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(Alliance News) - The FTSE 100 was largely unmoved midday Tuesday, while European peers declined, as troubling developments in the world's two largest economies kept the market in a risk-off mood.
The FTSE 100 index was up just 2.27 points at 7,626.27 heading into Tuesday afternoon. 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 GBP360 million in the year ended July 31, multiplied from GBP103 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 GBP81.1 million in the financial year that ended July 31 from GBP165.2 million the year before.
Net interest income rose 2.5% to GBP592.6 million from GBP578.0 million, but non-interest income declined by 5.1% to GBP340.0 million from GBP358.1 million.
Close Brothers took a GBP204.1 million impairment of financial assets, up from GBP103.3 million the year before. The impairments in the recent year included most significantly a GBP114.6 million provision in relation to the Novitas Loans business, up from GBP60.7 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 GBP220.8 million from GBP198.0 million a year prior. Pretax profit surged 73% to GBP24.7 million from GBP14.3 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 USD1.4 million from USD5.7 million a year earlier. This was due to cost of sales rising 24% to USD25.2 million from USD20.4 million, while revenue fell 2.2% to USD30.8 million from USD31.5 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 USD1.2188 at midday on Tuesday in London, down from USD1.2211 at the London equities close on Monday. The euro stood at USD1.0596, slightly higher against USD1.0589. Against the yen, the dollar was trading at JPY148.90, higher compared to JPY148.81.
Brent oil was quoted at USD91.21 a barrel at midday in London on Tuesday, down from USD91.44 late Monday. Gold was quoted at USD1,911.68 an ounce, lower against USD1,918.62.
Still to come on Tuesday's economic calendar, there is a US consumer confidence print at 1500 BST.
By Heather Rydings, Alliance News senior economics reporter
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