The pound and UK stock prices stabilised early Tuesday following a volatile day to start the week, though the investment mood remained jumpy.
Asian equity markets traded strongly on Tuesday, despite another negative lead from New York, and European shares have followed them higher at the open.
The FTSE 100 index was up 42.30 points, or 0.6%, at 7,063.25 early Tuesday. The mid-cap FTSE 250 index was up 136.23 points, or 0.8%, at 17,859.06. The AIM All-Share index was up 2.04 points, or 0.3%, at 829.93.
The FTSE 100 has managed a fractional gain on Monday, but the other two market measures ended unquestionably lower.
The Cboe UK 100 index was up 0.9% at 705.29. The Cboe 250 was up 0.8% at 15,268.04, and the Cboe Small Companies was up 0.2% at 12,893.42.
The CAC 40 stock index in Paris surged 1.3% early Tuesday, while the DAX 40 in Frankfurt was up 0.7%.
The Nikkei 225 index in Tokyo closed 0.5% higher, while the S&P/ASX 200 in Sydney ended up 0.4%. In China, the Shanghai Composite jumped 1.4%, and the Hang Seng in Hong Kong was up 0.1% in late trade.
There was some respite for the pound, a day after it had tumbled to a record low of $1.0349 on Monday morning. Sterling fetched $1.0832 early Tuesday, up from $1.0655 at the London equities close on Monday.
The euro rose to $0.9662 early Tuesday UK time from $0.9626 at the European equities close on Monday. Against the yen, the dollar slipped to JP¥144.12 from JP¥144.41.
‘In our view there will be no let-up in USD dominance for some months to come,’ commented Rabobank, adding: ‘Amid concerns about the pace of global growth, higher Fed rates have only served to underpin the safe haven attraction of the USD. Irrespective of the position of the USD, however, there is no escaping the fact that GBP is being pummelled as a result of investors' dissatisfaction with UK fundamentals.’
The UK government moved to calm tetchy currency markets, announcing it will now publish a ‘medium-term fiscal plan’ in November. The Bank of England also said Monday it is not afraid to act, though it ruled out an emergency rate hike before its next meeting.
‘Yesterday's statement from the Treasury indicates that the government will ensure that debt falls as a share of GDP in the medium-term,’ Rabobank said. ‘The government may attempt to argue that this will be achieved due to growth hitting its 2.5% growth target; an outlook which will be a hard sell to the market.’
Gold rose to $1,640.25 an ounce early Tuesday from $1,639.00 late Monday. A barrel of Brent firmed to $85.65 from $85.30.
In London, United Utilities lost 2.3% after it warned on annual revenue.
The water and wastewater company expects revenue in the half year ending September 30 to be 1% lower year-on-year, due to ‘moderately lower-than-forecast consumption’. This weaker consumption will continue into the second half, hurting full-year revenue, United Utilities said.
It expects annual revenue will be lower than a May forecast. Back then, the company said it expected annual revenue to grow 1%.
United Utilities was among the worst large-cap performers.
Biffa was the standout among mid-caps, rising 28% to 407.80 pence, giving it a market capitalisation of £1.25 billion.
It backed a £1.3 billion takeover from Energy Capital Partners. ECP will pay 410 pence cash for each share in the waste management firm, a 27% premium to its 323.90p closing price on Monday.
The acquisition sum is, however, 7.9% lower than an initial 445p per share proposal made back in June.
Biffa Chair Ken Lever said: ‘It is the Biffa board's view that this offer represents a compelling opportunity, particularly in a weakening economic environment, for shareholders to realise, in cash and with certainty, the potential for future value creation.’
ECP is an ‘experienced investor in environmental infrastructure and sustainability assets’, Lever noted.
Elsewhere on the M&A front, a deal to acquire wealth manager Brewin Dolphin has come into effect. Royal Bank of Canada's £1.6 billion buyout has been sealed. Brewin shares were suspended Tuesday ahead of a subsequent cancellation on Wednesday.
SSP climbed 4.0%. The Upper Crust and Camden Food owner expects annual sales and profit to be ahead of guidance as business for its travel food and beverage outlets get closer to pre-virus levels.
In the fourth quarter alone, revenue is expected be at roughly 91% of 2019 levels.
For the year ending September 30, SSP expects sales of £2.17 billion and pre-IFRS 16 earnings before interest, tax, depreciation and amortisation of £140 million. Both will be ‘slightly ahead of our previous full year guidance’. Revenue will be nearly tripled from the £834.2 million recorded in the Covid-19 hit prior year.
Saga tumbled 14% as the company swung to a sizeable half-year loss due to insurance-related impairments.
Saga provides insurance, cruises and package holidays to people over 50.
While revenue in the half year that ended July 31 improved, jumping 65% to £258.3 million from £156.4 million, its bottom-line figure was markedly worse.
Saga posted a £257.5 million pretax loss, swinging from a £700,000 profit a year earlier. Saga booked a £269.0 million impairment of insurance goodwill. The hit is due to a weaker outlook for future motor and home margins.
Admiral and Direct Line, which also operate in the motor and home insurance spaces, were down 4.3% and 2.0%, respectively.
Still to come on Tuesday, are a US durable goods orders at 1330 BST and a housing price index at 1400 BST. There is also a US consumer confidence reading at 1500 BST.
Copyright 2022 Alliance News Limited. All Rights Reserved.
