9th Aug 2022 12:12
(Alliance News) - European equities went into Tuesday afternoon mostly in negative territory, struggling to find traction ahead of Wednesday's US inflation report for July, and as tensions in Taiwan gave markets a reason to proceed with caution.
The FTSE 100 was up just 0.10 point at 7,482.47 midday Tuesday. The FTSE 250 index was down 109.10 points, or 0.5%, at 20,009.34. The AIM All-Share index was down 2.37 points, 0.3%, at 917.54.
The Cboe UK 100 index was down 0.1% at 746.50. The Cboe 250 was down 0.5% at 17,354.33. The Cboe Small Companies was up 2.1% at 14,265.07, the small-cap measure getting a boost from a takeover offer for professional services firm RPS Group.
In Paris, the CAC 40 stock index was down 0.4%, while in Frankfurt, the DAX 40 was 0.9% lower.
"Inflation, geopolitical tensions, monetary policies; a lot of this year's uncertainty may have already been priced in, but bullish market drivers are still hard to find and there is a high chance there are not enough of them to justify an extended short- to mid-term extended rally or a trend reversal," ActivTrades analyst Pierre Veyret commented.
Taiwan held an artillery drill on Tuesday, simulating defence against an attack, as its top diplomat accused Beijing of preparing to invade the island. It came after China launched its largest-ever air and sea exercises around Taiwan last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades.
"China has used the drills and its military playbook to prepare for the invasion of Taiwan," Taiwanese diplomat Joseph Wu told a press conference in Taipei on Tuesday, accusing Beijing of using Pelosi's visit as a pretext for military action.
Markets also were looking ahead to Wednesday's US consumer price index. The release comes after the US Federal Reserve enacted successive three-quarter percentage point rate hikes and after Friday's nonfarm payrolls report showed an unexpectedly strong jobs market.
A similarly hot inflation reading will strengthen the case for another chunky rate hike by the Fed.
While the inflation rate is forecast to ebb to 8.7% in July from 9.1% in June, the last couple of CPI readings have come in ahead of expectations, adding to the nerves ahead of Wednesday's data, AJ Bell analyst Danni Hewson commented.
"The fact economists are already predicting a slowdown in the rate of inflation means markets could be in for a shock if the inflation figure does not fall to the expected level," Hewson said.
The dollar was mixed on Tuesday. The pound was quoted at USD1.2107, slipping from USD1.2114 at the London equities close Monday. The euro was priced at USD1.0232, up from USD1.0217. Against the yen, the dollar was trading at JPY134.92, up from JPY134.61.
In London, abrdn shares were 4.6% lower at midday. The asset manager reported a swing to loss and a warning that current market volatility will see it take longer to hit its revenue growth and cost-to-income ratio targets.
abrdn's Investment unit ended the first half with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows.
abrdn booked a GBP320 million loss in the six months to June 30 versus the GBP113 million profit achieved a year prior. Fee-based revenue fell 8% to GBP696 million from GBP755 million, and its cost-to-income ratio worsened to 83% from 79%.
IWG tumbled 10%. In the six months to June 30, IWG's pretax loss narrowed to GBP81.3 million from GBP173.0 million a year prior, as system-wide revenue rose 22% to GBP1.45 billion from GBP1.17 billion.
The flexible workspace provider said its industry is facing "many tailwinds" as companies seek out hybrid working conditions more and more.
IWG decided against a dividend, explaining it would keep payouts on hold due to the current macroeconomic climate and geopolitical tensions.
Elsewhere in London, RPS was a standout performer, jumping 74% after agreeing to a GBP591.1 million cash takeover by Toronto-listed consultancy firm WSP Global. WSP will pay 206 pence per RPS share.
RPS shares traded at 204.00p at midday, giving it a market capitalisation of GBP566.1 million.
WSP provides engineering consulting services in the energy, maritime, infrastructure and rail and transport spaces. RPS works in fields including health and safety, exploration and development, planning and approvals and communications.
Shares in Independent Investment Trust also got a lift from M&A action, adding 14%. It agreed terms for a combinationwith FTSE 250-listed Monks Investment Trust.
Under the proposed combination, Independent Investment Trust shareholders will be offered a rollover option to receive new shares in Monks, or a cash option to realise part, if not all, of their holdings in the trust for cash.
Monks shares were down 2.0%.
Equities in New York are called mostly lower on Tuesday. The Nasdaq Composite was indicated down 0.5%, the S&P 500 down 0.2% and the Dow Jones Industrial Average flat, according to index futures trading.
Nvidia shares will be in focus once again, with the stock down 3.2% in pre-market trade, having already given back 6.3% on Monday.
For the three months to July 31, the Santa Clara, California-based semiconductor maker said on Monday it expects to report revenue of about USD6.70 billion, which is 17% behind the previous guidance of USD8.10 billion.
"The shortfall relative to the May revenue outlook of USD8.10 billion was primarily attributable to lower sell-in of Gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds," Nvidia said.
Brent oil was quoted at USD97.62 a barrel midday Tuesday in London, down from USD96.22 late Monday. Shares in BP and Shell rose 1.1% and 1.0%, helping to shield London's FTSE 100 from a steeper decline on Tuesday.
Gold stood at USD1,792.30 an ounce midday Tuesday, up against USD1,789.50 late Monday.
By Eric Cunha; [email protected]
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