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LONDON (Alliance News) - UK stocks are lower Thursday mid-morning in a busy day for corporate news, with updates from Wm Morrison Supermarkets and Aviva, as the uncertainty of the UK General Election's outcome reduces the risk appetite amongst investors.
The FTSE 100 is down 1.5% at 6,833.39, with only four stocks in the green side, reading below the 6,900 mark for the first time since early April. Meanwhile, the FTSE 250 is down 1.0% at 17,240.45, and the AIM All-Share is down 0.3% at 749.39.
Morrisons is the worst performer in the blue-chip index, down 6.9%, after it reported a drop in sales in its first quarter. The grocer said total sales in the 13 weeks to May 3 were down 5.1% on the same period a year earlier, while like-for-like sales were down 6.6%.
However, the supermarket chain said its financial position remains "strong", with net debt falling by around GBP150 million in the period to GBP2.2 billion, and it predicted higher profit in the second half of its financial year than in the first.
Analysts kept a positive stance on the company, with Shore Capital analyst Clive Black saying, "it is clearly still very early days in [new Chief Executive] David Potts' tenure, but we sense he is bringing a deep rooted and fundamental change to Morrison's that is for the better."
Wm Morrison shares also have gone ex-dividend Thursday.
Aviva Group shares are down 0.4% even though it reported higher levels of new business, bolstered by operations in the UK & Ireland, Europe and Asia. The life insurer said its integration of Friends Life is ahead of schedule, following the GBP5.6 billion acquisition of its former rival. It said the value of new business increased to GBP247 million in the three months ended March 31, compared with GBP224 million in the corresponding quarter of the prior year.
RSA Insurance Group is the best performer in the FTSE 100, up 1.6%. The insurer cautioned that lower interest rates and currency moves in its vital areas of business are having an unwelcome effect on business. However, it said its net profit in the first quarter of 2015 was "a little ahead" of plans and included gains it is expecting to make on asset sales.
RSA said net written premiums decreased to GBP1.59 billion in the three months ended March 31, compared with GBP1.73 billion in the corresponding period of the prior year.
Easyjet is the second biggest gainer, up 1.1% at 1,791.26 pence, after it said Thursday it flew 6.0 million passengers in April, up from 5.8 million a year earlier, while its load factor, a measure of how many paid seats are filled on its planes, rose to 90.8% from 89.8%. Also Thursday, Goldman Sachs lifted the airline price target to 2,365p from 2,000p, keeping it in its Conviction Buy List.
In the FTSE 250, Telecity is the best performer, up 19% at 1,074.00p, after it said it has received a takeover approach from American data-centre provider Equinix, a few months after agreeing an all-share deal to acquire data-centre services provider Interxion Holding.
Equinix has approached with a potential offer of 1,145 pence per share, payable in a mixture of cash and stock in Equinix. Around 54% of the consideration would be payable in cash, and 46% in Equinix stock.
Outside earning reports, the UK General Election also is grabbing attention. With voting having started at 0700 BST and continuing until 2200 BST, the final polls continued to show the Conservatives and Labour almost tied, suggesting that neither will win enough seats to form a majority government.
"The coming days and weeks are likely to see continued political uncertainty for equity markets. In elections over the last 50 years, UK equities have tended to have poor returns over the following months," says UBS analyst David Tinsley. "For equities we see risks both ways: either from some of the micro policies from Labour that may have negative impact on sentiment in specific sectors (Banks, Utilities, Transport etc.), or the risk of an in/out EU Referendum from the Conservatives."
Also related to the UK election uncertainty, analysts say volatility is starting to hit the pound, which is currently trading at USD1.5224, having touched an intraday low of USD1.5162 and an intraday high of USD1.5291.
"While the pound has held up fairly well in recent months, it is well above the lows this year on a trade weighted basis, anything other than a fairly speedy and decisive outcome to events today could well see some significant volatility swings in either direction," says Michael Hewson, senior market analyst at CMC Markets UK.
In Europe, the CAC 40 in Paris is down 1.1% and the DAX 40 in Frankfurt is down 0.8% partly hit by weak economic data. French industrial production dropped unexpectedly in March, falling 0.3% month-on-month, with economists expectations for a 0.1% increase. Meanwhile, German industrial orders came in lower than expected, increasing by 0.9% against economists' forecasts for a 1.5% rise.
European investors also are focused on Greece and its debt issues. The Mediterranean country will meet its European creditors in the eurozone ministers' meeting scheduled for Monday.
"Greece may have managed to repay EUR200 million to the IMF yesterday and stay afloat for now, but the country is fast running out of money and there are serious doubts that it will be able to repay another EUR763 million when it comes due on Tuesday, the day after the next eurogroup meeting," says Oanda senior market analyst Craig Erlam.
Still in the economic calendar Thursday, in the US, initial jobless claims are due at 1330 BST.
US futures point to a lower opening, with the DJIA and the Nasdaq 100 pointed down 0.6%, and the S&P 500 down 0.5%.
By Daniel Ruiz; danielruiz@alliancenews.com
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