30th May 2023 09:12
(Alliance News) - Stock prices in London opened mixed on Tuesday as UK and US markets returned from a three-day weekend facing a delayed deadline for raising the US debt ceiling.
The FTSE 100 index opened down 4.68 points, 0.1%, at 7,622.52. The FTSE 250 was up 62.00 points, 0.3%, at 18,856.09, and the AIM All-Share was down 0.23 of a points at 791.48.
The Cboe UK 100 was down 0.1% at 761.13, The Cboe UK 250 was up 0.4% at 16,404.80. The Cboe Small Companies was up 0.1% at 13,569.21.
In Washington, Republican and Democratic leaders scrambled to secure Congressional support for a bill aimed at avoiding a catastrophic US debt default, with just one week left before the government starts running out of money.
The bill, finalized on Sunday by US President Joe Biden and House Speaker Kevin McCarthy after weeks of frantic negotiations, faces opposition from the progressive and hard-right wings of their respective parties.
Ultra-conservative Republicans feel McCarthy should have secured far deeper spending cuts in exchange for raising the debt ceiling and allowing the government to keep borrowing money. The left wing of the Democratic Party is equally unhappy that Biden agreed to any spending limits at all.
"Presently, it feels like investors are confident that the US debt ceiling will be raised," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"The kneejerk reaction to a debt ceiling deal will be positive but gains could remain short-lived as most of the deal is already priced in, and the end of the debt ceiling crisis means that the US Treasury will issue USD1 trillion debt to service its existing debt, pay its bills and start refilling the Treasury's General Account, which fell to below USD50 billion last week, whereas the balance should be normally around USD500 billion. This means that the US Treasury will be sucking around half a trillion dollars from the market very shortly."
Ozkardeskaya added: "We don't know at what speed at which the market liquidity will drain, but we know that it will drain."
Wall Street ended higher on Friday ahead of the Memorial Day weekend. The Dow Jones Industrial Average closed up 1.0%, the S&P 500 up 1.3%, and the Nasdaq Composite up 2.2%.
Asian markets were mixed on Tuesday, having closed mostly higher on Monday on hopes for a US debt agreement.
The Nikkei 225 index in Tokyo closed up 0.3% on Tuesday after adding 1.0% on Monday. In China, the Shanghai Composite was closed up 0.1% on Tuesday, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed down 0.1%.
In European equities on Tuesday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was up 0.2%. Both indices had lost 0.1% on Monday.
The pound was quoted at USD1.2347 early on Tuesday in London, up compared to USD1.2325 at the equities close on Friday. The euro stood at USD1.0678, lower against USD1.0703. Against the yen, the dollar was trading at JPY140.34, down compared to JPY140.65.
In the FTSE 100, Hiscox was up 0.9%.
It named Jonathan Bloomer, the former chief executive officer of fellow insurer Prudential PLC, as chair designate.
Bloomer will join the board of the Hamilton, Bermuda-based insurer as chair designate on June 1, succeeding Robert Childs, who will retire on July 1. In March, Hiscox had announced that Childs will step down as chair during 2023. He joined the company in 1986.
Bloomer joined Prudential in 1995, initially as chief financial officer and then as CEO from 2000 to 2005.
Unilever lost 0.3%. It said Chief Financial Officer Graeme Pitkethly plans to step down by the end of May 2024. The board will now proceed with a formal internal and external search for his successor.
In the FTSE 250, RHI Magnesita jumped 18%.
Ignite Luxembourg Holdings, a company indirectly managed by Rhone Holdings VI, offered to buy a 20% stake in RHI Magnesita at GBP28.5 per share in cash, a 39% premium to the stock's close on Friday.
Rhone said it aims to buy a non-controlling minority stake in Vienna-based supplier of refractory products.
The offer values all of RHI Magnesita at GBP1.34 billion, or at GBP1.38 billion including a dividend recently declared by RHI Magnesita.
Hunting jumped 13% after it won a USD91 million contract.
The company said its Asia Pacific operating segment has won a significant new oil country tubular goods contract with Cairn Oil & Gas, Vedanta, for its operations in Rajasthan, India.
The contract is worth up to USD91 million and is for an estimated 100 wells. With this order, Hunting's sales order book now is about USD575 million.
Based on the timing of the first deliveries of this order, Hunting now expects 2023 full year earnings before interest, tax, depreciation and amortisation to be in the range of USD92 million to USD94 million.
Brent oil was quoted at USD76.41 a barrel early in London on Tuesday, down from USD76.63 late Friday. Gold was quoted at USD1,935.77 an ounce, down from USD1,939.81.
In this week's economic calendar, there is a US consumer confidence reading on Tuesday, before the key nonfarm payrolls report for May on Friday.
By Sophie Rose, Alliance News reporter
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