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(Alliance News) - Stocks in London were called down on Wednesday, as crunch talks in the US about avoiding a government debt default seemed to make little progress.
"Risk sentiment remains poor as the US couldn't reach an agreement on its debt ceiling... Yesterday, both equities and bonds were sold off on US debt ceiling impasse, while the US dollar index remained capped at two-week highs," said Swissquote Bank's Ipek Ozkardeskaya
US President Joe Biden said he is "optimistic" about securing a deal to avert a potentially catastrophic debt default, after he held talks with Republican leaders.
House Speaker Kevin McCarthy, however, said much work remained in negotiations to raise the federal borrowing limit and avert a default, with the deadline for agreement just days away.
Biden will cut short a major trip to Asia this week, returning Sunday to Washington for high-stakes negotiations with Republicans to avert a potentially catastrophic debt default, according to two people familiar with his plans.
In early UK company news, British Land said the value of its portfolio fell by around 12%. JD Sports reported a decline in annual profit. Blackstone and other shareholders sold GBP2.7 billion in London Stock Exchange shares. On AIM, Egdon Resources agreed to a takeover at nearly double its closing price on Tuesday.
In Tokyo, the Nikkei 225 stock index reached a 33-year high, as Japan's economic growth beat market forecasts.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 28.5 points, 0.4%, at 7,722.58
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Hang Seng: down 1.1% at 19,749.65
Nikkei 225: closed up 0.9% at 30,093.59
S&P/ASX 200: closed down 0.5% at 7,199.20
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DJIA: closed down 336.46 points, 1.0%, to 33,012.14
S&P 500: closed down 0.6% at 4,109.90
Nasdaq Composite: closed up 0.2% at 12,343.05
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EUR: down at USD1.0857 (USD1.0862)
GBP: down at USD1.2470 (USD1.2486)
USD: up at JPY136.79 (JPY136.53)
Gold: down at USD1,989.39 per ounce (USD2,001.14)
Oil (Brent): down at USD74.50 a barrel (USD74.84)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CEST EU consumer price index
07:00 EDT US MBA weekly mortgage applications survey
08:30 EDT US housing starts
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British former prime minister Liz Truss, on a visit to Taiwan, will set up a full-throated clash with both China and her successor Rishi Sunak in demanding the West get tough with Beijing. In a speech in Taipei, Truss is due to call for Sunak to make good on his Conservative leadership campaign pledge last year to designate China as a strategic "threat". She will also demand that he "immediately" shut down UK-based Confucius Institutes controlled by the communist government and replace them with cultural centres run by people from Hong Kong and Taiwan. The West cannot avoid another "Cold War" with China, the former Conservative leader will argue in the speech to the Prospect Foundation in Taipei, according to excerpts released by her office.
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Around one in five adults were finding bills and credit commitments a heavy burden by the start of this year, according to the City regulator. The number of adults struggling this way is estimated to have increased by 3.1 million since May 2022, the Financial Conduct Authority said, jumping from around 7.8 million, 15%, in May last year to 10.9 million, 21%, in January 2023. The number of UK adults who had missed bills or loan payments in at least three of the previous six months is also estimated by the regulator to have increased by 1.4 million, from 4.2 million, 8%, in May 2022 to 5.6 million, 11%, in January 2023.
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BROKER RATING CHANGES
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Peel Hunt cuts Tyman to 'add'
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HSBC starts Oxford Instruments with 'hold' - price target 2,900 pence
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COMPANIES - FTSE 100
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Blackstone, Thomson Reuters, Canada Pension Plan Investment Board and other investors sold 33.0 million shares in London Stock Exchange Group at 8,050 pence each via a placing by Barclays to institutional investors, and a separate retail offer. The sale of existing LSEG shares was worth GBP2.7 billion in total.
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British Land swung to an annual loss in the financial year that ended March 31, as the value of its portfolio saw a double-digit fall. The commercial property developer and investor swung to a pretax loss of GBP1.03 billion from GBP963 million profit, as total revenue was little changed at GBP418 million from GBP412 million. The firm recorded GBP798 million in negative valuation movements, compared to a gain of GBP475 million the year prior. "Higher interest rates have inevitably had an impact on property market yields and, as a result, the value of our portfolio declined by 12.3%. Whilst we remain mindful of ongoing macroeconomic challenges, the upward yield pressure appears to be easing and there are early signs of yield compression for retail parks," said CEO Simon Carter. British Land also recorded a GBP467 million loss from joint ventures, compared to GBP247 million a year prior. Portfolio estimated rental value growth was 2.8%, compared to a 1.2% decline a year before. It declared a final dividend of 11.04 pence per share, bringing the full-year total to 22.64p, a 3.3% increase from the previous year.
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JD Sports Fashion reported a stronger year of sales, though profit declined. In the financial year ended January 28, the athleisure retailer said revenue rose to GBP10.13 billion from GBP8.56 billion, though pretax profit fell to GBP440.9 million from GBP654.7 million. The lower profit is down to a higher adjusted items, "principally [related] to a non-cash movement in the present value of future put and call options held with minority shareholders in certain subsidiary businesses and losses incurred in divesting our non-core branded fashion businesses", the firm explained. Since the year-end, JD said organic constant currency sales growth has been over 15%. It expects to meet current average market consensus expectations for adjusted pretax profit of GBP1.03 billion in financial 2024, which would be up from GBP991.4 million achieved in financial 2023. JD raised its final dividend to 0.67p, bringing the annual total to 0.80p, up from 0.35p a year before.
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COMPANIES - FTSE 250
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Industrial thread maker Coats Group reported a 12% drop in revenue in the period from January 1 to April 30, or a 20% decline on an organic constant currency basis. This reflects a strong comparator, as well as the continued destocking in Apparel and Footwear across the industry, it said. Coats also attributed the fall to a customer contract in-sourcing in Performance Materials. "We continue to anticipate full year 2023 performance consistent with the board's expectations, with a second-half weighting, underpinned by the contribution from acquisitions, associated synergies and strategic projects," Coats said.
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OTHER COMPANIES
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Egdon Resources has agreed to an all-cash takeover offer from Petrichor Partners at 4.5p per share. This values the oil and gas explorer and producer at around GBP26.6 million. The offer price is a 96% premium to Tuesday's closing price of 2.3p. Egdon's board intend to unanimously recommend the offer to shareholders at an upcoming general meeting. Petrichor is a wholly-owned subsidiary of Heyco Energy Group. The ultimate parent company of Heyco Energy and Petrichor is Explroers Petroleum Corp, which is controlled by George Yates. "Heyco Group believes the timing is right to acquire Egdon and take it private, as Heyco Group believes that the public market continues to undervalue its assets, including the impressive Wressle development," the release said. Petrichor said it has received irrevocable undertakings to accept the offer from Habour Energy and Union Jack Oil, fellow London-listed oil and gas companies.
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By Elizabeth Winter, Alliance News senior markets reporter
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