6th Nov 2018 12:26
LONDON (Alliance News) - A decline in shares of Wm Morrison Supermarkets and US midterm election jitters were combining to keep the FTSE 100 below water at midday on Tuesday.The FTSE 100 was down 0.6%, or 45.78 points, at 7,058.06. The FTSE 250 was flat, just 1.31 points lower at 19,062.40. The AIM All-Share was broadly unchanged at 991.53.The Cboe UK 100 was down 0.7% at 11,983.88, while the Cboe UK 250 was 0.1% lower at 17,274.69. The Cboe UK Small Companies declined 0.2% to 11,661.86."Mid-terms are upon us, and early gains in Europe have been reversed despite a better session in Asia. It looks suspiciously like a lower high is upon us, equities having failed to maintain last week's progress. However, it might be wise to not to read too much in to today's moves, given pre-election nerves," said IG chief market analyst Chris Beauchamp.In mainland Europe, the CAC 40 stock index in Paris and DAX 30 in Frankfurt were both down 0.2% at midday.The latest survey data from IHS Markit showed eurozone private sector activity expanded at the weakest pace in over two years in October, as both manufacturing and services slowed.The composite Purchasing Managers' Index fell to 53.1 from September's 54.1, marking the lowest reading since September 2016. The flash reading for the composite PMI was 52.7, with a score above 50 suggesting growth in the sector.The services PMI eased to 53.7 from 54.7 in September, though this, again, was slightly above the flash reading of 53.3. Earlier survey data also showed that euro area manufacturing grew at the slowest pace in nearly four years during October."While the PMI numbers hint at an upward revision to the 0.2% flash estimate of third quarter GDP growth, it's clear that the economy has slowed and that the weakness has intensified into the fourth quarter," IHS Markit Chief Economist Chris Williamson said.In New York, Wall Street is on course for a lower open with both the Dow Jones and the S&P 500 called down 0.2% and the Nasdaq set to slide 0.3%.Focus in the US on Tuesday lies on the midterm elections, with all 435 seats in the US House of Representatives up for re-election.A total of 35 US Senate seats out of the 100 total also are in play, as well as almost 40 out of 50 state governor positions and the balance of power in virtually every state chamber. "Attention to the midterms has rarely been so high outside of the US. There is a strong sense that this midterm election will be different. The level of partisanship is high in the US, and its trading partners are watching closely," said Societe Generale. Societe Generale believes the most likely scenario is that the Republicans retain control of the Senate, but the Democrats gain the House. A thin corporate calendar in the US on Tuesday has results from pharmacy chain CVS Health and media firm Thomson Reuters, though the days ahead hold earnings from media giants Twenty-First Century Fox, News Corp and Walt Disney as well as semiconductor maker Qualcomm.CVS Health announced a 7.8% year-on-year rise in third-quarter earnings. They came in at USD1.39 billion, or USD1.36 per share. This compares with USD1.29 billion, or USD1.26 per share, in last year's third quarter. Revenue for the quarter rose 2.4% to USD47.27 billion from USD46.18 billion last year.Thomson Reuters reported a profit for third quarter that dropped 16% from the same period last year. The company's profit totalled USD291 million, or USD0.37 per share. This compares with USD348 million, or USD0.46 per share, in last year's third quarter. Revenue rose 1.6% to USD1.29 billion from USD1.27 billion last year.In London, keeping the FTSE 100 in the red on Tuesday was Wm Morrison Supermarkets, down 5.6% after reporting a slowdown in like-for-like sales in its third quarter.The supermarket chain's comparable sales, excluding fuel, rose 5.6% over 13 weeks to November 4, with retail rising 1.3% and wholesale 4.3%. Same-store sales, excluding fuel, were up 6.3% in the second quarter of the current financial year and were up 3.6% in the first quarter. Same-store sales had grown by 2.5% in the third quarter of financial 2018. Total sales for the recent third quarter were up 6.0%, excluding fuel, and up 6.4% including fuel.Perched at the top of the index was Associated British Foods, up 2.6% after its low-cost fashion chain Primark helped to offset a weak price environment that is hobbling ABF's sugar unit. "Sugar earnings may be under pressure, but this is still a sweet result from Associated British Foods. Overall group earnings have beaten market expectations, as a strong performance from other divisions such as Primark take up sugar's slack," commented Fiona Cincotta, senior market analyst at City Index.For the financial year that ended September 15, AB Foods's pretax profit fell 18% to GBP1.28 billion from GBP1.58 billion a year ago, as the company incurred a GBP34 million loss on sale and closure of businesses compared to a GBP293 million profit on such items the year before.However, on an adjusted basis, pretax profit increased 5% to GBP1.37 billion. The company's revenue increased 1.4% to GBP15.57 billion from GBP15.36 billion a year ago. AB Foods's adjusted earnings per share came in at 134.9 pence, up 6% on the previous year and beating company-compiled analysts consensus which forecast an increase of 4.6% to 132.9p. Primark "delivered its most significant profit growth in recent years", with adjusted operating profit up 15% to GBP843 million from GBP735 million and revenue up 6.1% to GBP7.48 billion from GBP7.05 billion. AB Foods's Sugar unit, meanwhile, recorded a 51% drop in adjusted profit to GBP123 million from GBP249 million. Also higher among London's blue-chips was paper and packaging company DS Smith, up 1.4% after saying it traded in line with expectations over the first half of its financial year. The firm expects adjusted operating profit and the return on sales for the six months to the end of October to be "materially ahead" of the year before. Adjusted operating profit in the prior year was GBP251 million, while return on sales stood at 9.0%.Workspace provider IWG was the biggest gainer in the FTSE 250, up 7.6% as third-quarter revenue grew. For the three months to the end of September, the Regus office space provider reported revenue of GBP637.9 million, up 10% at constant currency from GBP585.7 million a year before. IWG said its performance for the period was broad-based, including good performances in the US, EMEA and Asia-Pacific regions, more than offsetting disappointing results in the UK. Shares in engineer Weir were up 5.7% as it said orders increased in the third quarter, boosted by its acquisition of US-based surface mining company ESCO Corp.In the three months to September, including the ESCO acquisition, orders were up 40% at constant currency, which compares to a 16% increase in the second 2018 quarter. Like-for-like aftermarket orders from continuing operations grew by 15% and original equipment was up 20%.William Hill slumped 3.8% after the bookmaker warned of a decline in annual profit as it reported revenue for the 17 weeks since June 27 was down 4% on a year before.The betting firm said it expects financial 2018 operating profit to come in between GBP225 million and GBP245 million. A year ago, adjusted operating profit was GBP291.3 million. Furthermore, William Hill said it expects its profit to reduce by GBP20 million in 2018 and by a further GBP25 million in 2019, due to "adverse regulatory and tax changes" including the increase in Remote Gaming Duty to 21% that was announced in the UK government budget last week.
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