22nd Jul 2020 08:54
(Alliance News) - Stock prices in London opened mixed on Wednesday amid concerns about slow progress by US lawmakers in drafting a new economic stimulus package, while Kingfisher surged after saying it expected higher profit.
The FTSE 100 index was down 15.61 points, or 0.3%, at 6,254.12. The mid-cap FTSE 250 index was 23.01 points, or 0.1%, higher at 17,524.84. The AIM All-Share index was flat at 893.46.
The Cboe UK 100 index was down 0.3% at 622.54. The Cboe 250 was up 0.1% at 14,699.54, and the Cboe Small Companies index was up 0.3% at 9,240.06.
In mainland Europe, the CAC 40 in Paris was down 0.2%, while the DAX 30 in Frankfurt was up 0.1%.
"European stimulus news boosted sentiment and stocks in the previous session. However, in the US the Republicans and Democrats are struggling to reach an agreement over the next relief package, causing optimism to stutter," said City Index analyst Fiona Cincotta.
Democrats have drawn up a new USD3.5 trillion plan, while Republicans and officials in the White House are bogged down trying to draw up their own stimulus, which is said to be around USD1 trillion.
Among the sticking points are the extension of a supplement to unemployment benefits and President Donald Trump's desire for tax cuts. With Congress due to take a break in August there is a concern a deal will not be agreed, leaving millions without cash.
Still, Trump said he was optimistic, telling a White House briefing: "We're working very hard on it, we're making a lot of progress."
Meanwhile, Trump on Tuesday acknowledged the coronavirus pandemic will "get worse" and noted a recent surge in cases, marking a change of tone as he revived his regular press briefings on the outbreak.
"It will probably, unfortunately, get worse before it gets better - something I don't like saying about things, but that's the way it is," Trump said.
On the London Stock Exchange, Kingfisher was the best blue-chip performer, up 8.2%. The DIY retailer reported strong second-quarter trading figures following a good e-commerce performance and the phased reopening of stores France and the UK as lockdown measures eased.
For the second quarter to July 18, group like-for-like sales were up 22%, though year-to-date, group like-for-like sales were down 3.7%.
Kingfisher, which owns B&Q in the UK and Castorama in France, added that online sales have more than tripled as customers took up DIY projects during lockdown.
Kingfisher said that based on the strong sales seen to date in the second quarter, combined with cost reductions, it anticipates its half-year adjusted pretax profit to be ahead of the prior year. The retailer posted interim pretax profit of GBP245 million last year.
Mexican gold miner Fresnillo was the second-best blue-chip performer, up 5.0%, followed by Russian gold miner Polymetal International, up 3.2%, tracking spot gold prices higher.
Gold was trading at USD1,860.19 an ounce Wednesday morning, up sharply from USD1,839.86 at the London equities close Tuesday. The precious metal hit a fresh nine-year high of USD1,866.28 overnight.
"Gold and silver price action is mirroring post-[global financial crisis] patterns in so many ways. Inflation break evens are coming back, and real Treasury rates dropping. With a push for the vaccine, the recovery in inflation expectations can go further as oil prices find a more solid footing and thereby drive gold higher even if nominal rates stay flat," said AxiCorp's Stephen Innes.
Brent oil was quoted at USD44.26 a barrel early Wednesday, soft from USD44.62 a barrel at the London equities close Tuesday.
Separately, Fresnillo said first-half gold production decreased 12% to 381,319 ounces from 432,417 ounces last year due to a lower volume of ore processed at Herradura and Noche Buena mines.
Second-quarter gold production was 184,400 ounces, down 6.4% from the first quarter of 2020. The company attributed the fall in production to coronavirus restrictions. Fresnillo said first half silver production was 26.8 million ounces, down 2.7% from last year.
As such, Fresnillo said annual gold production is now expected to be in a range of 785,000 ounces to 815,000 ounces, from a previously guided range of 815,000 to 900,000 ounces, as a result of Covid-19 related disruption.
Silver production guidance remains in the range of 51 million ounces to 56 million ounces.
At the other end of the large-cap index, Melrose Industries was the worst performer, down 15% after the industrial turnaround specialist said revenue declined by 27% in the first half of 2020.
Melrose - which is highly exposed to the battered aerospace and automotive sectors - said an "extraordinary" trading period saw factories of its Automotive and Powder Metallurgy businesses temporarily shut in Europe and the Americas due to Covid-19.
Melrose said trading was in line with expectations until mid-March and then fell steeply in the second quarter due to Covid-19. After cost cuts, however, Melrose said it generated GBP200 million in free cash flow before restructuring costs and the January acquisition of Forecast 3D, reducing net debt by GBP90 million in the half-year.
In China on Wednesday, the Shanghai Composite ended up 0.8%, while the Hang Seng index in Hong Kong was down 0.3%. The Nikkei 225 index in Tokyo ended down 0.6%.
The pound was quoted at USD1.2668 early Wednesday, lower from USD1.2736 at the London equities close Tuesday.
The euro stood at USD1.1540, up sharply from USD1.1491. The single currency extended gains against the dollar following the EU stimulus agreement and was sitting at its highest levels since early 2019.
Against the yen, the dollar was trading at JPY106.81, flat from JPY106.85.
By Arvind Bhunjun; [email protected]
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