28th Aug 2020 09:08
(Alliance News) - Stock prices in London opened lower on Friday on a quiet day for UK company news, while Amigo Holdings shares rose as the subprime lender braces for a battle over its future.
In London, the blue-chip FTSE 100 index was down 23.46 points, or 0.3%, at 5,976.53. The mid-cap FTSE 250 index was down 43.30 points, or 0.3%, at 17,718.73. The AIM All-Share index was down 0.2% at 961.93.
The Cboe UK 100 index was down 0.6% at 594.69. The Cboe 250 was up 0.1% at 15,079.68. The Cboe Small Companies was down 0.1% at 9,497.65.
In mainland Europe, the CAC 40 index in Paris was down 0.3%, while the DAX 30 in Frankfurt was down 0.4%.
Stocks wilted despite the US Federal Reserve indicating that it would take a more relaxed approach to inflation.
At the Jackson Hole economic symposium on Thursday, the Fed outlined a major policy change that gives greater weight to its mission of maximising employment for the benefit of lower-income families, while placing less emphasis on fighting inflation.
Chair Jerome Powell said the aim is to correct the "shortfalls" in achieving the Fed's full employment goal while recognizing that, with changes in the global economy, a tight job market does not necessarily drive prices higher.
In practice, the change has no impact in the near-term but will keep borrowing rates low for much longer than in prior economic expansions. The new policy makes it clear the central bank will allow inflation to stay above its 2.0% target "for some time" before raising interest rates.
In the FTSE 100, gold miners Polymetal International and Fresnillo were the best performers, up 1.8% and 1.7% respectively, tracking spot gold prices higher, as the dollar weakened.
Gold was quoted at USD1,947.71 an ounce Friday morning, up from USD1,919.95 late Thursday.
At the other end of the large caps, Rolls-Royce was the worst performer, down 3.0% as the jet engine maker extended losses from Thursday. The stock closed down 1.2% on Thursday after saying it was looking to sell assets, amid a gaping loss and a warning of "material uncertainties" caused by the coronavirus pandemic.
In the FTSE 250, Essentra was up 2.5%. The plastic and fibre products maker said on Friday that revenue and order intake trends improved towards the end of the second quarter.
For the six months ended June 30, Essentra posted pretax profit of GBP8 million, crashing down 85% year-on-year from GBP53.1 million. This was as revenue fell 12% to GBP448 million from GBP507 million.
However, the drop in profit was attributed primarily to the disposal of various businesses in the first half of 2019 as well as temporary inefficiencies caused by the pandemic, the company said. Costs in the first half of 2020 included GBP10.9 million of amortisation of intangible assets and an exceptional pretax charge of GBP2.5 million.
Looking ahead, Essentra said: "On a divisional basis, the outlook for the second half suggests that Components will see a continuation in the improvement on like-for-like trends, Filters will see a continued trend of year-on-year growth driven in part by outsourcing contract volumes, and in Packaging - due to some recent softness seen in certain end markets owing to a supply chain adjustment resulting from a reduction in prescriptions and surgeries through lockdown periods - the third quarter should be broadly flat with a return to growth anticipated for the fourth quarter."
Elsewhere, Amigo Holdings was up 16%. The guarantor loans provider posted a sharp drop in first-quarter earnings due to the granting of payment holidays, a day after its disgruntled founder made a formal bid to return.
Amigo reported a drop in first-quarter revenue which it said primarily reflected the effects of Covid-19 payment holidays that it granted to its borrowers. The revenue fall all but wiped out profit.
After the London market close on Thursday, Amigo had said it received a general meeting requisition notice from Richmond Group for appointing James Benamor as a director of the company.
The notice also proposed removal of Chief Financial Officer Nayan Kisnadwala, Interim Chair Roger Lovering and Chief Executive Glen Crawford as directors of Amigo and resolutions in relation to Amigo's unit Amigo Loans, the sub-prime lender noted.
Amigo said it is consulting with its advisors in relation to the resolutions.
In April, Benamor had called for the sub-prime lender's entire board to be ousted after saying the company is "committing slow motion suicide", but shareholders rejected Benamor's resolutions.
Amigo and Benamor settled their dispute in June, with Benamor deciding to sell his entire 61% stake in the company.
On Monday, Amigo hit back at Benamor, saying that he should not waste time or money in his bid to return.
The pound was quoted at USD1.3278 early Friday, up from USD1.3192 at the London equities close on Thursday.
The euro stood at USD1.1887 early Friday, up sharply from USD1.1798 at the European equities close Thursday. Against the yen, the dollar was trading at JPY106.05, lower from JPY106.50.
In commodities, Brent oil was quoted at USD45.65 a barrel from Friday morning, up from USD44.68 a barrel at the London equities close Thursday.
The Japanese Nikkei 225 index closed down 1.4%. In China, the Shanghai Composite is up 1.5%, while the Hang Seng index in Hong Kong is up 1.6%.
Japan's Prime Minister Shinzo Abe is to resign over health problems, top lawmakers said Friday, in a bombshell development will end a record-setting tenure with no clear successor in yet in place.
Abe announced his plan at an emergency meeting of the ruling Liberal Democratic Party, senior lawmaker and close Abe ally Tomomi Inada told reporters.
"I heard his plan. It was sudden and unexpected. I am stunned," she said.
Other lawmakers confirmed the account.
By Arvind Bhunjun; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
EssentraPOLY.LFresnilloRolls-RoyceAmigo