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LONDON MARKET OPEN: Stocks flat; bidding war begins for Pendragon

27th Sep 2023 08:51

(Alliance News) - The FTSE 100 was tentatively higher at the open on Wednesday but failed to make substantial gains as investors remained cautious amid an uncertain economic backdrop.

"Nerves are frayed about the impact of high interest rates in the United States, while fragility in China is showing up once again," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

The FTSE 100 index opened up 7.01 points, or 0.1%, at 7,632.73. The FTSE 250 was virtually flat, down just 6.59 points at 18,330.06, and the AIM All-Share was marginally higher, up just 0.36 of a point at 730.51.

The Cboe UK 100 was flat at 761.32, the Cboe UK 250 was down 0.2% at 15,949.70, and the Cboe Small Companies was flat at 13,270.40.

In London, Flutter Entertainment was one of the top performers in the FTSE 100, up 0.9% in early morning trade after it announced the acquisition of an initial 51% stake in MaxBet, a Serbian omni-channel sports betting and gaming operator, for EUR141 million.

"MaxBet will provide Flutter with the platform to access fast-growing markets via a strong podium brand. This also creates an opportunity to accelerate growth and deliver a gold medal position for Flutter through expansion in the Balkans region by leveraging the benefits of the Flutter Edge," the Betfair and Paddy Power owner said.

Flutter will have the opportunity to acquire the remaining 49% stake in MaxBet in 2029.

In the FTSE 250, Great Portland Estate and Derwent London sat around the bottom of the index following rating cuts from Jefferies.

Jefferies cut both firms to 'hold' from 'buy' and slashed their respective price targets. It lowered GPE's target to 387 pence from 706p and Derwent's to 1,913p from 3,399p.

The stocks are currently trading 4.1% lower at 414.00p and 2.3% lower at 1,866.00p, respectively.

Senior added 1.9% after it announced that its Aerospace division has been awarded a 12-year contract extension with jet engine maker Rolls-Royce for the supply of precision machined structures and components.

The contract extension begins in January 2026 with manufacturing being undertaken at Senior Aerospace's Ketema facility near San Diego, US.

Shares in FTSE 100-listed Rolls-Royce were down 1.5%.

Elsewhere in London, Pendragon jumped 9.9% after it reported double-digit percentage rises in interim profit and revenue despite a challenging market backdrop.

The automotive retailer has also received a number of unsolicited takeover proposals.

Pendragon reported a pretax profit of GBP36.4 million in the first half of 2023, up 11% from GBP32.9 million the previous year. Revenue in the half climbed 13% to GBP2.09 billion from GBP1.85 billion.

Earlier this month, the company agreed to sell its entire UK motor business and leasing business to its North American rival, Lithia Motors. Following completion of the disposal, Pendragon will operate as a stand alone Pinewood business, making it a pure-play software as a service business.

On Wednesday, Pendragon said it was carefully considering takeover proposals from Hedin Mobility Group and PAG International and from AutoNation and will provide an update in due course.

Pendragon received a proposal from AutoNation to acquire the company for 32 pence per share on Tuesday. Last week, it had received a revised takeover offer by Hedin Mobility Group and PAG International worth 32 pence per share, up 14% from the 28p per share offered previously.

In European equities on Wednesday, the CAC 40 in Paris was marginally lower, while the DAX 40 in Frankfurt was down 0.1%.

In Tokyo on Wednesday, the Nikkei 225 index closed up 0.2%. The S&P/ASX 200 in Sydney closed down 0.1%. In China, the Shanghai Composite ended 0.2% higher, while the Hang Seng index in Hong Kong was up 0.7%.

The Hang Seng was set for a positive finish despite further bad news for beleaguered Chinese property developer China Evergrande.

According to anonymous sources cited by Bloomberg News, Xu Jiayin, the boss of Evergrande, was taken away by authorities earlier this month.

He is being held under "residential surveillance", the report said, which does not mean he has been arrested or charged with a crime.

The company's property arm this week missed a key debt payment due, and Chinese financial website Caixin reported that former executives at the firm had been detained. Evergrande's enormous debt has contributed to the country's deepening property sector crisis, raising fears of a global spillover.

Wall Street on Tuesday ended firmly in the red with the Dow Jones Industrial Average down 1.1%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.6%.

The pound was quoted at USD1.2150 at early on Wednesday in London, down from USD1.2163 at the close on Tuesday. The euro stood at USD1.0573, slightly higher against USD1.0576. Against the yen, the dollar was trading at JPY149.05, higher compared to JPY148.91.

"The dollar is enjoying another widespread rally, shrugging off yesterday's unconvincing US consumer confidence figures while being boosted by a round of defensive re-positioning amid a deteriorating risk environment," said Francesco Pesole at ING.

US consumer confidence declined for the second consecutive month in September, data on Tuesday showed, as people's short-term outlook for business, the labour market and income conditions worsened.

The Conference Board's consumer confidence index fell to 103 this month, down from an upwardly revised 108.7 in August.

Stephen Innes at SPI Asset Management noted that investors in the US were also continuing to grapple with the implications of an extended period of elevated interest rates and the potential economic repercussions, adding that the looming possibility of a US government shutdown was not helping matters.

Brent oil was quoted at USD92.85 a barrel at early in London on Wednesday, up from USD92.37 at the London equities close on Tuesday. Gold was quoted at USD1,897.26 an ounce, sharply lower against USD1,903.23.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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