The FTSE 100 edged only fractionally higher but still outperformed European peers heading into Tuesday afternoon, as China growth worries and the possibility of a US government shutdown did little for risk appetite.
The FTSE 100 index was up just 2.27 points at 7,626.27. Meanwhile, the FTSE 250 was down 61.61 points, or 0.3%, at 18,353.70, and the AIM All-Share was down 1.98 points, or 0.3%, at 732.54.
The Cboe UK 100 was up 0.1% at 760.87, the Cboe UK 250 was down 0.5% at 15,962.59, and the Cboe Small Companies was flat at 13,264.15.
‘Investors remain understandably wary about China’s troubled property sector and...the threat of a government shutdown is creating nervousness across the Atlantic too,’ said Russ Mould, investment director at AJ Bell.
Concerns over China’s economic stability resurfaced on Monday after China Evergrande Group announced that it was unable to issue new debt as its subsidiary was ‘being investigated’.
Markets were also on edge after the Moody’s ratings agency warned that a US government shutdown this weekend, amid political deadlock in Congress, would have negative implications for the country’s top-tier credit rating.
The warning from Moody’s – the only major agency to maintain its rating for US sovereign debt at its highest level – underscores the potential economic danger to the US of failing to reach an agreement to keep the government funded before the end of the month.
In London, Smiths Group remained in the red at midday, trading 0.7% lower despite reporting its annual profit had more than tripled.
The engineering firm reported a pretax profit of £360 million in the year ended July 31, multiplied from £103 million the previous year.
Smiths also noted that it was a ‘record’ year of organic revenue growth and said it is now ‘well positioned’ for its financial 2024 growth targets, which see organic revenue growth between 4% and 6%.
In the FTSE 250, Close Brothers fell 2.5% after it announced that its annual profit had halved due to a provision for its shuttered litigation funding business.
The London-based merchant bank said pretax profit fell to £81.1 million in the financial year that ended July 31 from £165.2 million the year before.
Net interest income rose 2.5% to £592.6 million from £578.0 million, but non-interest income declined by 5.1% to £340.0 million from £358.1 million.
Close Brothers took a £204.1 million impairment of financial assets, up from £103.3 million the year before. The impairments in the recent year included most significantly a £114.6 million provision in relation to the Novitas Loans business, up from £60.7 million the year before.
Novitas provided litigation finance but has ceased lending.
Elsewhere in London, Card Factory tumbled 8.3% despite posting interim earnings growth and saying it is confident of meeting expectations for the full-year.
The greeting cards and gifting firm said revenue in the six months to July 31 grew 12% to £220.8 million from £198.0 million a year prior. Pretax profit surged 73% to £24.7 million from £14.3 million.
AJ Bell’s Mould said a warning that tough Christmas conditions are ‘in the post’ is the likely reason for Tuesday’s round of profit-taking, even if the company sounds confident about navigating these challenges.
On AIM, Anglo Asian Mining plunged 40% as it reported a sharp drop in profit in the first half of 2023.
In the six months that ended June 30, the Azerbaijan-focused copper, silver and gold producer said pretax profit fell 75% to $1.4 million from $5.7 million a year earlier. This was due to cost of sales rising 24% to $25.2 million from $20.4 million, while revenue fell 2.2% to $30.8 million from $31.5 million.
Anglo Asian Mining said the half-year performance was in line with expectations, given the declining grades at the Gebabek open pit.
In European equities on Tuesday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was 0.7% lower.
Stocks in New York were called lower as the threat of a US government shutdown loomed. The Dow Jones Industrial Average was called down 0.4%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.5%.
The potential shutdown failed to derail the greenback, however, with the safe haven dollar pushing largely higher due to the risk-off mood.
The pound was quoted at $1.2188 at midday on Tuesday in London, down from $1.2211 at the London equities close on Monday. The euro stood at $1.0596, slightly higher against $1.0589. Against the yen, the dollar was trading at JP¥148.90, higher compared to JP¥148.81.
Brent oil was quoted at $91.21 a barrel at midday in London on Tuesday, down from $91.44 late Monday. Gold was quoted at $1,911.68 an ounce, lower against $1,918.62.
Still to come on Tuesday’s economic calendar, there is a US consumer confidence print at 1500 BST.
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