4th Dec 2024 08:54
(Alliance News) - London's FTSE 100 opened in the red on Wednesday, underperforming European peers, with the CAC 40 marching on despite uncertainty hanging over the French government.
The FTSE 100 index fell 18.05 points, 0.2%, at 8,341.36. The FTSE 250 added 31.42 points, 0.2%, at 20,924.16, and the AIM All-Share rose 0.75 of a point, 0.1%, at 735.84.
The Cboe UK 100 lost 0.3% at 838.05, the Cboe UK 250 was up 0.2% at 18,423.95, and the Cboe Small Companies fell slightly to 15,967.00.
The CAC 40 in Paris added 0.4% in early dealings. The DAX 40 in Frankfurt rose 0.6%.
France's government on Wednesday faces no confidence votes that could spell the end of the short-lived administration of Prime Minister Michel Barnier, plunging the country into uncharted waters of political chaos.
The toppling of the Barnier government after just three months in office would present President Emmanuel Macron with an unenviable dilemma over how to go forwards and who to appoint in his place.
The National Assembly is due to debate two motions brought by the hard-left and far-right in a standoff with Barnier over the budget, which saw the premier force through the social security budget without a vote.
The far-right National Rally, RN, of three-time presidential candidate Marine Le Pen is expected to vote for the motion put forwards by the left, giving it enough numbers to pass.
The greenback was mixed, but ING analysts believe "geopolitics [is] just another reason to hold dollars".
"Dollar strength is not entirely being led by the second coming of Donald Trump. A lame duck government in Germany and potentially France too today if a no-confidence vote is successful, plus this Korean news, will only add to confidence that the relatively high rates (USD one-week deposit rates at 4.6%) and liquidity make the dollar the most compelling currency in which to park cash balances right now," ING added.
The pound was quoted at USD1.2693 early Wednesday, rising from USD1.2660 at the time of the London equities close on Tuesday. The euro stood at USD1.0510, nudging slightly lower from USD1.0513. Against the yen, the dollar was trading at JPY150.42, up from JPY149.44.
South Korean stocks sank. The Kospi index ended down more than 1%, having shed as much as 2.3% at the open, after President Yoon Suk Yeol declared martial law, before reversing that call later.
In Asia, China's Shanghai Composite fell 0.4% and the Hang Seng Index in Hong Kong was marginally lower. The Nikkei 225 added 0.1% in Tokyo, though Sydney's S&P/ASX 200 shed 0.4%.
Brent oil was quoted at USD73.75 a barrel early Wednesday, climbing from USD73.67 late on Tuesday. Gold was lower at USD2,640.41 an ounce from USD2,644.88.
In London, Legal & General shares rose 3.5%, as it set out a decent outlook for a unit and suggested returns could be on the way for shareholders. The life insurer expects mid-single digit growth in operating profit for 2024, in line with guidance. Thereafter, it expects to achieve its 6% to 9% compound annual growth target in core operating earnings per share between 2024 and 2027.
The update came ahead of a "deep dive" into its Institutional Retirement division, the first in a series of events which will cover all its units.
"The global pension risk transfer market is growing and attractive and the group is well-positioned to continue to seize the opportunity," L&G said.
Its pipeline of PRT deals is "as strong as it has ever been". Its guidance of GBP50 billion to GBP65 million of UK pension risk transfers between 2024 and 2028 is unchanged. In the Institutional Retirement division, it expects compound annual operating profit growth between 5% and 7% between 2023 and 2028.
L&G added: "Year-to-date we have written global PRT volumes of GBP10.0 billion and are exclusive on a further GBP500 million expected to close in 2024. Of this GBP10.5 billion, GBP8.4 billion is UK and GBP2.1 billion is International, with L&G writing its highest ever volumes in the US and Canada.
Strain has also been lower than expected, it said, at 1% compared to initial guidance of below 4%.
"We anticipate returning to shareholders a proportion of the capital not deployed on strain this year. This will form part of the board's wider consideration of buyback capacity, which will be set out at the FY24 results in March 2025 and would be incremental to the capital return intentions indicated at the capital markets event in June," it added.
Elsewhere in London, vehicle rental and fleet management firm Zigup lost 5.5%. It said it has "confidence in full year expectations", but reported a half-year earnings decline.
Revenue in the half-year to October 31 fell 0.8% to GBP903.6 million from GBP911.3 million a year earlier. Pretax profit slumped 42% to GBP56.2 million from GBP97.4 million.
Underlying revenue, however, rose 5.6% to GBP775.0 million from GBP733.8 million. The measure excludes vehicle sales.
"Our strategy continues to deliver, and we are well placed with our broadening position in the essential market for mobility services. We are pleased to report underlying growth in revenues, and the delivery of PBT in line with expectations, while reflecting normalising disposal profits as previously stated," Chief Executive Officer Martin Ward said.
The company added: "Recent vehicle supply contracts have provided good visibility for calendar 2025 fleet growth, and expected increases in infrastructure spending are also positive for our UK rental customer base over the medium term. Spain continues to enjoy record demand. While the normalisation seen in residual values will see disposal profits moderate as expected, our confidence in the business, and for our outlook, is unchanged and remains in line with market expectations."
On AIM, Biome fell 39% as it warned on annual revenue amid component delivery delays.
The bioplastics and radio frequency technology company said two projects in the latter division are now unlikely to get going by the end of the year.
"Additional complexities relating to component deliveries for the two large projects, which were expected to be completed in 2024, have arisen recently. In two specific cases, externally manufactured parts and bought in assemblies have required rework or return to their suppliers for replacement," Biome explained.
"The technical paths for rework and replacement are clear. However, despite significant recent work on expediting this, the timetables are such that this will not be delivered within a timeframe that will allow completion of the two final machine builds and the required extensive internal and customer testing acceptance process before the 2024 year end. Internal completion dates have therefore been revised into Q1 2025 and new final acceptance dates are being discussed with the customers."
The firm now expects revenue to be "materially below current market expectations with a consequential impact on profitability".
By Eric Cunha, Alliance News news editor
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