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(Alliance News) - Stock prices in London came to a mixed closed on Monday, as the FTSE 100 underperformed its European peers, while the domestically-focused FTSE 250 index saw a stronger day.
The FTSE 100 index closed down 34.85 points, 0.5%, at 7,299.99. The FTSE 250 ended up 218.00 points, 1.2%, at 18,559.57, and the AIM All-Share closed up 1.2%, or 9.76 points, at 824.81.
The Cboe UK 100 ended down 0.7% at 730.19, the Cboe UK 250 closed up 1.2% at 16,006.99, and the Cboe Small Companies ended up 0.5% at 12,522.76.
In European equities on Monday, the CAC 40 in Paris ended marginally lower, while the DAX 40 in Frankfurt ended 0.5% higher.
"European markets have seen a choppy start to the week, as the end of week hopium around a China reopening gives way to a semblance of reality that any reopening plan is unlikely to happen quickly.
Sentiment has also been cautious ahead of tomorrow’s US mid-term elections and the latest CPI report later this week," said CMC Market's Michael Hewson.
On Saturday, China said that it will "unswervingly" stick to its zero-Covid policy. The doubling down had followed recent market optimism that Beijing would cast aside some of its economically damaging virus curbs.
In the US, President Joe Biden pulled out the stops Sunday to mobilize US voters in defence of democracy, hoping to counter a Republican "red wave" in Tuesday's midterms that could set Donald Trump on a course back to the White House.
Polls in the final stretch put Republicans ahead in the fight for the House of Representatives, and also show them gaining momentum in key Senate races as voters seek to take out frustration over decades-high inflation and rising illegal immigration.
The dollar was weaker ahead of the elections.
The pound was quoted at USD1.1459 at the London equities close Monday, up compared to USD1.1301 at the close on Friday. The euro stood at USD0.994 at the European equities close Monday, up against USD0.9915 at the same time on Friday.
Against the yen, the dollar was trading at JPY146.56, down compared to JPY147.16 late Friday.
"The bigger downside risk for the dollar is that the Republicans secure control of both the House and the Senate, which would imply a hamstrung administration unable to deliver fiscal support in a downturn. A split Congress (House control going to the Republicans) may be mostly priced in, and the implications for the dollar could be relatively limited," ING said.
Meanwhile in the UK, with just 10 days until an autumn statement, UK Chancellor Jeremy Hunt is looking at ways to plug a black hole in UK government finances. The autumn statement is delivered on November 17, though ministers must present crucial parts of the plan to the Office for Budget Responsibility before then so an economic forecast can be prepared.
Hunt is looking at tax rises and spending cuts totalling up to GBP60 billion as he aims to address the black hole in the public finances. PA reported that Treasury sources confirmed that up to GBP35 billion of the "fiscal tightening" could come in the form of a reduction in spending, signalling a further squeeze on hard-pressed services.
"While it's clear that the UK government still has a slightly higher disciplinary bar to scale, due to the chaos which ensued in September, the risk is that ministers go too far and too fast in slashing spending. Already the outlook for the economy is ominous, with the longest recession since the 1920s forecast by the Bank of England, and further cuts to public expenditure will only exacerbate the pain," said Hargreaves Lansdown's Susannah Streeter.
In London, GSK closed the day 4.5% lower.
The pharmaceutical firm said that its blood cancer drug, Blenrep, has failed to meet its primary endpoint of progression-free survival in recent phase three trials.
Blenrep, or belantamab mafodotin, is an antibody drug conjugate designed to treat adult patients with relapsed or refractory multiple myeloma.
Shell shed 0.9% after Goldman Sachs cut the stock to 'neutral' from 'buy'.
Shell and GSK are among FTSE 100's largest constituents with market capitalisations of GBP175 billion and GBP55 billion respectively, which put disproportionate pressure on the blue-chip index.
In the FTSE 250, IWG surged 27%. This followed a Sky News report that CVC Capital Partners approached the office space firm about a potential acquisition of its digital division, Instant Group.
According to Sky, CVC, the private equity backer of Six Nations Rugby, made a GBP1.5 billion approach for Instant Group.
Citing "banking sources", Sky said Instant Group's chief executive has been marketing the business to a "number of private equity firms" recently after "a string of unsolicited approaches".
Wizz Air and easyJet were up 8.2% and 2.9% respectively, in positive read-across from Dublin-listed Ryanair. The budget airlines were lifted on strong interim earnings from the Irish carrier.
In the six months to September 30, Ryanair's revenue trebled year-on-year to EUR6.62 billion from EUR2.15 billion. The recent figure was 23% higher than EUR5.39 billion three years ago, before the Covid-19 pandemic.
Ryanair swung to an interim pretax profit of EUR1.55 billion from a EUR99.9 million loss in the first financial half of 2021. This beat pre-pandemic profit of EUR1.26 billion.
“To post a record profit so soon after the pandemic is astonishing and speaks to the market share gains the Ryanair has eked out as smaller rivals lose altitude, with the target for passenger numbers increasing significantly," said AJ Bell's Russ Mould.
"[CEO Michael O’Leary] was notably dismissive of inflation and cost-of-living pressures on the business, suggesting both that Ryanair has got its pricing right but also that people are continuing to prioritise jetting away over other discretionary spending. The company is also benefiting from a return of people travelling for work purposes."
Ryanair closed up 3.5% in Dublin.
On AIM, Appreciate Group shares surged 57%. The prepaid gift card and voucher provider backed a GBP83 million buyout from payment services provider PayPoint. PayPoint will pay 33 pence in cash and 0.019 of a new PayPoint share for each Appreciate share. Appreciate shareholders also will receive a 0.8p interim dividend.
Appreciate's offering boosts PayPoint's "client and retailer proposition".
PayPoint shares were 4.3% lower.
Stocks in New York were mixed at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 0.1%, and the Nasdaq Composite down 0.2%.
Brent oil was quoted at USD98.97 a barrel at the London equities close Monday, up from USD97.52 late Friday.
Gold was quoted at USD1,678.79 an ounce at the London equities close Monday against USD1,672.83 at the close on Friday.
In Tuesday's corporate calendar, there are annual results from Primark owner Associated British Foods, half-year results from IT consultancy Aveva Group, and natural gas distributor DCC. There are also trading statements from bottling company Coca-Cola HBC, housebuilder Persimmon, food packaging firm Hilton Food Group and Direct Line Insurance.
The economic calendar for Tuesday has Japanese trade statistics overnight, and eurozone retail sales at 1000 GMT. It is Election Day in the US.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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