London's FTSE 100 opened in the green on Thursday morning, but was sitting behind European peers, with a strong start to the session by tobacco firm Imperial Brands and electronics products distributor RS Group being undermined by oil major Shell.
The FTSE 100 index opened up 8.18 points, or 0.1%, at 7,061.79. The FTSE 250 opened 96.20 points, or 0.5%, at 17,658.62, and the AIM All-Share opened up 0.88 of a point, 0.1%, at 816.32.
The Cboe UK 100 opened up 0.2% at 705.25, the Cboe UK 250 opened up 0.7% at 15,091.76, and the Cboe Small Companies opened down 2.03 points at 12,763.54.
In European equities on Thursday, the CAC 40 in Paris opened up 0.4%, while the DAX 40 in Frankfurt opened up 0.7%.
The pound was quoted at $1.1354 at the London equities open Thursday, rising sharply from $1.1252 at the close on Wednesday.
UK government debt suffered another hit, as Fitch lowered its outlook negative from stable after new Prime Minister Liz Truss announced a crash program of debt-fuelled tax cuts. The rating for the debt itself remains at ‘AA-’.
It said Liz Truss' ‘large and unfunded fiscal package’ will lead to a ‘significant increase in fiscal deficits over the medium term’. It also expressed unease at Chancellor Kwasi Kwarteng's hints at additional tax cuts to come.
Meanwhile, Truss will call for unity from European leaders to ‘address the fundamental causes’ of energy and migration challenges as she attempts to move beyond splits within her party.
The prime minister will attend a summit of European leaders in Prague on Thursday, with French President Emmanuel Macron among those she is expected to meet.
The euro stood at $0.9909 Thursday, up against $0.9859 at the same time on Wednesday.
Against the yen, the dollar was trading at JP¥144.65, down compared to JP¥144.78 late Wednesday.
In London, Imperial Brands added 4.3% in early trade. The tobacco company announced a £1 billion share buyback programme, and said including dividends, annual capital returns are expected to exceed £2.3 billion. This is about 13% of current market capitalisation, it noted.
It also said trading in its financial year ended September 30 was in line with expectations. It expects net revenue and adjusted operating profit to grow by around 1% in constant currency, in line with previous guidance.
RS Group gained 3.0%.
It said revenue in the six months to September - its first half - was 16% higher year-on-year. The industrial and electronic products distributor now expects full-year revenue and adjusted profit to be ‘slightly ahead’ of market consensus.
Revenue consensus stands at £2.86 billion, with adjusted operating profit expected at £364.9 million, and adjusted pretax profit estimated at £357.7 million.
Shell lost 3.9%, meanwhile. The oil major said it expects a negative hit of $1.0 billion to $1.4 billion on Products adjusted earnings before interest, tax, depreciation and amortisation in the third quarter. It said this is due to a decrease in margins.
It also warned trading for Integrated Gas will be ‘significantly lower’ compared to the second quarter of this year.
Having enjoyed record profits in the first half of the year, it faces declining oil prices, as well as heightened volatility in the gas market.
Brent oil was quoted at $93.23 a barrel at the London equities open Thursday, down from $93.34 late Wednesday.
In the FTSE 250, Volution jumped 13%. It said revenue in the year ended July 31 rose 13% year-on-year to £307.7 million from £272.6 million, as pretax profit increased 57% to £47.2 million from £30.0 million.
It declared a total dividend of 7.3 pence, up from 6.3p.
‘The new financial year has started well, delivering revenue and profit ahead of the same period last year,’ the ventilation products supplier said.
On AIM, Image Scan plunged 27%. The X-ray imaging systems provider said annual profit and revenue will be below market expectations.
This is due to contract slippage into next year, due to government contract delays as well as component supply issues hitting its product ranges, which ‘will continue to do so for the foreseeable future’.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite was closed as National Day Golden Week continues, while the Hang Seng index in Hong Kong was down 0.3% in late trade. The S&P/ASX 200 in Sydney closed marginally higher.
Gold was quoted at $1,723.95 an ounce, up against $1,709.08.
In the economic calendar, there is the UK construction PMI reading at 0930 BST before eurozone retail trade data at 1000 BST. The latest US jobless claims reading at 1330 BST, with comments from US Federal Reserve officials later on.
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