Shares opened lower in London on Tuesday, after New York failed to follow through on the positive start made to the week by European markets, while investors also were unnerved by a politician in Taiwan accusing China of planning an invasion.
US shares were hurt on Monday by a dark outlook from semiconductor maker Nvidia.
The FTSE 100 was up just 4.94 points at 7,487.31 early Tuesday, fighting back into the green after opening in the red. The FTSE 250 index was down just 5.41 points at 20,113.03. The AIM All-Share index was up 1.17 points, or 0.1%, at 921.08.
The Cboe UK 100 index was down 0.1% at 747.11. The Cboe 250 was down slightly at 17,431.41. The Cboe Small Companies was up 2.1% at 14,272.02.
In Paris, the CAC 40 stock index was down 0.2%, while in Frankfurt, the DAX 40 was 0.4% lower.
Taiwan held an artillery drill on Tuesday, simulating defence against an attack, as its top diplomat accused Beijing of preparing to invade the island after days of massive Chinese war games.
China launched its largest-ever air and sea exercises around Taiwan last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades.
‘China has used the drills in its military playbook to prepare for the invasion of Taiwan,’ foreign minister Joseph Wu told a press conference in Taipei on Tuesday, accusing Beijing of using Pelosi’s visit as a pretext for military action. ‘China’s real intention is to alter the status quo in the Taiwan Strait and entire region,’ he said.
The Chinese military said its Taiwan drills continued Tuesday and involved air and sea units.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.9%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was 0.1% lower. The S&P/ASX 200 in Sydney ended up 0.1%.
In London, FTSE 100-listed asset manager abrdn offered a grim outlook, saying current market volatility will see it take longer to hit its revenue growth and cost-to- income ratio targets.
abrdn shares plunged 7.0% in early trading.
The Investment unit ended the first half with assets under administration of £386 billion, sinking 17% from £464 billion at the same point a year prior. It recorded £37.3 billion in net outflows.
abrdn booked a £320 million loss in the six months to June 30 versus the £113 million profit achieved a year prior. Fee-based revenue fell 8% as its assets went tumbling, falling to £696 million from £755 million, and its cost-to-income ratio worsened to 83% from 79%.
abrdn left its interim dividend unchanged at 7.3p.
‘The half year group results largely reflect the challenging global economic environment and market turbulence,’ chief executive Stephen Bird said.
He added, however: ‘The strength of our balance sheet means that we can continue to invest and reward shareholders.’
Also dragging on the FTSE 100, Legal & General was 0.5% lower.
The life insurance and investment manager lifted its interim payout as it reported growth in profit and capital generation during what was a ‘good start’ to 2022.
L&G said its first half went to plan, despite posting a fall in assets under management, which were hit by volatile markets. It hailed growth in net flows, however.
L&G’s pretax profit in the half-year ended June 30 advanced 2.8% to £1.44 billion from the £1.40 billion it achieved 12 months earlier. Operating profit improved 7.5% to £1.16 billion from £1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses.
Gross written premiums were 55% higher year-on-year at £6.61 billion from £4.26 billion.
‘All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility,’ L&G explained.
InterContinental Hotels Group shares lost 1.1% in early trading, but it reported a strong rise in profit in the first half as it continues to see travel demand increase.
In the six months to June 30, the Holiday Inn- and Crowne Plaza-owner’s pretax profit multiplied to $299 million from $67 million a year prior. Operating profit more than doubled to $361 million from $138 million.
Total revenue was up 52% to $1.79 billion from $1.18 billion. Comparable revenue per available room improved 61% in the first quarter, then grew 44% in the second quarter, the firm noted, meaning it saw 51% growth in the first half as a whole. When compared to the pre-pandemic levels of 2019, however, comparable RevPAR was still down 11% in recent half-year.
The hotel operator resumed its interim dividend payout at 43.9 US cents per share, reflecting a 10% rise from the last interim payout made for the first half of 2019.
‘Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG’s brands, loyalty programme and technology platform,’ Chief Executive Keith Barr said.
Among London midcaps, IWG shares slumped 13% but the flexible workspace provider said it was ‘cautiously optimistic’ on its outlook.
In the six months to June 30, pretax loss narrowed to £81.3 million from £173.0 million a year prior, as system-wide revenue rose 22% to £1.45 billion from £1.17 billion.
The workspace firm said its industry is facing ‘many tailwinds’ as companies seek out hybrid working conditions more and more, largely due to it lowering costs.
‘With hybrid working becoming the preferred operational model for a rapidly growing number of companies, we remain confident about the continuing structural growth drivers at play in our industry,’ the company explained.
‘Our strategy is focused on meeting this demand by increasing the growth and coverage of our network and we have excellent momentum in delivering capital light growth, enabled by an expanding base of franchise and property partners.’
The Dow Jones Industrial Average closed up 0.1%, but the S&P 500 index and the Nasdaq Composite both slipped by 0.1%.
Tech stocks in New York took a hammering after chipmaker Nvidia guided for its second quarter revenue to fall well short of previous expectations.
For the three months to July 31, the Santa Clara, California-based semiconductor maker expects to report revenue of about $6.70 billion, which is 17% behind the previous guidance of $8.10 billion.
Nvidia closed down 6.3% on Monday and was down a further 1.4% in pre-market activity on Tuesday.
‘For risky assets, the picture remains bleak arguing that rallies, such as we have been seeing in equities, should be seen as tactical interruptions to an ongoing bearish trend,’ remarked economists at Rabobank.
US investment focus is on Wednesday’s inflation reading, following the blowout jobs report last week. The annual inflation rate in the US is expected to slow to 8.7% in July from 9.1% in June, according to FXStreet-cited consensus. The core rate is expected to edge up to 6.1% from 5.9%, however.
The dollar was higher early Tuesday in London.
The pound was quoted at $1.2076, slipping from $1.2114 at the London equities close Monday. The euro was priced at $1.0206, down from $1.0217. Against the yen, the dollar was trading at JP¥134.94, up from JP¥134.61.
Brent oil was quoted at $95.74 a barrel Tuesday morning, down from $96.22 late Monday. Gold stood at $1,784.50 an ounce, down against $1,789.50.
Tuesday’s economic calendar is quiet, with no significant data due.
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