Stock prices in London ended in the red on Wednesday, as falling oil prices and regulatory fears for the UK’s tobacco sector knocked blue-chip stocks like Shell and Imperial Brands.
The mood in mainland Europe and over in New York was calmer, though there is still unease lingering in global equities, with all eyes on the bond market despite a less dramatic day there on Wednesday.
Bond sell-offs, pushing yields higher, have kept a lid on equities recently. However, the US 10-year treasury yield cooled to 4.74% at the time of the European equities close, off a high of 4.88% hit earlier on Wednesday.
The FTSE 100 index fell 57.71 points, or 0.8%, at 7,412.45. The FTSE 250 ended down 184.86 points, or 1.1%, at 17,492.90, and the AIM All-Share lost 8.23 points, or 1.2%, at 695.21.
The Cboe UK 100 fell 0.9% at 739.36, the Cboe UK 250 fell 1.0% at 15,225.56, and the Cboe Small Companies lost 1.3% to 13,233.17.
In European equities on Wednesday, the CAC 40 in Paris closed unchanged, while the DAX 40 in Frankfurt ended up 0.1%.
In New York, the Dow Jones Industrial Average was up 0.1% at the time of the London equities close. The S&P 500 rose 0.3% and the Nasdaq Composite added 0.7%.
Data from the Institute of Supply Management showed an expansion in the US service sector in September, though at a slower pace than the month prior.
The ISM services PMI registered 53.6 in September, down from 54.5 in August. The pullback in the rate of growth for the services sector was attributed to slower rates of growth in the new orders and employment indexes.
The services sector reading came after the latest ADP tracker showed US employment growth was markedly below forecast.
The ADP national employment report showed job growth in the US private sector slowed significantly in September.
Private sector employment increased by 89,000 jobs in September. In August, private sector employment increased by 180,000 jobs, upwardly revised from 177,000.
A lesser slowdown to 153,000 was expected for September, according to FXStreet cited consensus.
Focus now turns to Friday’s nonfarm payrolls data, the official employment report. The reading is expected to show jobs growth of 170,000 in September, easing from 187,000 in August.
The pound was quoted at $1.2144 at the London equities close on Wednesday, up from $1.2065 at the London equities close on Tuesday. The euro stood at $1.0515, higher against $1.0459. Against the yen, the dollar was trading at JP¥148.83, lower compared to JP¥149.22.
In London, Tesco added 0.9% after upping its full-year profit outlook as its interim profit surged.
Tesco said its pretax profit jumped to £1.22 billion in the 26 weeks to August 26, from £396 million the year prior. Revenue climbed 5.0% to £34.15 billion from £32.52 billion.
Looking ahead, the supermarket said now expects to deliver between £2.6 billion and £2.7 billion retail adjusted operating profit for the financial year. Previously, Tesco said it has expected it to be ‘broadly flat level’ at about £2.5 billion.
Oil and tobacco stocks put pressure on the FTSE 100, however.
Imperial Brands lost 3.0% and BAT fell 1.5%. The legal age for buying tobacco in the UK should rise every year to stop youngsters taking up smoking, the prime minister has said, as he also pledged to crack down on the sale of disposable vapes to children.
Prime Minister Rishi Sunak said more must be done to ‘try and stop teenagers taking up cigarettes in the first place’ as he set out plans to introduce a new law banning tobacco sales to anybody born on or after January 1, 2009.
He told the Conservative party conference in Manchester that ‘a 14-year-old today will never legally be sold a cigarette’, under new legislation for England.
Imperial Brands is due to release a trading statement on Thursday.
Shell and BP fell 2.3% and 3.3%, tracking Brent prices lower. Brent oil was quoted at $87.91 a barrel late Wednesday, down from $91.00 at the London equities close on Tuesday.
Spirent Communications tumbled 31%, the worst FTSE 250 performer, after it cut its annual outlook, reporting a weak order book and a slow summer period.
The automated test and assurance solutions provider said for the nine months to September 30, it expects revenue to be around 20% behind the prior year.
Spirent explained this was because the uptick in its Telecommunications orders seen over the second quarter ‘dissipated’ over the summer, and the expected rebound in September did not materialise due to delays in customer expenditure and technology investments.
Elsewhere in London, Superdry jumped 28% after it announced it will establish an intellectual property joint venture in India in collaboration with Reliance Brands, a company that partners with clothing firms and luxury goods sellers.
The clothing retailer said it will sell its intellectual property assets, including its brand and related trademarks in India, Sri Lanka and Bangladesh to the joint venture vehicle for £40.0 million.
Superdry will hold a 24% stake in the JV, with Reliance Brands holding the remaining 76%. Superdry anticipates gross proceeds of £30.4 million from the sale.
Gold was quoted at $1,826.09 an ounce at the London equities close, higher against $1,824.87.
Thursday’s economic calendar has the latest US jobless claims data at 1330 BST, after a UK construction PMI reading at 0930 BST.
The local corporate calendar has annual results from energy-efficient indoor air quality solutions firm Volution, and half-year results from ICG Enterprise Trust.
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