London's blue chips got off to a slow start on Wednesday, with grocer Tesco slipping into the red following a disappointing profit performance, while commodity prices remain on edge ahead of the OPEC+ meeting.
The FTSE 100 index opened down 45.23 points, or 0.6%, at 7,041.23. The FTSE 250 opened down 31.1 points, or 0.2%, at 17,791.05, and the AIM All-Share opened down 0.61 of a point, 0.1%, at 819.23.
The Cboe UK 100 opened down 0.5% at 704.61, the Cboe UK 250 opened down 0.6% at 15,125.50, and the Cboe Small Companies opened up 0.3% at 12,806.97.
In European equities on Wednesday morning, the CAC 40 in Paris opened down 0.8%, while the DAX 40 in Frankfurt was down 0.5%.
The pound was quoted at $1.1450 in early trade on Wednesday, up compared to $1.1438 at the close on Tuesday.
UK Prime Minister Liz Truss is set to give her keynote speech at the Conservative Party Conference later this morning.
She will say the ‘disruption’ from her plans to revive the country's economy will be worth it as she battles to save her premiership after just a month in the job.
Truss will insist there can be no more ‘drift and delay’ in the effort to boost economic growth in her first Tory conference speech as leader.
She will defend her ‘new approach’ which will ‘unleash the full potential of our great country’.
Truss is under heavy pressure within her own party, following the tax cut U-turn. She faces public dissent from within the cabinet, and brewing discontent over the level of benefits.
Meanwhile, the 13 members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and their 10 allies headed by Russia will hold their first in-person meeting since March 2020 at the group's headquarters in Vienna.
Collectively known as OPEC+, reports indicate they were mulling an output cut of up to two million barrels per day in a bid to prop up slumping prices.
After soaring close to $140 per barrel in the aftermath of Russia's invasion of Ukraine in late February, oil has recently been trading below the $90 mark.
Brent oil was trading at $91.93 a barrel early Wednesday, edging higher than $91.77 late Tuesday.
In the FTSE 100, Tesco added 0.3%, after it said interim profit was stung by a hefty impairment charge, and warned of pressures in the second half.
For the 26 weeks ended August 27, the supermarket said revenue rose 6.7% to £32.46 billion from £30.42 billion a year before. Pretax profit, however, shrunk 64% to just £413 million from £1.14 billion. It recognised a £626 million non-cash non-current asset impairment charge ‘related to an increase in discount rates this year’, it explained.
Nevertheless, the grocer proposed an interim dividend of 38.5 pence per share, a 20% increase from 3.20p a year before.
‘We saw significant cost inflation and some impact from a step up in own brand sales vs branded ranges as customers took steps to manage the pressure on their household budgets,’ Tesco said.
It maintains annual profit guidance provided in April, ‘albeit towards the lower end’. It expects retail adjusted operating profit between £2.4 billion to £2.5 billion in its full year.
Anglo American shed 1.5% as it reported a slowing of De Beers diamond sales. It recorded $500 million in cycle 8, compared to $638 million in cycle 7. Sales were up year-on-year, however, rising from $492 million in the previous cycle 8.
The sales were in line with its expectations ‘at what is a traditionally quieter time of year’, it said.
In the midcaps, Hill & Smith added 2.0% after it said trading has been robust since its half year, with current foreign exchange rates ‘providing potential outperformance’.
The infrastructure firm completed the acquisition of the business and assets of National Signal for $25.3 million in cash. National Signal designs, manufactures and supplies off-grid solar lighting solutions for the US market. It also completed the buy of Widnes Galvanising, to expand its presence in the northwest of the UK.
In AIM, Serinus Energy plunged 25%. The Jersey-based upstream oil and gas exploration and production company said readings from the Moftinu Nord-1 well did not show sufficient gas resources to justifying continuing with the testing and completion of the well.
It will now suspend the well, which has cost the firm $867,000.
In contrast, Omega Diagnostics jumped 22%. The special medical diagnostics company received a positive draft performance evaluation report from the World Health Organisation for its Visitect CD4 Advanced Disease Rapid test.
‘If the Visitect CD4 Advanced Disease test successfully meets all WHO pre-qualification requirements, it will continue to be made available for sale by Accubio and the company will receive the full £4.0 million of deferred consideration,’ Chief Executive Officer Jag Grewal explained.
The euro traded at $0.9956 early Wednesday, lower than $0.9970 late Tuesday. Against the yen, the dollar was quoted at JP¥144.42, higher versus JP¥144.40.
Stocks in the Asia Pacific region were stronger on Tuesday. The Nikkei 225 in Tokyo closed up 0.5%, while the S&P/ASX 200 in Sydney ended up 1.7%. In China, the Shanghai Composite closed down 0.6%. The Hang Seng index in Hong Kong caught up on recent rallies as markets re-opened after a break, ending up 6.2%.
Gold was quoted at $1,721.97 an ounce early Wednesday, lower than $1,725.92 on Tuesday.
Still to come in the economic calendar, there's a services PMI reading from the EU at 0900 BST before the UK at 0930 BST and the US at 1445 BST.
Copyright 2022 Alliance News Limited. All Rights Reserved.
