Alliance News) - Stock prices in London were lower at midday on Monday, as an aborted uprising in Russia over the weekend and hawkish moves from central banks over the past two weeks caused investors to tread carefully.
"Investors are adding ballast to their portfolios and taking more defensive positions as geo-political developments bring fresh winds of uncertainty. This more cautious stance is likely to continue as investors wait for further signs about the path of inflation," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The FTSE 100 index was down 20.25 points, or 0.3%, at 7,441.62. The FTSE 250 was down 178.34 points, or 1.0%, at 17,883.99, and the AIM All-Share was down 4.94 points, or 0.6%, at 762.13.
The Cboe UK 100 was down 0.2% at 742.58, the Cboe UK 250 was down 0.9% at 15,672.98, and the Cboe Small Companies was down 0.3% at 12,953.26.
In London, Lloyds Banking was among the worst performing blue-chip stocks at midday, down 2.2%, after JPMorgan cut the bank to 'underweight' from 'neutral'.
Meanwhile, Whitbread was the best performer in the FTSE 100, up 1.9%. On Thursday, the hotelier reported a jump in quarterly revenue amid strong demand from both leisure and business travellers in the UK.
Analysts at Shore Capital on Friday said the "strong" trading update was above its expectations, leading the broker to boost its full-year pretax profit estimate for the firm by 15%.
In the FTSE 250, Aston Martin climbed 9.0%, making it the index's best performer at midday.
The carmaker said it has entered into a supply agreement with the US's Lucid Group and amended a separate agreement with Mercedes-Benz.
Aston Martin and Lucid have agreed integration and supply agreements that will provide Aston Martin with access to Lucid's technology for its battery electric vehicle, including electric powertrains and battery systems.
As a result of the agreement, Lucid will become a 3.7% shareholder in Aston Martin and also receive USD132 million in cash from the firm.
"The proposed supply agreement with Lucid is a game changer for the future EV-led growth of Aston Martin. Based on our strategy and requirements, we selected Lucid, gaining access to the industry's highest performance and most innovative technologies for our future [battery electric vehicle] products," said Executive Chair Lawrence Stroll.
Aston Martin also separately agreed to continue its cooperation with Germany's Mercedes-Benz.
The two companies originally entered the agreement in late October 2020, and it has allowed Aston Martin access to a wide range of Mercedes-Benz's technology. In exchange, Aston Martin agreed to issue shares to Mercedes-Benz in at least two tranches by July 2024.
The original agreement now has been replaced with a restated commitment to the existing strategic collaboration, allowing Aston Martin and Mercedes-Benz to discuss future access to technology in exchange for cash. Aston Martin will not issue or pay any further consideration shares or related cash top-ups to Mercedes-Benz.
Aston Martin said Mercedes-Benz will remain a long-term strategic partner and 9.4% shareholder.
Shares in Mercedes-Benz 0.7% lower in Frankfurt on Monday afternoon, while shares in Lucid were up 7.5% in pre-market trade in New York after closing 4.5% lower on Friday.
Elsewhere in London, Cineworld dropped 29%.
The cinema chain operator said it plans to apply to the English Court for an administration order. The order will apply only to itself as the listed parent and not its operating companies or subsidiaries, which it added will continue operating as normal.
Once administrators have been appointed, Cineworld said it plans to take steps to transfer its assets to its wholly-owned subsidiary Crown UK Holdco and a newly incorporated company.
Following this and an application to the UK Financial Conduct Authority, Cineworld expects its shares to be suspended from trading in July.
Russ Mould, investment director at AJ Bell, said neither event comes as a shock given the news fits with previously announced financial restructuring plans and adheres to earlier warnings that shareholders would be left with nothing.
On AIM, Microsaic Systems plunged 53%.
The mass spectrometry equipment developer said partner DeepVerge owes it GBP1.35 million in unpaid invoices, and added it will need to raise additional working capital in the third quarter if these are not paid.
Shares in environmental and life sciences company DeepVerge were suspended from trading on AIM on Monday, pending clarification of its financial position. Its shares were last quoted at 0.15p, having traded as high as 16.00p in the past year.
DeepVerge had been seeking to sell one or more of its business units in order to raise sufficient funds to allow it to continue to trade. However, it failed to do so.
"Despite receiving indicative offers for both the Labskin (including Skin Trust Club and Rinocloud) and Modern Water businesses, in the voard's opinion none of these offers appears likely to reach a successful conclusion on a timely basis," DeepVerge said.
As a result, the company said it is unlikely that sufficient funds will be raised in time to allow its business units to continue to trade.
In European equities on Monday, the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was down 0.3%.
Business sentiment in Germany took a hit in June, as companies' expectations for the future soured.
Munich-based Ifo institute's business climate index fell to 88.4 points in June from 91.5 in May. The fall was further than expected, given FXStreet-cited market consensus of a 90.7-point reading.
"Expectations were markedly pessimistic and companies' assessments of their current situations were worse. Above all, the weakness in the manufacturing sector is steering the German economy into turbulent waters," ifo explained.
Stocks in New York were called lower on Monday. The Dow Jones Industrial Average was called down 0.1%, the S&P 500 index down 0.2%, and the Nasdaq Composite down 0.2%.
"There's not much of interest on the economic or corporate calendars today either, but any further direction over what happens next in Russia will be closely followed in the wake of the weekend's abortive coup attempt," said Joshua Mahony, chief market analyst at Scope Markets.
"The old adage of markets not liking uncertainty arguably summarises the situation well, so given the geopolitical backdrop, the potential for rebalancing as we approach the halfway point for the year and also some potential for derisking ahead of next week's market holiday in the US, traders can arguably be excused if the mood this week is somewhat muted."
The dollar was weaker around midday in London, unmoved by the events in Russia, but under slight pressure as the prospect of global interest rates staying higher for longer remained the central focus of markets.
The pound was quoted at USD1.2728 at midday on Monday in London, higher compared to USD1.2709 at the close on Friday. The euro stood at USD1.0905, higher against USD1.0888.
ING's Chris Turner explained, on the surface, the narrative of central bankers needing to keep higher rates for longer is "not a good one for the pro-cyclical euro", but a hawkish European Central Bank has provided "some defence against high US interest rates".
Against the yen, the dollar was trading at JPY143.04, lower compared to JPY143.73.
Brent oil was quoted at USD74.32 a barrel at midday in London on Monday, up from USD73.71 late Friday. Gold was quoted at USD1,932.88 an ounce, sharply higher against USD1,922.24.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.