(Alliance News) - The FTSE 100 stood out on Monday, but for the wrong reason, as share price falls for some of its largest constituents meant the index London large-caps underperformed versus the mid-cap FTSE 250 and European indices.
The mood early Monday was improved, despite some weak economic data from China. Stocks in New York were called higher, with focus in the US turning to Tuesday's midterm elections.
The FTSE 100 index traded 9.43 points, 0.1%, lower at 7,325.41 midday Monday. The FTSE 250, however, was up 271.56 points, or 1.5% at 18,613.13, and the AIM All-Share was up 5.02 points, 0.6%, at 820.07.
The Cboe UK 100 was down 0.5% at 732.24, the Cboe UK 250 was up 1.5% at 16,044.82, and the Cboe Small Companies was up 0.2% at 12,475.39.
Stocks in mainland Europe were higher. The CAC 40 index in Paris was up 0.2%, while the DAX 40 in Frankfurt was 0.9% higher.
The pound was quoted at USD1.1465 midday Monday in London, up from USD1.1301 late Friday. The stronger pound held back the FTSE, which is stacked with international earners.
The euro traded at USD0.9984 on Monday afternoon, higher than USD0.9915 at the European equities close on Friday. Against the yen, the dollar was lower at JPY146.52, down from JPY147.16.
"Chinese officials denied plans to end the zero-Covid policy and after a brief wobble, risk assets have traded better," Bannockburn Global Forex analyst Marc Chandler commented.
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.
Stocks largely shrugged off the news, however, and poor trade trade figures from China on Monday similarly failed to spark an equity market sell-off.
China's exports shrank in October, the first such decline since mid-2020, customs authorities said, as a domestic slowdown and the threat of global recession hit international trade.
Exports fell 0.3% year-on-year in October, according to the General Administration of Customs, a steep reversal from September's 5.7% increase and well below analysts' expectations.
It meant China's trade surplus widened to around USD85.2 billion in October from USD84.7 billion in September. However, this fell short of FXStreet cited consensus of USD96.0 billion.
Stocks in New York were called solidly higher. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all were called up 0.6%.
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 four-decades-high inflation and rising illegal immigration.
Elsewhere in the US this week, stock market traders will have an eye on Thursday's inflation reading, as well as earnings from Walt Disney on Tuesday.
In London, Paddy Power-owner Flutter shares rose 2.9% on the back of an arbitration boost in a dispute with Fox. The ruling concerned Fox's right to acquire just shy of a 19% stake in Flutter's US-based fantasy sports and online betting operator FanDuel.
The duo argued over the consideration for the stake, with Fox believing it should only acquire the holding at the same price Flutter paid back in December 2020. However, Flutter on Monday said an arbitration confirmed the fee that Fox would pay for the stake would be based on a FanDuel valuation of USD20 billion.
With annual compounding, this equates to a valuation for FanDuel of USD22 billion and a cost of USD4.1 billion for Fox to acquire an 18.6% stake, Flutter said.
In April 2021, Fox filed an arbitration suit against Flutter to enforce its right to buy an 18.6% stake in FanDuel, at the same price Flutter paid roughly five months earlier. But Flutter said Fox's position was "incorrect" and that both companies agreed to a fair market valuation as of July 2021.
It would be a "windfall to Fox" if Flutter sold the FanDuel stake at an USD11.2 billion valuation, Flutter said in April of last year.
Putting pressure on the FTSE 100, however, were share price falls for oil major Shell and pharmaceutical firm GSK. With market capitalisations of over GBP175 billion and GBP55 billion, respectively, they are among the blue-chip index's largest constituents.
Shell lost 1.4% after Goldman Sachs cut the stock to 'neutral' from 'buy'.
GSK gave back 3.3% after its Blenrep blood cancer drug failed to meet its primary endpoint in a recent phase three probe.
HSBC fell 1.5%. The stock had received a boost on Friday on hopes that China would ease from its strict zero-Covid policy.
The doubling down of the zero-Covid measures in China put pressure on the stock on Monday. Comments from a major investor in the bank on Friday put HSBC's strategy back in focus, too.
Major shareholder Ping An Insurance on Friday said it would back an HSBC spin-off which is "conducive to improving" the lender's fortunes.
Ping An wants the bank to demerge its Asian operations, but HSBC has previously suggested it wants to keep its current structure, while continuing a pivot to Asia.
AIM listing Appreciate Group jumped 56% after backing 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 is a prepaid gift card and voucher provider, and its offering boosts PayPoint's "client and retailer proposition". PayPoint shares were 6.6% lower.
Joules tumbled 25%. The retailer cautioned that a trading underperformance has left its finances on precarious footing.
It is in talks with founder Tom Joule and its lender about obtaining a bridge loan, as recent weak trading has left its working capital position below expectations.
News from Joules has seldom been positive in recent months. A string of profit warnings and a break down in talks over a possible investment from Next have hurt the stock.
"The curse of the wrong type of weather has struck again, with Joules saying that sales of jumpers, coats and wellies have disappointed because the past few months have been relatively mild. This is disastrous for Joules because it was already struggling and needs every possible penny hitting its tills to help put the business back on track," AJ Bell analyst Russ Mould commented.
Gold was quoted at USD1,677.73 an ounce midday Monday UK time, up from USD1,672.83 at the London equities close on Friday. Brent oil was trading at USD98.29 a barrel, up from USD97.52.
By Eric Cunha; ericcunha@alliancenews.com
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