25th Sep 2019 08:35
(Alliance News) - Stock prices in London opened lower on Wednesday amid political drama on both sides of the Atlantic, with US President Donald Trump facing an impeachment inquiry and UK Prime Minister Boris Johnson flying back home after his suspension of Parliament was ruled unlawful.
The FTSE 100 index was down 40.87 points, or 0.6%, at 7,250.56 early Wednesday. The FTSE 250 was down 93.47 points, or 0.5%, at 19,825.60. The AIM All-Share was down 0.2% at 879.03.
The Cboe UK 100 index was down 0.6% at 12,303.35. The Cboe UK 250 was down 0.4% at 17,752.45, and the Cboe UK Small Companies flat at 10,877.16.
In mainland Europe, the CAC 40 in Paris was down 0.6% and while the DAX 30 in Frankfurt was 0.5% lower in early trade.
"Major US benchmark indices closed in negative territory as investors became increasingly anxious due to the Trump's comments which criticized China's unfair trade practices. Moreover, investors are also worried about the ongoing drama over in Washington which could possibly end up in Trump's impeachment," said Naeem Aslam at ThinkMarkets.
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.
Aslam continued: "Closer to home, the UK’s prime minister is expected to face his biggest nightmare after losing a battle in Supreme court yesterday."
Parliament will reconvene at 1130 BST following the Supreme Court's ruling on Tuesday that Johnson's prorogation of the legislative body was unlawful.
Johnson - who was at the UN in New York at the time of the ruling - will fly back into a political storm with demands for his resignation from furious opposition parties, determined to hold him to account over his Brexit plans.
Johnson is expected to land in the UK around midday on Wednesday, and it is thought likely that he will address the Commons in the afternoon. He updated Cabinet ministers on the ruling in a conference call on Tuesday from New York, in which Commons Leader Jacob Rees-Mogg reportedly said the Supreme Court judgment amounted to a "constitutional coup".
Sterling was quoted at USD1.2452 early Wednesday, down compared to USD1.2469 at the London equities close on Tuesday.
Amid broad-based losses in London on Wednesday, J Sainsbury was the best performer in early trade, up 1.6%.
Like-for-like sales excluding fuel in the 12 weeks to September 21 fell 0.2%, compared to a steeper 1.6% fall seen in the first quarter of the year. Total retail sales were up 0.1%, in contrast to a 1.2% fall in the first quarter.
"Sales momentum was stronger in all areas, and we further improved our performance relative to our competitors, particularly in Grocery," said Chief Executive Mike Coupe.
For the first half, Sainsbury's expects underlying pretax profit to be GBP50 million lower than a year ago due to the phasing of cost savings, unseasonal weather and higher marketing costs. However, the company is on track to deliver annual profit in line with consensus.
As the grocer hosts its capital markets day on Wednesday, it laid out some new strategic aims.
In its financial services business, Sainsbury's is to "immediately" stop new mortgage sales, and there will be no more group capital injections after GBP35 million in the current financial year.
Elsewhere, the grocer will review its store estate, which will result in 10 new supermarkets and 10 to 15 closures, and 110 new convenience stores with 30 to 40 closures. The closures should deliver an ongoing net operating profit benefit of GBP20 million per year, the company said.
United Utilities was in third place among blue-chip risers, just 0.7% higher after the water firm said first half revenue is expected to be higher than a year ago. This is largely due to allowed regulatory revenue changes, it explained.
Underlying operating profit is expected to grow, due to higher revenue and lower infrastructure renewals expenditure.
Halma was down 1.4% despite the hazard detection firm saying it has made good progress in its first half.
The company's performance was in line with board expectations and saw further organic constant currency revenue growth, even against a strong comparative period a year ago.
All sectors delivered organic constant currency revenue growth, with Environmental & Analysis performing particularly well while the rate of growth in the Medical and Infrastructure Safety segments was more modest.
Babcock International shares rose 4.1% after the defence firm confirmed its annual expectations.
The Marine sector is performing well, Babcock said, while in Nuclear the civil market remains challenging but activity levels have increased across defence. While the firm said it has seen some delays in the award of new contracts in Aviation, overall bidding activity across the sector has increased.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite closed down 1.0%, while the Hang Seng index in Hong Kong is down 1.3% in late trade.
In Wednesday's economic calendar, the Confederation of British Industry's Distributive Trades survey is out at 1100 BST.
By Lucy Heming; [email protected]
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