Stocks in London ended lower on Monday as tensions between China and the US show signs of rising over the possibility of US House Speaker Nancy Pelosi making a visit to Taiwan during her Asia tour.
With no word if Pelosi will visit the island, she stopped first in Singapore, where Prime Minister Lee Hsien Loong urged her at a meeting to strive for ‘stable’ ties with Beijing.
Her itinerary also includes Malaysia, South Korea and Japan, but a possible Taiwan visit has dominated attention in the run-up.
Reports about a plan to visit the island have enraged Beijing and caused unease in the White House with President Joe Biden trying to lower the temperature.
Beijing considers self-ruled Taiwan its territory - to be seized one day, by force if necessary - and said it would regard a Pelosi visit as a major provocation.
The FTSE 100 index closed down 10.01 points, or 0.1%, at 7,413.42. The FTSE 250 ended down 85.67 points, or 0.4%, at 20,079.23. The AIM All-Share closed down 3.17 points, or 0.3%, at 918.63.
The Cboe UK 100 index lost 0.1% at 741.59. The Cboe 250 shed 0.3% at 17,522.48. The Cboe Small Companies rose 0.3% at 13,931.44.
In Paris the CAC 40 stock ended lost 0.2%, while the DAX 40 in Frankfurt ended 0.1% lower.
In the FTSE 100, Pearson ended the standout performer, up 12%, after the education materials publishing company lifted its dividend as profit for the first half of 2022 surged.
Pearson reported pretax profit of £179 million for the six months to June 30, multiplied from £4 million a year before, as operating expenses fell 7.3% to £690 million from £744 million. It had booked £85 million in restructuring costs a year earlier. Revenue rose 12% year-on-year to £1.79 billion from £1.60 billion.
The London-based firm lifted its interim dividend by 4.8% to 6.6 pence from 6.3p year-on-year.
Pearson backed its full-year expectations for revenue and adjusted operating profit. Pearson is launching a strategic review of its Online Program Management business, which is part of its Virtual Learning segment. The OPM review comes ahead the end of Pearson's contract with Arizona State University next June.
HSBC Holdings ended up 6.1% after the Asia-focused bank posted a decline in half-year profit but said it aims to restore its dividend to pre-Covid levels ‘as soon as possible’.
In the six months to June 30, pretax profit fell to $9.18 billion from $10.84 billion the year before. Keeping a lid on profit was HSBC racking up $1.09 billion in expected credit losses, swinging from a $719 million gain the year prior.
In the first half, net interest income rose to $14.45 billion from $13.10 billion, aided by rising central interest rates around the world. The lender's net interest margin improved to 1.30 % from 1.21%.
‘We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade,’ said Chief Executive Noel Quinn. ‘As a result, we are providing more specific dividend payout ratio guidance of around 50% for 2023 and 2024. We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-Covid-19 levels as soon as possible.’
Rival Standard Chartered rose 1.3% in a positive read-across.
In the FTSE 250, Quilter ended the best FTSE 250-listed performer, jumping 14%.
FTSE 100-listed NatWest is mulling making an offer for the London-based wealth manager, the Daily Mail reported. According to the newspaper, private equity firms CVC Capital Partners, Bain Capital and BC Partners are sizing up Quilter, which currently has a market capitalisation of £1.67 billion.
Shares in the state-backed lender closed up 1.3%. Rival mid-cap wealth managers Jupiter, Rathbones and Ninety One closed up 4.3%, 3.4% and 1.6% respectively in a positive read-across.
At the other end of the mid-caps, Ascential ended the worst performer, down 16%, after the business-to-business media and events firm posted a widened interim loss.
The London-based firm said revenue jumped 59% year-on-year to £95.1 million from £59.7 million for the six months to June 30, reflecting ‘continuing structural growth in attractive end markets boosted by a bounce-back from major events,’ it explained.
However, Ascential's pretax loss widened to £41.6 million from £13.6 million. Ascential said it booked a £31.4 million impairment related to its Edge Digital Shelf e-commerce analytics platform. It did not book any impairments a year earlier.
Ascential, which did not declare a dividend in 2020 and 2021 due to Covid, decided against an interim payout again.
The pound was quoted at $1.2270 at the London equities close, up sharply from $1.2163 at the close Friday, despite data showing growth in the UK manufacturing sector weakened in July.
The latest S&P Global/CIPS UK manufacturing purchasing managers' index fell to 52.1 points in July, from 52.8 in June. Though remaining above the 50.0 no change mark, the PMI hit its weakest level in over two years.
The euro stood at $1.0270 at the European equities close, up from $1.0196 late Friday.
The single currency also shrugged off disappointing economic data from the continent.
Eurozone manufacturing activity shrank in July as inflation ‘squeezed’ demand, according to S&P Global.
The manufacturing purchasing managers' index declined to 49.8 in July from 52.1 in June, signalling the sharpest production downturn since the first wave of strict Covid lockdowns in May 2020.
New orders fell sharply. Excluding the pandemic, manufacturing order book volumes fell at the fastest rate since the eurozone debt crisis in 2012.
Against the yen, the dollar was trading at JP¥131.85, down from JP¥133.45 late Friday.
Stocks in New York were higher at the London equities close despite geopolitical tensions over House Speaker Pelosi's trip to Asia.
The DJIA was up 0.1%, the S&P 500 index up 0.3% and the Nasdaq Composite up 0.5%.
On Wall Street, Dow member Boeing was up 4.6% after the Federal Aviation Administration certified the aerospace company's plan to resume deliveries of its 787 Dreamliner aircraft.
Brent oil was quoted at $100.70 a barrel at the equities close, down sharply from $105.24 at the close Friday.
Gold stood at $1,766.01 an ounce at the London equities close, firm against $1,763.38 late Friday.
The economic events calendar on Tuesday has the Reserve Bank of Australia's interest rate decision overnight.
The UK corporate calendar on Tuesday has interim results from oil major BP, gold miner Fresnillo, pizza chain Domino's Pizza and builders merchant Travis Perkins.
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