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(Alliance News) - Stock prices in London were lower at midday on Tuesday on fears that central bank moves to fight inflation will spark a recession, while the euro hit parity against the dollar for the first time in almost 20 years.
The FTSE 100 index was down 30.59 points, or 0.4%, at 7,166.00. The FTSE 250 index was down 123.43 points, or 0.7%, at 18,713.50. The AIM All-Share index was down 3.69 points, or 0.4%, at 880.43.
The Cboe UK 100 index was down 0.4% at 714.05. The Cboe 250 was down 0.6% at 16,272.20, and the Cboe Small Companies was 0.1% lower at 13,210.04.
In mainland Europe, the CAC 40 stock index in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.8%.
"European shares continue to slide lower on Tuesday, alongside US futures, as caution prevails in the markets," said ActivTrades analyst Pierre Veyret. "Elsewhere, investors' appetite for riskier assets is also being undermined by the prospect of renewed lockdowns in China, while some traders are braced for patchy US corporate results due to possible negative impacts brought by a stronger dollar over company's earnings."
In the FTSE 100, United Utilities was up 1.4%. The water company agreed to sell its renewable energy business, United Utilities Renewable Energy, to FTSE 250-listed SDCL Energy Efficiency Income Trust for an enterprise value of GBP100 million.
SDCL was down 0.3%.
At the other end of the large-caps, British Land was the worst performer, down 4.0%, after RBC Capital downgraded the property company to 'underperform' from 'sector perform'.
Property rival Land Securities was down 3.9% after RBC cut the stock to 'sector perform' from 'outperform'.
In the FTSE 250, Hammerson was down 4.5% after RBC downgraded the shopping centre operator to 'underperform' from 'sector perform'. Great Portland was down 3.7% after Goldman Sachs cut the London-focused property developer to 'neutral' from 'buy'.
Softcat was down 3.2%. The IT services provider promoted Chief Financial Officer Graham Charlton to CEO with effect from August 1, 2023.
Charlton will replace Graeme Watt as CEO who will, in turn, succeed Martin Hellawell as non-executive chair. Hellawell will step down from the role and board upon Watt's succession. Softcat also said a search for a CFO to succeed Charlton has commenced.
On AIM, Serica Energy was up 13% at 343.50 pence and Kistos was up 5.8% at 490.00p, after rejecting each other's takeover offers.
London-based energy industry investor Kistos's combination terms value Serica at 382.00p per share. This represents a 25% premium to Serica's closing share price of 305p on Monday. Kistos is offering 0.2932 of a new Kistos share and 246.00p in cash for each Serica share. Under this, Serica's shareholders would own roughly 50% of the combined new firm.
However, Serica rejected the offer - and instead made its own takeover offer for Kistos, valuing it at 483.00p per share in another cash-and-shares approach. Serica's bid - of 90p in cash and 1.29 new Serica shares for each Kistos one held - represents a premium of 4% to Kistos's closing share price on June 30 of 463p per share.
The euro was priced at USD1.0014 at midday Tuesday in London, down from USD1.0087 late Monday, as a cut in Russian gas supplies to Europe heightened fears of a possible recession in the eurozone.
The common currency briefly hit exact parity against the dollar in mid-morning trade in London on Tuesday, as the market priced in a widening interest rate differential between the US and eurozone following strong US employment figures on Friday last week.
"The June job reports underlined the solid momentum in the labour market and reinforced Fed officials' desire to hike by 75 basis points at the July meeting," commented Deutsche Bank. "Shortly after the employment report, Atlanta Fed President Bostic indicated his 'full support' for another super-sized 75bps hike in July and expected it not to cause protracted damage to the economy."
Meanwhile, UBS said it expects the European Central Bank to raise interest rates by just 25 basis points next week - its first rate hike since 2011 under then-president Jean-Claude Trichet.
The last time the euro was at parity against the buck was in late 2002, early in the European single currency's life.
ActivTrades analyst Ricardo Evangelista said: "The expectations amongst analysts are that the US dollar will soon become more valuable than the euro, as the economic outlook in Europe deteriorates, while on the other side of the Atlantic the Federal Reserve remains fully committed to controlling inflation through relentless tightening of monetary policies.
"The complete cut-off of Russian gas to Europe is now a realistic prospect; a scenario that would exacerbate the ongoing energy crisis in the continent and increase the already high probability of a recession in the eurozone. Against such strong headwinds, the single currency remains under pressure and exposed to further losses, especially versus the US dollar."
The pound was faring little better. It was quoted at USD1.1821 at midday Tuesday, down from USD1.1898 at the London equities close Monday. Against the yen, the dollar was quoted at JPY136.97 in London, lower than JPY137.31.
Brent oil was trading at USD104.65 a barrel Tuesday at midday, down sharply from USD106.35 on Monday evening. Gold stood at USD1,732.36 an ounce, lower against USD1,738.10.
New York was pointed to a lower open on Tuesday as equity markets look set to extend Monday's losses.
The Dow Jones Industrial Average was called down 0.6%, the S&P 500 down 0.5%, and the Nasdaq Composite down 0.4%. The indices closed down 0.5%, 1.2% and 2.3% respectively on Monday.
PepsiCo on Tuesday lifted its annual revenue growth forecast, though the soft drink and snack maker's second quarter profit took a hit from impairments related to Russia's invasion of Ukraine.
Revenue in the quarter ended June 11 rose 5.2% year-on-year to USD20.24 billion from USD19.22 billion. The figure topped a CNN-cited forecast of USD19.5 billion. Pretax profit, however, fell 39% to USD1.84 billion from USD3.01 billion a year earlier.
Pepsi said it recorded a pretax impairment charge of USD1.36 billion related to the Russia-Ukraine conflict.
The stock was up 0.9% in pre-market trade in New York.
Ahead this week, JPMorgan Chase and Morgan Stanley report second-quarter results on Thursday as earnings season in the US banking sector begins.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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