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Alliance News) - Stock prices in London opened lower on Thursday with Rolls-Royce weighing on the FTSE 100 as the US Federal Reserve's Jackson Hole virtual symposium gets underway.
In London, the blue-chip FTSE 100 index was down 14.56 points, or 0.2%, at 6,031.04. The mid-cap FTSE 250 index was down 18.12 points, or 0.1%, at 17,735.45. The AIM All-Share index was down 0.3% at 963.32.
The Cboe UK 100 index was down 0.2% at 600.69. The Cboe 250 was flat at 15,100.68. The Cboe Small Companies was flat at 9,475.65.
In mainland Europe, the CAC 40 index in Paris was down 0.4%, while the DAX 30 in Frankfurt was down 0.2%.
Investors await a key speech from Fed Chair Jerome Powell to see if the central bank will soften its stance on the 2.0% inflation target.
"There is an element of caution among investors as the Fed Chairman Jerome Powell will deliver a speech on a monetary policy framework later today. "The future of the coronavirus stock market rally is highly dependent on the Fed's monetary policy stance," said AvaTrade analyst Naeem Aslam said.
On the London Stock Exchange, WPP was the best blue-chip performer, up 4.3% after the ad agency said it would pay a dividend despite posting a drop in advertising income during the Covid-19 pandemic.
For the six months ended June 30, WPP posted a pretax loss of GBP2.58 billion, swinging from a profit of GBP409 million a year prior. This was as revenue fell 12% year-on-year to GBP5.58 billion from GBP6.37 billion and administrative expenses jumped to GBP3.23 billion from GBP443 million.
Revenue less pass-through costs was GBP4.7 billion, down from GBP5.2 billion in the first half of 2019.
An interim dividend of 10.0p was declared, down 56% from 22.7p a year before. WPP said it has decided to review its dividend policy "in the context of our overall capital allocation priorities". It will provide an update as part of a capital markets event near the end of the year.
Looking ahead, WPP said that assuming no further economic lockdowns, it expects earnings for the full year to be in line analysts' expectations of a 10% to 12% decline in like-for-like revenue less pass-through costs, and 10% to 13% headline operating margin.
WPP added that its share buyback was under review but intended to restart once the current environment had stabilised.
Flutter Entertainment was up 2.7% after the gambling firm said it saw encouraging signs for the second half of 2020, with more sporting events resuming as lockdown restrictions ease.
For the half-year to June 30, revenue came in at GBP1.52 billion, up 49% from GBP1.02 billion last year, but pretax profit fell 70% to GBP24 million from GBP81 million.
Looking ahead, Flutter said its outlook remains highly uncertain, due to potential further Covid-19 related disruption and possible regulatory change across various markets.
However, it said trading in the second half so far has been encouraging, "benefiting from condensed football fixtures, favourable sports results and ongoing resilience of gaming".
At the other end of the large caps, Rolls-Royce was the worst performer, down 7.5% after the jet engine maker reported a steep loss as the coronavirus pandemic caused demand for air travel to slump.
For the half-year ended June 30, revenue fell 26% to GBP5.82 billion from GBP7.88 billion last year, and the company's pretax loss widened to GBP5.37 billion from GBP3.24 billion on an underlying basis.
The company reported free cash outflow of GBP2.8 billion, "deteriorated" from a GBP429 million outflow last year, "reflecting the reduction in engine flying hour receipts and a substantial working capital related outflow that included a cessation of invoice discounting".
The Derby-based firm expects another GBP1 billion in cash outflow in the second half, meaning GBP4 billion for the year as a whole. Beyond 2020, it is targeting a return to positive free cash generation during the second half of 2021 and annual 2021 free cash outflow is expected at significantly reduced levels compared to 2020.
Rolls-Royce said underlying revenue in 2020 is expected to be 25% to 30% lower than the prior year.
In addition, Chief Financial Officer Stephen Daintith has decided to leave the company to take up the same role at online grocer Ocado Group. Daintith will replace Duncan Tatton-Brown at Ocado who decided to step down for family circumstances, the online grocer said. Ocado shares were up 0.8%.
Homeserve was down 4.5% after Morgan Stanley downgraded the home emergency cover provider to Equal Weight from Overweight.
HSBC Holdings was down 2.5% after the Asia-focused bank was slammed by US Secretary of State Mike Pompeo on Wednesday over reports it had frozen access to credit card and bank accounts for executives of pro-democracy independent media group Next Media.
Pompeo accused HSBC of bowing to Chinese pressure amid Beijing's imposition of a draconian security law on Hong Kong.
The pound was quoted at USD1.3205 early Thursday, up from USD1.3186 at the London equities close Wednesday.
The euro stood at USD1.1827 Thursday morning, up from USD1.1819 at the European equities close Wednesday. Against the yen, the dollar was trading at JPY106.00, lower from JPY106.16.
In commodities, Brent oil was quoted at USD45.76 a barrel Thursday morning, up from USD45.58 at the London equities close Wednesday. Gold was quoted at USD1,941.27 an ounce, down from USD1,944.17.
The Japanese Nikkei 225 index ended down 0.4% on Thursday. In China, the Shanghai Composite ended up 0.4%, while the Hang Seng index in Hong Kong is down 0.9%.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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