The pound was finding support, but stocks in London were mixed at midday on Tuesday, as Rishi Sunak took over as UK prime minister.
Sunak warned the nation is facing a ‘profound economic crisis’ as he pledged to fix the ‘mistakes’ of Liz Truss’s leadership.
The freshly minted Conservative leader braced the nation for ‘difficult decisions to come’ as he made his first speech after meeting the King.
AJ Bell financial analyst Danni Hewson said the main concern for financial markets is whether or not Sunak will keep Jeremy Hunt as chancellor.
‘Not to do so could unsettle investors who are eagerly awaiting the October 31 announcement of fiscal plans and don't need anything else to spook them before that.’
Sterling traded at $1.1335 midday Tuesday in London, up from $1.1295 at the London equities close on Monday.
The FTSE 100 index was down 36.59 points, or 0.5%, at 6,977.53. The mid-cap FTSE 250 was up 67.75 points, or 0.4%, at 17,405.30, and the AIM All-Share was up 2.39 points, or 0.3%, at 789.94.
The Cboe UK 100 was down 0.6% at 697.20, the Cboe UK 250 up 0.3% at 14,852.155, and the Cboe Small Companies flat at 12,227.55.
In European equities on Tuesday, the CAC 40 in Paris was up 0.3% but the DAX 40 in Frankfurt was 0.8% lower.
Germany’s stock benchmark was being hit by a 7.0% drop in shares of Linde. On Monday, the industrial gases and engineering company approved a proposal to delist its shares.
Covestro was 5.8% lower, also hitting the DAX 40, as it shared results of a bruising third quarter, and narrowed annual guidance towards the low end of previous ranges.
UBS was 4.7% higher in Zurich.
The Swiss bank reported a drop in revenue and profit, as it continues to battle against high inflation and tight labour markets.
In the three months to September 30, UBS recorded net profit of $1.74 billion, down 24% from $2.29 billion year-on-year.
Net interest income was down to $1.60 billion from $1.69 billion, while net fee & commission income dropped 20% year-on-year to $4.48 billion from $5.61 billion. Total revenue was 9.6% lower at $8.24 billion compared to $9.12 billion.
In London, HSBC continued to be an anchor around the neck of the FTSE 100 on Tuesday, its shares losing 7.3% as investors digested a decline in profit and revenue in the third quarter, as well as the appointment of a new chief financial officer.
In the three months that ended September 30, HSBC reported pretax profit of $3.15 billion, down 42% from $5.40 billion a year before. Revenue decreased by 3.2% to $11.62 billion from $12.01 billion.
‘We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023,’ Chief Executive Noel Quinn said.
HSBC said it has appointed Georges Elhedery as its new chief financial officer, effective from January 1. Previously, Elhedery was co-CEO of HSBC’s Global Banking & Markets division, before taking a six-month sabbatical.
THG shares surged 16% higher.
The e-commerce retailer reported revenue growth in the third quarter, boosted by its Beauty and Nutrition units, which offset a steep decline in OnDemand.
The E-commerce retailer said its total revenue increased 2.1% in the third quarter to £518.6 million from £507.8 million.
Looking ahead, Chief Executive Officer & Founder Matthew Moulding said that the fourth quarter has started positively. ‘We are well positioned from a logistics and supply perspective to meet the significant uplift in demand anticipated during the cyber period, whilst continuing to deliver a high-quality customer experience,’ he said.
THG last week Monday announced that Moulding, as well as THG cornerstone investor Qatar Holding, bought up SoftBank’s entire stake in the firm. THG said SoftBank sold 80.6 million shares for £31.4 million in total. Those THG shares had been worth some £480 million back in May 2021.
Analysts at Liberum were unconvinced that THG will achieve its annual guidance and kept the stock at ‘hold’.
‘We struggle to see upside as there remain downside risks to 2022 estimate guidance, delivery of Ingenuity Commerce promise is uncertain, outlook for next year is clouded, and the group is back in debt.’
Fellow retailers B&M European Value Retail, Kingfisher and JD Sports were up 2.3%, 0.8% and 1.1%, respectively.
On AIM, Scancell jumped 26% after it announced a licensing agreement with biotechnology company Genmab.
Copenhagen-based Genmab now has the exclusive rights to develop and commercialise one of Scancell’s investigational anti-glycan monoclonal antibody into novel therapeutic products.
Scancell will be eligible for upfront payments, milestone payments of up to $208 million for each product developed and commercialised up to a maximum of $624 million, and ‘low single digit’ royalties for products sold.
In New York, stocks were called for a weak open after Monday’s strong session. The Dow Jones Industrial Average and the S&P 500 were both called 0.4% lower, while the Nasdaq Composite pointed down 0.2%. The three indices closed up 0.9% to 1.3% on Monday.
The focus on Tuesday will be quarterly figures from tech giants Alphabet and Microsoft after the US closing bell. Lower-than-expected sales by the pair could increase fear of a global recession.
The euro traded at $0.9860 midday Tuesday, lower from $0.9877 late Monday. Against the yen, the dollar was quoted at JP¥148.95, firm versus JP¥148.82.
Gold was quoted at $1,640.10 an ounce midday Tuesday, down from $1,648.76 on Monday evening in London. Brent oil was trading at $90.11 a barrel, down from $90.88 late Monday.
Still to come Tuesday, there is a US consumer confidence reading at 1400 BST.
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