9th Aug 2022 09:07
(Alliance News) - The investment mood in London soured on Tuesday morning, with a disappointing lead from Wall Street compounded by Taiwan raising fears that China will invade the island.
New York shares were hurt on Monday by a dark outlook from semiconductor maker Nvidia.
The FTSE 100 was up just 4.94 points at 7,487.31 early Tuesday, fighting back into the green after opening in the red. The FTSE 250 index was down just 5.41 points at 20,113.03. The AIM All-Share index was up 1.17 points, or 0.1%, at 921.08.
The Cboe UK 100 index was down 0.1% at 747.11. The Cboe 250 was down slightly at 17,431.41. The Cboe Small Companies was up 2.1% at 14,272.02.
In Paris, the CAC 40 stock index was down 0.2%, while in Frankfurt, the DAX 40 was 0.4% lower.
Taiwan held an artillery drill on Tuesday, simulating defence against an attack, as its top diplomat accused Beijing of preparing to invade the island after days of massive Chinese war games.
China launched its largest-ever air and sea exercises around Taiwan last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.9%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was 0.1% lower. The S&P/ASX 200 in Sydney ended up 0.1%.
In London, FTSE 100-listed asset manager abrdn offered a grim outlook, saying current market volatility will see it take longer to hit its revenue growth and cost-to- income ratio targets.
abrdn shares plunged 7.0% in early trading.
The Investment unit ended the first half with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows.
abrdn booked a GBP320 million loss in the six months to June 30 versus the GBP113 million profit achieved a year prior. Fee-based revenue fell 8% as its assets went tumbling, falling to GBP696 million from GBP755 million, and its cost-to-income ratio worsened to 83% from 79%.
abrdn left its interim dividend unchanged at 7.3p.
"The half year group results largely reflect the challenging global economic environment and market turbulence," Chief Executive Stephen Bird said.
He added, however: "The strength of our balance sheet means that we can continue to invest and reward shareholders."
Also dragging on the FTSE 100, Legal & General was 0.5% lower.
The life insurance and investment manager lifted its interim payout as it reported growth in profit and capital generation during what was a "good start" to 2022.
L&G said its first half went to plan, despite posting a fall in assets under management, which were hit by volatile markets. It hailed growth in net flows, however.
L&G's pretax profit in the half-year ended June 30 advanced 2.8% to GBP1.44 billion from the GBP1.40 billion it achieved 12 months earlier. Operating profit improved 7.5% to GBP1.16 billion from GBP1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses.
Gross written premiums were 55% higher year-on-year at GBP6.61 billion from GBP4.26 billion.
"All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility," L&G explained.
InterContinental Hotels Group shares lost 1.1% in early trading, but it reported a strong rise in profit in the first half as it continues to see travel demand increase.
In the six months to June 30, the Holiday Inn- and Crowne Plaza-owner's pretax profit multiplied to USD299 million from USD67 million a year prior. Operating profit more than doubled to USD361 million from USD138 million.
Total revenue was up 52% to USD1.79 billion from USD1.18 billion. Comparable revenue per available room improved 61% in the first quarter, then grew 44% in the second quarter, the firm noted, meaning it saw 51% growth in the first half as a whole. When compared to the pre-pandemic levels of 2019, however, comparable RevPAR was still down 11% in recent half-year.
The hotel operator resumed its interim dividend payout at 43.9 US cents per share, reflecting a 10% rise from the last interim payout made for the first half of 2019.
"Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform," Chief Executive Keith Barr said.
Among London midcaps, IWG shares slumped 13% but the flexible workspace provider said it was "cautiously optimistic" on its outlook.
In the six months to June 30, pretax loss narrowed to GBP81.3 million from GBP173.0 million a year prior, as system-wide revenue rose 22% to GBP1.45 billion from GBP1.17 billion.
The workspace firm said its industry is facing "many tailwinds" as companies seek out hybrid working conditions more and more, largely due to it lowering costs.
"With hybrid working becoming the preferred operational model for a rapidly growing number of companies, we remain confident about the continuing structural growth drivers at play in our industry," the company explained.
"Our strategy is focused on meeting this demand by increasing the growth and coverage of our network and we have excellent momentum in delivering capital light growth, enabled by an expanding base of franchise and property partners."
The Dow Jones Industrial Average closed up 0.1%, but the S&P 500 index and the Nasdaq Composite both slipped by 0.1%.
Tech stocks in New York took a hammering after chipmaker Nvidia guided for its second quarter revenue to fall well short of previous expectations.
For the three months to July 31, the Santa Clara, California-based semiconductor maker expects to report revenue of about USD6.70 billion, which is 17% behind the previous guidance of USD8.10 billion.
Nvidia closed down 6.3% on Monday and was down a further 1.4% in pre-market activity on Tuesday.
US investment focus is on Wednesday's inflation reading, following the blowout jobs report last week. The annual inflation rate in the US is expected to slow to 8.7% in July from 9.1% in June, according to FXStreet-cited consensus. The core rate is expected to edge up to 6.1% from 5.9%, however.
CMC Markets analyst Michael Hewson said: "Friday's bumper jobs report has raised expectations that the Federal Reserve still has some way to go when it comes to raising rates, with 75bps currently priced in for September, while at the same time declining inflation expectations are indicating that the Fed might have room to look at raising rates in smaller increments.
"Consensus opinion appears to be leaning towards the current strength in equity markets, being a bear market rally with limited upside, while on the other side there are those who think we've managed to carve out a base."
The dollar was higher early Tuesday in London.
The pound was quoted at USD1.2076, slipping from USD1.2114 at the London equities close Monday. The euro was priced at USD1.0206, down from USD1.0217. Against the yen, the dollar was trading at JPY134.94, up from JPY134.61.
Brent oil was quoted at USD95.74 a barrel Tuesday morning, down from USD96.22 late Monday. Gold stood at USD1,784.50 an ounce, down against USD1,789.50.
Tuesday's economic calendar is quiet, with no significant data due.
By Paul McGowan; [email protected]
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