2nd Oct 2013 09:36
LONDON (Alliance News) - London's equity indices opened lower Wednesday and have continued downward at mid-morning, led lower by disappointing results from supermarket giant Tesco and against a background of political turmoil in the US and Italy.
By mid-morning Wednesday the FTSE 100 is down 0.9%, at 6,41.30, the FTSE 250 is down 0.5%, at 14,896.75 and the AIM All-Share is down 0.4%, at 784.35.
Food and drug retailers have lead the UK stock market lower, with both Tesco and Sainsbury's making announcements. Tesco, down 4%, reported a huge drop in European profits of almost two thirds on a like-for-like basis. Sainsbury's outperformed its rival and announced plans to have more than 1,000 convenience stores by 2016. Even so, the stock also trades lower, down 1.4%.
The Tesco and Sainsbury reports are reading across to other UK food retailers, with Morrison down 1.7%, Greggs down 1.2%, and Ocado down 0.1%. Domino's Pizza bucked the trend, sitting close to the top gainers on the FTSE 250, up 2.4% after reporting a surge in online and mobile orders.
Hochschild Mining leads the fallers on the FTSE 250, down 5% after announcing a new acquisition that analysts think may not be affordable.
On AIM, Albemarle & Bond Holding leads the fallers, the pawnbroker trading about 50% lower after saying it is in talks with its lenders about solving potential breaches of its debt covenants later this year, after discussions with its largest shareholder about an equity raising failed.
Conversely, on the main market, Galleon Holdings shares have surged 1,600% after the stock started trading, having been suspended pending the release of the company's results, which were delayed as it went into administration and undertook a restructuring to turn itself from an online games company into an investment company.
Data from the morning has shown UK construction PMI at 58.9 in September, down from 59.1 in August and missing consensus forecasts of 59.2, according to FXstreet.com. The miss comes on the back of a manufacturing PMI miss Tuesday as the run of expectation-beating UK economic data appears to have come to an end. Construction remains strong, however, as a PMI reading above 50 still indicates growth.
The pound took a small dip against the dollar on release of the PMI numbers but has quickly recovered to trade back above USD1.62 as the US budgetary showdown continues to weigh heavily on the green back.
The euro also remains strong, currently USD1.3535 in the run up to both an ECB interest rate announcement and a no-confidence vote in the Italian parliament. No change is expected in interest rates, but central bank president Mario Draghi is expected to maintain a dovish tone at his press conference, especially given the persistently strong euro.
The vote of no confidence in Italy, prompted by Silvio Berlusconi's threat to pull out of the ruling coalition, remains on a knife-edge. "Italy is running a risk that could be fatal," PM Enrico Letta said in a speech to the Senate, stressing that the country needed political stability to emerge from a record-length recession and maintain markets' confidence. A vote is expected this afternoon.
The ISM New York manufacturing index is scheduled for 1445 BST and is not expected to be affected by the ongoing US government shutdown.
By Jon Darby; [email protected]; @jondarby100
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