Stock prices in London closed firmly in the red on Thursday, as markets nervously eyed flaring tensions in the Middle East and the prospect of interest rates staying higher for longer in the world’s largest economy.
The FTSE 100 index closed down 88.47 points, 1.2%, at 7,499.53. The FTSE 250 ended down 190.32 points, 1.1%, at 17,213.14, and the AIM All-Share closed down 1.56 points, 0.2%, at 683.24.
The Cboe UK 100 ended down 1.1% at 748.99, the Cboe UK 250 closed down 0.9% at 14,931.03, and the Cboe Small Companies ended down 0.5% at 12,931.20.
In European equities on Thursday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt ended down 0.3%.
Stocks in New York were lower at the London equities close, with the DJIA down 0.3%, meanwhile both the S&P 500 index and the Nasdaq Composite were down 0.4%.
‘Worries about an escalation of violence in the Middle East weighed on stocks around the world. US markets experienced a troubled session last night and negativity spread across Europe and Asia on Thursday,’ AJ Bell analyst Russ Mould commented.
US markets were on edge ahead of speech by US Federal Reserve Chair Jerome Powell. He is expected to speak before the Economic Club of New York at around 1700 BST.
Powell is likely to be extra hawkish in his key policy speech amid growing concerns over surging oil prices, driven by the Israel-Hamas war.
Brent oil was quoted at $91.28 a barrel at the London equities close Thursday from $91.10 late Wednesday.
Geopolitical unrest in the Middle East has unsettled markets in the past two weeks and amplified uncertainty.
The UK prime minister arrived in Israel on Thursday to meet leaders in the Middle East and call for any escalation of the conflict to be avoided.
Rishi Sunak will hold talks with the country’s prime minister, Benjamin Netanyahu, and President Isaac Herzog as he starts a two-day trip that is expected to take in a number of capitals in the region.
He will urge Middle East leaders to ‘avoid further dangerous escalation’, saying that ‘too many lives have been lost’ already in the Israeli-Hamas war.
Sunak’s visit follows one from US President Joe Biden. The president’s trip appeared to herald a breakthrough, with Netanyahu’s office announcing it had approved a request from Biden to allow Egypt to deliver limited quantities of humanitarian aid to the Gaza Strip.
On London’s FTSE 100, Rentokil tumbled 18% to the bottom of the index.
The pest control and hygiene firm warned that tricky market conditions in North America mean its full-year outturn in the region will be worse than expected.
It now predicts a North America adjusted operating margin range of 18.5% to 19.0%, lowered from its 19.5% expectation. At group level, however, it maintained its adjusted operating margin guide of 16.5%.
Rightmove slumped 13%, with the stock rocked by M&A developments elsewhere in the online property portal market.
New York-listed property group CoStar has struck a deal to acquire Rightmove’s AIM-listed property portal rival, OnTheMarket.
The offer is for 110 pence for each OTM share, valuing the firm at around £99 million. The price is a premium of 56% to OTM’s closing price of 70.50p on Wednesday.
Shares in OTM jumped 53% to 107.53p on Thursday.
For CoStar, the deal is an ‘attractive strategic entry point’ to enter the UK residential property market, the release said.
AJ Bell’s Russ Mould said: ‘It’s a classic move – a US business that is already an expert in the same sector is using the acquisition of a London-listed stock to expand into a new segment of the UK market. In CoStar’s case, the deal will give it a foot in the door for the UK residential property sector.’
AJ Bell rose 4.6% on Thursday, placing it at the top of the FTSE 250 index.
For the year ended September 30, the firm, which provides online investment platforms and stockbroker services, reported net inflows of £1.65 billion, up 57% from £1.05 billion a year prior.
Total assets under management were £4.7 billion, up 68% from £2.8 billion.
‘At an industry level, we continue to engage with Government on potential ISA reforms, with our focus being on simplifying the existing ISA landscape to make it easier for retail investors to navigate. We believe this will encourage a greater number of people to invest via ISAs which would benefit UK listed firms given the natural home bias exhibited by retail investors,’ said Chief Executive Officer Michael Summersgill.
On AIM, Saietta shares slumped 23%, after they resumed trading in London on Thursday afternoon.
The designer, engineer and manufacturer of ’eDrive’ solutions for electric vehicles said its pretax loss for the year ended March 31 was £29.3 million, compared with a £11.1 million loss the year before.
However, Saietta said revenue and other income from continuing operations more than doubled in financial 2023 to £4.8 million from £2.1 million. Including discontinued operations, revenue increased 19% to £5.1 million from £4.3 million.
The pound was quoted at $1.2149 at the London equities close Thursday, down compared to $1.2191 at the close on Wednesday.
The euro stood at $1.0576 at the European equities close Thursday, up against $1.0533 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥149.92, up compared to JP¥149.86 late Wednesday.
Gold was quoted at $1,952.66 an ounce at the London equities close Thursday, up against $1,941.78 at the close on Wednesday.
In Friday’s UK corporate calendar, there is a trading statement from hotel chain operator InterContinental Hotels. There are also updates from estate agency Foxtons and currency & derivatives manager Record.
The economic calendar for Friday has UK public sector finances and retail sales readings at 0700 BST. There is also PPI data from Germany.
The People’s Bank of China’s loan prime rate announcement will be released overnight.
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