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(Alliance News) - Stock prices in London were struggling to find a direction on Wednesday, as investors await the UK government budget announcement.
Chancellor of the Exchequer Rishi Sunak will deliver his statement to Parliament starting at 1230 BST.
Sunak on Tuesday confirmed he will scrap the year-long public sector pay freeze, paving the way for a possible wage increase next year for teachers, nurses, police and armed forces personnel.
The chancellor last November "paused" public sector pay increases for 2021-22, with the exception of the NHS and those earning less than GBP24,000, after heavy borrowing during the Covid-19 crisis.
"Certainly the FTSE 100 was in sleepy mood ahead of the budget announcement and it remains to be seen if the chancellor can wake investors up by pulling any rabbits out of the hat this lunchtime," said AJ Bell investment director Russ Mould.
The large-cap FTSE 100 index was down 19.93 points, or 0.3%, at 7,257.69 at midday on Wednesday. The mid-cap FTSE 250 index was up 1.36 points at 23,162.63. The AIM All-Share index was down 0.2% at 1,230.66.
The Cboe UK 100 index was down 0.3% at 719.38. The Cboe 250 was down 0.1% at 20,824.59, and the Cboe Small Companies was down 0.7% at 15,477.44.
The CAC 40 stock index in Paris and the DAX 40 in Frankfurt were both down 0.2%.
The pound was quoted at USD1.3721 on Wednesday at midday in London, lower than USD1.3774 at the London equities close Tuesday.
The euro was priced at USD1.1592, firm on USD1.1587. Against the yen, the dollar was trading at JPY113.73, down from JPY114.25.
In the FTSE 100, Aveva was down 1.4%. The engineering, design and information management software provider said its revenue grew by 9% in the six months to September 30 on a pro forma organic constant currency basis. This increase drove significant margin leverage and growth in adjusted earnings before interest and tax. For the first half of financial 2021, Aveva had reported revenue of GBP332.6 million.
"What the statement does not say is that the figures reported suggest that the second quarter was a little slower than the 11% reported in the first quarter," noted Steve Clayton, fund manager at Hargreaves Lansdown Select.
"The news of strong margin expansion is a positive, but the market's rather disinterested reaction to these numbers, marking the stock a few pennies lower, shows that the lack of any acceleration in the business was investors' main focus."
Fresnillo climbed into positive territory, up 0.1%, by midday, after falling as much as 3.6% in morning trading. The company expressed confidence in achieving its annual guidance amid a bright performance so far in 2021, though this was somewhat dimmed by reduced output in the third quarter.
The Mexican gold and silver miner reported year-to-date attributable silver production of 40.2 million ounces, in line with the prior year, citing a higher ore grade at the San Julian disseminated ore body in Mexico and, to a lesser extent, the contribution of development ore from the Juanicipio mine, also in Mexico.
For the third quarter alone, Fresnillo reported attributable silver production of 12.7 million ounces, down 15% when compared to the second quarter of 2021. On a year-on-year basis, silver output was down 4.7%, due to a lower volume of ore processed and a lower ore grade at Saucito.
Year-to-date attributable gold production of 600,900 ounces was up 8.5% year-on-year, primarily due to the higher volume of ore processed at Herradura mine in Mexico following the lifting of Covid-19 restrictions, which had resulted in lower volumes of ore deposited last year.
Quarterly attributable gold production was 172,500 ounces, down 14% quarter-on-quarter. When compared to the third quarter of 2020, gold production was flat.
Fresnillo said it remains on track to meet its 2021 production guidance of 53.5 million to 59.5 million ounces of silver and 675,000 to 725,000 ounces of gold. Fresnillo produced 53.1 million ounces of silver in 2020, down from 54.6 million in 2019, and 769,618 ounces of gold, down from 875,913 ounces.
Among the mid-caps, FirstGroup was the best performer on Wednesday midday, up 4.8% at 100.80p. The transport operator opened a tender offer for shares at 105p to return up to GBP500 million to shareholders.
Importantly, FirstGroup said activist shareholder Coast Capital Management has agreed to support the plan and tender all its shares.
The buyback comes after FirstGroup sold its First Student and First Transit businesses in the US to EQT Infrastructure for USD3.12 billion earlier this year.
Additionally, last week FirstGroup said it had sold its US coach business Greyhound Lines to a subsidiary of FlixMobility. This completed the company's refocus back on the UK.
Homeserve was the second-best performer in the FTSE 250 index, up 3.4%. The company has completed the acquisition of home emergency assistance business CET Structures.
The GBP53 million acquisition was made on a debt-free, cash-free basis and is to be funded via existing debt facilities. It is expected to be "modestly enhancing" to HomeServe's adjusted earnings per share in the current financial year.
The home repairs & improvements company stressed that the acquisition transaction brings together "two well-positioned complementary businesses". Together with Homeserve's own home assistance cover business, the two companies cover around 4.9 million homes and completed about 700,000 jobs in financial 2021.
Among London small-caps, On The Beach was the worst performer, losing 4.0% on Wednesday midday. The holiday retailer reported suppressed trading in the second half of its most recent financial year, which ended on September 30.
While demand for international leisure travel currently remains below pre-pandemic levels, the company highlighted that its specific initiatives, including its 'free Covid tests' promotion, combined with a further softening of government restrictions, have stimulated bookings in the final weeks of the financial year.
Going forward, On The Beach said it remains committed to investing for long-term market share gains in its current financial year, ahead of full market recovery.
US stock market futures were pointed to a softer start as investors brace for more third-quarter earnings reports. Coca-Cola, McDonald's, Bristol-Myers Squibb, Boeing, General Motors, and Harley-Davidson are among the companies reporting before the market starts on Wednesday. After the market closes, Ford and eBay will follow.
The Dow Jones Industrial Average and the S&P 500 were called 0.1% lower, while Nasdaq Composite was seen off 0.2%.
"US futures continue to trade near their record high as the optimism among investors and traders is fuelled by better-than-expected earnings results. The fact is that there have been a lot of concerns among investors that an increase in pricing may have dampened the demand among consumers, but the actual results have shown that consumers are in a perfectly healthy condition, and they are able to consume surging costs. As long as consumers can handle the soaring costs, market players are comfortable in taking on riskier bets," said AVAtrade Chief Market Analyst Naeem Aslam.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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