insurance & Asset Management division. Bulmer, who will be based in Hong Kong, has served in several leadership roles at Prudential since joining in 1997.
Turner will remain available to the group for the next four months to "support a smooth transition".
"The insurer didn't provide much, if any, detail on the nature of the behaviour which led to James Turner's dismissal although an insistence there were no implications for the group's financial performance or reporting was probably enough to prevent a bigger sell-off in the shares," AJ Bell's Mould said.
Also dragging down the index were BP and Shell, down 3.1% and 2.1%, respectively.
Oil prices weakened on Wednesday as traders remained nervous due to the unresolved US debt ceiling crisis and contradictory messages from key Opec+ members ahead of a crucial meeting.
The 13 members of Opec and 10 other oil-producing countries, known as Opec+, will meet on Sunday to decide on production policy.
Brent oil was quoted at USD72.04 a barrel early in London on Wednesday, down from USD74.30 late Tuesday.
On AIM, Purplebricks lost 20%, after Lecram Holdings withdrew its offer for the online estate agent.
On Friday, Purplebricks had said an indicative takeover proposal by Lecram of 0.5p per share was not better than a potential offer it had received from estate agency Strike.
Earlier in May, Strike offered a total of GBP1, with Strike to assume most of its liabilities. The transaction would mean the firm holds a cash balance of GBP5.5 million, and would return net cash proceeds of around GBP2 million to shareholders after certain costs.
Purplebricks continues to recommend shareholders vote in favour of the potential takeover by Strike at its general meeting Friday.
Investors will also keep a close eye on index changes, which will be announced after the market close on Wednesday, based on closing prices on Tuesday.
Engineering firm IMI is set to replace Ocado in the FTSE 100 in Wednesday's quarterly review, according to the indicative index changes from FTSE Russell released last week.
There will also be a handful of departures on the FTSE 250, according to indicative changes.
Upstream energy company Capricorn Energy, Africa and South America-focused exploration firm Tullow Oil, and oil and gas industry services provider Hunting are primed to be cut.
At midday Wednesday, Ocado was down 3.8%, whilst its anticipated replacement IMI shed 0.3%. Capricorn Energy and Hunting were down 1.8% and 1.6%, respectively. Tullow Oil was up 0.7%.
The pound was quoted at USD1.2364 at midday on Wednesday in London, down compared to USD1.2404 at the equities close on Tuesday. The euro stood at USD1.0678, lower against USD1.0721. Against the yen, the dollar was trading at JPY139.96, up compared to JPY139.74.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.2%, whilst boththe S&P 500 index and the Nasdaq Composite were called down 0.3%.
Gold was quoted at USD1,957.55 an ounce at midday Wednesday, down against USD,960.99.
The economic calendar has US retail sales data at 1355 BST.
By Sophie Rose, Alliance News reporter
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