(Alliance News) - Stock prices in London were mixed at midday on Thursday as investors digested China's plans to tighten regulation and hints of plateauing US inflation.
Meanwhile, the pound showed little reaction to upbeat UK economic growth figures.
China on Wednesday unveiled plans to tighten regulation across multiple sectors over the coming years, weeks after it hit stocks by cracking down on tech firms.
The FTSE 100 index was down 14.93 points, or 0.2%, at 7,205.21. The mid-cap FTSE 250 index was up 15.36 points, or 0.1%, at 23,773.45. The AIM All-Share index was up 0.2% at 1,271.01.
The Cboe UK 100 index was down 0.1% at 718.30. The Cboe 250 was up 0.5% at 21,298.35, and the Cboe Small Companies up 0.2% at 15,4524.34.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 0.3% and 0.1% respectively.
Analysts at ActivTrades said: "Today's market sentiment was dented by China's continued regulatory crackdown, temporarily offsetting yesterday's enthusiastic trading mood after data showed US inflation easing. While consumer prices remain high in the US, yesterday's figures confirm the Fed's view about the transitory effect of inflation, which should continue to sustain the stock rally over the medium term."
The US consumer price index rose by 5.4% in July from a year before, the same pace as June's 13-year high, according to figures from the Department of Labor on Wednesday. The latest reading was slightly above market expectations, cited by FXStreet, of 5.3% inflation.
"Between the global recovery, the spread of the Delta variant weighing on some nations and major regulatory changes in the world's second biggest economy, traders have a lot to digest and are now wondering how high can stocks go," ActivTrades added.
In the FTSE 100, Aviva was the best performer, up 4.2%, after the insurer raised its dividend and pledged to return more cash to shareholders.
Aviva reported pretax profit from continuing operations for the six months that ended June 30 of GBP396 million, down from GBP739 million a year before. Total income more than doubled to GBP14.78 billion from GBP6.98 billion, as Aviva swung to net investment income of GBP7.35 billion from a net investment expense of GBP1.28 billion.
However, the company booked a GBP8.45 billion hit on changes in investment contract provisions, swung from a GBP5.72 billion gain a year before. Net earned premiums declined by 12% to GBP6.65 billion from GBP7.51 billion a year ago.
Aviva declared an interim dividend of 7.35 pence a share, up 5.0% from 7.00p a year before. In addition, the London-based firm said it aims to buy back up to 300 million shares for up to GBP750 million to reduce its share capital.
Fellow blue-chip insurers Phoenix Group and Admiral were up 0.7% and 1.2% respectively, in a positive read-across.
At the other end of the large-caps, Rio Tinto, Evraz and Legal & General were the worst performers, down 8.3%, 5.7% and 1.9% respectively after the stocks went ex-dividend. This means new buyers no longer qualify for the latest payout.
BP and Royal Dutch Shell 'B' shares were down 1.2% and 1.4% respectively after also going ex-dividend.
Entain was 1.1% lower. The gambling firm said it saw strong first-half performance with continuing momentum across its brands and refraining from declaring a dividend.
For the six months to June 30, revenue was GBP1.77 billion, up 12% from GBP1.58 billion last year, and pretax profit was GBP130.6 million, almost triple from GBP45.1 million. Entain said first half retail net gaming revenue was down 46% amid betting shop closures, but online NGR excluding Germany was up 38%. Entain said a new regulatory regime in Germany was hurting the online gaming market there.
Despite the strong results, Entain did not propose an interim dividend, but it said it expects that with full-year results in March it will be in a position to recommence payouts.
The Ladbrokes brand owner in the UK also said its joint venture in the US with MGM, ResortsBetMGM, continues to perform strongly and is well positioned for further success in the second half.
In the FTSE 250, Cineworld Group was giving back some early gains but remained the best performer, up 4.5%, after the multiplex chain expressed confidence in its prospects as lockdown restrictions ease.
Cineworld said its pretax loss narrowed to USD576.4 million in the first half of 2021 from USD1.64 billion a year before, as its movie houses were allowed to reopen. Revenue totalled USD292.8 million, down from USD712.4 million a year before, a period that included some time pre-pandemic.
The Brentford, London-based movie-house chain declared no interim dividend, the same as last year. With 9,269 screens worldwide, Cineworld said it expects strong trading in the fourth quarter due to a strong film slate and pent-up demand and said the actions it took to cope with the virus pandemic have strengthened the business.
In addition, Cineworld said it was mulling a listing of itself or a partial listing of its US movie theatre business Regal Entertainment on Wall Street, pointing to US equity capital markets as the "largest and most liquid" in the world as rationale for the move.
Cineworld acquired Regal in 2018 for USD3.6 billion, making it the second largest global cinema chain behind AMC Entertainment, which has a market capitalisation of USD15.83 billion. For perspective, Cineworld's market value currently stands at GBP879.20 million, following a pandemic-driven tumble over the past year.
Shares in AMC, which has an army of Reddit investors, were up 0.2% in pre-market trade in New York.
"The board is considering options to maximise shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or a partial listing of Regal in the US. The board will evaluate these options over the coming months and will consult with shareholders in due course if any formal proposals are to be made," Cineworld said.
Elsewhere, Stock Spirits was up 44% at 385.50p after the distiller agreed to a takeover deal worth around GBP767 million.
Stock Spirits has accepted private equity firm CVC Funds's offer of 377.00p per share, representing a premium of 41% on the stock's 268.00p closing price on Wednesday. The takeover is expected to complete within the next three to six months, CVC said.
The pound was quoted at USD1.3853 at midday on Thursday, marginally lower from USD1.3863 at the London equities close on Wednesday, despite encourage domestic economic growth figures.
The UK economy rebounded sharply on an annual basis in June as the economy continued to reopen and the country pressed head with its mass-vaccination drive, the Office for National Statistics said.
In the three months to June, UK gross domestic product grew 4.8% quarter-on-quarter, following a contraction of 1.6% in the first quarter of 2021. The print was in line with market forecasts, cited by FXStreet.
On an annual basis, the UK economy expanded 22% in the second quarter, rebounding significantly from the height-of-pandemic comparison, having shrank by 6.1% in the first quarter from a mostly pre-pandemic comparative period. The second-quarter reading was in line with the market estimate.
Despite the upbeat figures, ING remained unconvinced by the prospects for the UK economy given the spread of the Delta variant of Covid-19.
"The spread of the Delta variant has put the brakes on the recovery after a strong second quarter. While we're not expecting a return to significantly negative growth, the rise in Covid-19 cases suggests it may still be another couple of quarters before the economy has returned to it's pre-virus level," said analysts at the Dutch bank.
The euro was priced at USD1.1735, flat from USD1.1737. Against the Japanese yen, the dollar was trading at JPY110.45, down slightly from JPY110.47.
On the continent, eurozone industrial production contracted further in June, figures from Eurostat showed.
Industrial output in the single-currency block shrank 0.3% month-on-month in June after a 1.1% fall in May. Consensus, cited by FXStreet, had expected a more moderate decline of 0.2%.
Year-on-year, eurozone industrial production jumped 9.7%. While a solid figure, this was less than half the 21% surge posted for May, and analysts had been eyeing 10% growth for June.
Brent oil was quoted at USD71.33 at midday Thursday, up sharply from USD70.14 a barrel late Wednesday. Gold was trading at USD1,752.50 an ounce, higher against USD1,748.19.
US stock index futures were called flat ahead of jobless claims and producer price figures.
On the corporate front, the UK competition regulator flagged issues over Facebook's acquisition of GIF-sharing website Giphy.
The deal, reported to be worth around USD400 million, was first announced in May of last year. The UK Competition & Markets Authority began to eye the merger in June 2020 before launching an inquiry into the transaction at the start of 2021.
It has provisionally found the merger could hamper competition between social media platforms and remove a "potential challenger" in the display advertising market.
It noted Facebook is the largest provider of social media sites and display advertising in the UK, and Giphy the largest provider of GIFs.
Facebook shares were 0.3% lower in New York pre-market trade.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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