Equities in London made a slow start on Thursday, but peers in Europe traded more confidently, with market focus on upcoming US data and political developments either side of the English Channel, and across the Atlantic.
In London, a US blow for GSK hurt its shares. Miners also struggled in early dealings. Elsewhere, there was a guidance boost for outsourcer Serco, Watches of Switzerland reported it is cautiously optimistic, but fashion retailer Quiz slumped as UK sales suffered.
The FTSE 100 index traded 10.85 points lower, 0.1%, at 8,214.48. The FTSE 250 fell just 0.41 of a point at 20,297.69, while the AIM All-Share fell 1.47 points, 0.2%, at 764.45.
The Cboe UK 100 fell 0.2% to 817.15, the Cboe UK 250 lost 0.1% at 17,662.32, and the Cboe Small Companies was down 0.2% at 16,967.50.
In European equities on Thursday, the CAC 40 in Paris was up 0.1% and the DAX 40 in Frankfurt shot up 0.3%.
In China, the Shanghai Composite ended down 0.9%, while the Hang Seng in Hong Kong tumbled 2.1%. The Nikkei 225 in Tokyo closed down 0.8% and the S&P/ASX 200 in Sydney lost 0.3%.
The tepid trade in Asia came despite a decent session in New York on Wednesday. The Dow Jones Industrial Average ended marginally higher, the S&P 500 rose 0.2% and the Nasdaq Composite added 0.4%.
The pound was quoted at $1.2638 early Thursday, up from $1.2624 at the time of the London equities close Wednesday. The euro stood at $1.0694, rising from $1.0678. Against the yen, the dollar was trading at JP¥160.53, down from JP¥160.66.
The yen recovered slightly after hitting a 38-year low against the dollar, putting investors on alert for a possible intervention by Japanese authorities.
The Japanese unit’s latest retreat came as uncertainty surrounded the Federal Reserve’s timetable for cutting interest rates, and the Bank of Japan’s caution in tightening monetary policy.
Focus has turned to Tokyo, where Vice Finance Minister Masato Kanda said earlier in the week that authorities were keeping a close eye on movements in forex markets and were ready to step in with yen support 24 hours a day.
Their determination was put to the test after the yen fell to 160.87 per dollar late Wednesday – its weakest since 1986 – as US Treasury yields spiked.
The economic calendar on Thursday has a US gross domestic product reading at 1330 BST, after eurozone consumer confidence at 1000 BST.
On Friday, all eyes will be on the latest core personal consumption expenditures inflation gauge, the Fed’s preferred measure.
Focus will also be on political developments, as election campaigns in the UK and France near the finish line, and as US President Joe Biden prepares for a debate against his predecessor Donald Trump.
Biden and Trump square off for a historic US presidential debate Thursday, with the stage set for what could be an inflection point in the 2024 race as millions of voters tune in to the clash of rivals.
In London, DS Smith rose 6.7%. Brazil’s Suzano ended the pursuit of International Paper, which is on the verge of sealing a deal to acquire DS Smith.
Suzano last month confirmed its interest in acquiring International Paper. Such a deal would have thrown into doubt International Paper’s acquisition of DS Smith.
However, Suzano said Wednesday: ‘It is important to emphasize that it has always been a condition of Suzano for the completion of this transaction that the engagement between the parties be based on private, confidential, and amicable terms. As it was not possible to proceed in this manner, Suzano has decided to terminate the negotiations.’
GSK lost 5.5% on an unfavourable development in the US. The US Centers for Disease Control & Prevention updated its recommendation for the use of respiratory syncytial virus vaccines.
For the upcoming virus season, the CDC recommended everyone aged 75 and older receive a jab. People aged between 60 and 74 are recommended to receive one if they have certain chronic medical conditions, such as lung or heart disease.
There was no recommendation for adults aged under 60, however.
Pfizer shares had fallen 2.0% in New York.
Hurting the FTSE 100, Anglo American fell 2.1%. Berenberg cut the stock to ’sell’ from ’hold’. Elsewhere in the mining sector, Rio Tinto and Glencore lost 0.7%.
Back in London, Watches of Switzerland shares rallied 8.4%. It said it is ‘cautiously optimistic’ for its new financial year, after a tricky one just ended.
For the year ended April 28, revenue was largely flat on-year at £1.54 billion. Pretax profit, however, fell 40% to £92.1 million from £154.8 million.
‘I am proud of the performance that our team delivered this year in what was undoubtedly a more challenging market. We cemented our position as a leading international luxury watch and jewellery retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model. In particular, our US business went from strength to strength, growing 11% and will soon represent half of group sales,’ Chief Executive Officer Brian Duffy said.
Looking ahead, the luxury watches seller expects revenue of £1.67 billion to £1.73 billion for the new year.
It added: ‘Following the more challenging trading conditions of FY24, we are cautiously optimistic about trading in FY25. The industry as a whole is being more conservative on production, which we believe is a responsible approach to the long-term stability of the luxury watch market.’
Outsourcer Serco climbed 6.1% after it upped guidance amid ‘good progress’ in the first half.
It now expects underlying operating profit for 2024 of £270 million, its guidance raised from £260 million.
The new guidance represents roughly an 8.4% increase from the £249 million achieved in 2023.
‘We have delivered a good performance in the first half, with progress in improving productivity and the underlying performance of our portfolio,’ CEO Mark Irwin said. ‘As we enter the second six months of the year, while mindful of a potential impact internationally from elections in 2024, we remain optimistic about the quality of our pipeline of potential new work to support our medium-term growth targets.’
Elsewhere in London, retailer Quiz slumped 24% as its UK sales continue to be hurt by cost of living pressures on consumer spending.
Revenue between the start of April and end of May totalled £13.8 million, a decline of around 11% from £15.5 million.
‘Notwithstanding the continued difficult trading environment in the period, the group is encouraged by a 12% increase in demand for Quiz product in international territories and sales in Quiz stores being broadly comparable year-on-year on a like-for-like basis. UK online traffic has, however, been more severely impacted by the challenging environment and pressures on customers outlined above,’ the firm added.
Brent oil was quoted at $84.28 a barrel, up from $84.21. Gold was quoted at $2,299.27 an ounce, up from $2,297.70.
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