(Alliance News) - Stocks in London ended slightly lower on Wednesday with investors seemingly cautious ahead of an interest rate decision from the US Federal Reserve.
The FTSE 100 index closed down 25.92 points, or 0.4%, at 7,248.89. The FTSE 250 ended down 42.21 points, or 0.2%, at 23,097.79 and the AIM All-Share closed down 0.82 of a point, or 0.1%, at 1,226.77.
The Cboe UK 100 ended down 0.4% at 718.10, the Cboe UK 250 closed down 0.3% at 20,636.70 and the Cboe Small Companies finished 0.2% lower at 15,549.00.
In Paris the CAC 40 stock index ended up 0.3%, while the DAX 40 in Frankfurt ended flat.
"Quiet has dominated throughout the day as markets await today's FOMC meeting and the expected tapering of asset purchases. Fed days are never the busiest, and with so much on the calendar over the coming two days the inevitable atmosphere is one of expectation. The taper itself is likely to be the non-event, and instead markets want to hear more about the outlook for inflation and growth, and any hints on interest rate rises," said IG Group's Chris Beauchamp.
In the FTSE 100, Pearson ended the best performer, up 3.0%, after the Biden administration on Tuesday filed an antitrust suit to block the USD2 billion merger between its US rivals Penguin Random House and Simon & Schuster.
The US Department of Justice said a large-scale merger between the two companies would likely harm competition in the publishing industry.
British Airways-parent International Consolidated Airlines closed up 2.3% on a positive read-across from German flag carrier Deutsche Lufthansa.
Lufthansa said it was back in the black in the third quarter of this year - for the first time since the start of the coronavirus pandemic - as restrictions are lifted and air travel takes off again. The airline said its revenue almost doubled in the period from July through September, and it posted a small underlying, or operating, profit of EUR17 million, compared with a loss of EUR1.3 billion a year earlier.
Deutsche Lufthansa closed up 6.8% in Frankfurt. IAG puts out its own third-quarter results on Friday.
Royal Mail closed up 1.5% after UBS upgraded the postal operator to Neutral from Sell.
Anglo American ended 1.5% higher after the miner appointed Duncan Wanblad as chief executive officer, succeeding Mark Cutifani, who is leaving after nine years in the role.
Wanblad led the miner's Base Metals business as CEO from 2013 to 2019, and took on the Strategy & Business Development portfolio as group director in 2016. Anglo American Chair Stuart Chambers said Wanblad is "the standout and natural successor" to Cutifani. "
At the other end of the large-caps, Darktrace ended the worst performer, down 5.2% at 599.52 pence. A fund managed by Vitruvian Partners has sold 11.0 million shares in cybersecurity firm Darktrace at a price of 580 pence each, raising GBP63.8 million. The price was an 8.3% discount to Darktrace's closing price of 632.5p on Tuesday.
The sale, first announced after the market close on Tuesday, was carried out by Deep Defence, a wholly-owned subsidiary of Vitruvian Investment Partnership III, a fund managed by Vitruvian Partners. Vitruvian will retain just shy of a 3% stake in Darktrace following the placing and has agreed to a 60-day lockup for these shares. Darktrace will not receive any of the placing proceeds.
Coca-Cola HBC closed down 3.4%. The soft drinks bottler said it was on track to achieve its full-year revenue guidance despite a "challenging cost environment".
The Zug, Switzerland-based soft drinks bottler said the summer season drove currency-neutral revenue up by 17% to EUR2.12 billion in the three months to September 30 from EUR1.81 billion a year before. In the nine months to the end of September, currency-neutral revenue was up 19% year-on-year to EUR5.37 billion.
Next lost 3.3% after the clothing and homewares retailer left its annual profit outlook unchanged. The high street stalwart also warned a recent surge in full price sales will ebb as pent-up demand wanes, with the UK consumer facing accelerating costs of essential goods. In the third quarter to October 30, Next said full price sales, including interest income, rose 17% from pre-virus levels.
Next noted pent-up demand is "likely to continue to diminish", while supply chain challenges mean stock availability is an issue. In addition, consumers face rising costs from elsewhere, potentially limiting their spending on non-essentials.
It has left fourth-quarter guidance unchanged at 10.2%, however, as Next expects recent gains to fade. It still expects pretax profit guidance of GBP800 million, which would be up 6.9% on two years prior. Pretax profit in the year ended January 2021 amounted to GBP342 million.
Elsewhere in London, Daily Mail & General Trust ended up 2.9% at 1,122.00 pence after the newspaper publisher announced it was undertaking a major reorganisation of the company, which comprises the agreed takeover by Rothemere Continuation, and a proposed cash distribution to shareholders.
This follows the fulfilment of all pre-conditions for the takeover, which includes the payment of GBP412 million into the London-based newspaper publisher's main pension scheme.
Under the reorganisation, Rothemere will acquire all DMGT shares it does not own for 255.00p each, increased from the 251.00p bid announced in mid-July. In addition, all shareholders are to receive a special distribution of 568.00p and 0.5749 Cazoo shares per DMGT share.
Based on the closing of the used car business Cazoo on Tuesday at USD10.01, the special dividend has an aggregate value of 991.00p per share.
On this basis, adding a final dividend of 17.3p, shareholders outside of Rothemere Continuation stand to receive 1,263.00p per DMGT share, reflecting a 16% premium to the group's closing price of 1,090.00p on Tuesday.
The pound was quoted at USD1.3662 at the London equities close, up from USD1.3614 at the close Tuesday, ahead of the Bank of England's interest rate decision on Thursday.
The BoE will announce its latest monetary policy decision, alongside the release of the Monetary Policy Committee meeting minutes and quarterly Monetary Policy Report, at midday on Thursday. There will be a press conference at 1230 GMT.
Over recent weeks, investors have grown more confident the BoE will raise rates by 15 basis points, which would see the key Bank Rate rise to 0.25% from its current record low of 0.10%.
"Andrew Bailey, governor of the Bank of England, has dropped a number of hints that he is ready to act, predominantly on the rise in inflation in the UK. Soaring energy prices and supply chain issues have put prices on an upward trajectory, and he states that 'monetary policy can't solve supply side problems, but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations'. If rates don't go up on Thursday, there could be a short term dip in the pound, but the central bank has ample opportunity to raise rates in ether their December or February meeting," said analysts at OFX.
The euro stood at USD1.1581 at the European equities close, little changed from USD1.1580 late Tuesday. Against the yen, the dollar was trading at JPY114.04, up from JPY113.81.
Stocks in New York were mostly lower ahead of a key Federal Reserve decision at 1800 GMT, as investors digested solid economic data.
The DJIA was down 0.2%, the S&P 500 index down 0.1% but the Nasdaq Composite was up 0.2%.
Major indices have closed at records the last three sessions, but were under pressure ahead of an expected Fed announcement later Wednesday to trim back stimulus bond purchases.
The Fed's accommodative stance, along with strong earnings, have helped propel stocks to records in recent weeks.
On the economic front, the US private sector added more jobs than expected last month, according to payrolls processor ADP.
There was a 571,000 increase in nonfarm private employment in October, said ADP. This was up from 568,000 in September and beat forecasts, cited by FXStreet, for a pull back to 400,000.
On the corporate front, Activision Blizzard was down 15% in New York after the video game publisher late Tuesday said it is delaying eagerly-awaited sequels to its hit Diablo and Overwatch franchises as it deals with upheaval due to workplace conditions.
"As we have worked with new leadership in Blizzard and within the franchises themselves, particularly in certain key creative roles, it has become apparent that some of the Blizzard content planned for next year will benefit from more development time to reach its full potential. While we are still planning to deliver a substantial amount of content from Blizzard next year, we are now planning for a later launch from Overwatch 2 and Diablo IV than originally envisaged," the company stated.
More than Activision 20 employees have "exited" the gaming giant, the company said last month in a staff email, following accusations of sexual harassment and discrimination against women.
Brent oil was quoted at USD82.02 a barrel at the equities close, down sharply from USD84.09 at the close Tuesday, ahead of the Organization of Petroleum Exporting Countries meeting on Thursday to set output policy.
Gold stood at USD1,766.02 an ounce at the London equities close, lower against USD1,788.90 late Tuesday.
The economic events calendar on Thursday has services PMI readings from Germany at 0855 GMT, the eurozone at 0900 GMT and UK construction PMI at 0930 GMT.
The UK corporate calendar on Thursday has interim results from telecommunications firm BT Group and supermarket chain J Sainsbury. There are also third-quarter results from medical devices maker Smith & Nephew and luxury car manufacturer Aston Martin Lagonda.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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