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(Alliance News) - London's FTSE 100 index moved lower at the open on Wednesday, as the pound continued to climb higher on the potential for the stability that a Rishi Sunak premiership could bring to Westminster.
"After Liz Truss's terrible race for growth through unfunded tax cuts decimated the pound and sent government bond rates skyrocketing in the last month, the selection of Sunak has been hailed by financial markets as promising political stability," AvaTrade Chief Market Analyst Naeem Aslam said.
He added: "When compared to the dollar, the pound is almost 10% stronger than it was on September 26, when it set a record low, and the rates on gilts have returned to more normal levels after reaching excessive levels that caused pension funds to get agitated."
Sterling was quoted at USD1.1540 early Wednesday, sharply higher from USD1.1464 at the London equities close on Tuesday. The pound had not hit USD1.15 since mid-September.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, commented: "Jeremy Hunt, the continuity candidate at the Treasury, is desperate for some dough to rise but recognises the risks of upsetting the bond market judges by not crossing out enough on his shopping list. Spending cuts are expected to be high on his page of ingredients for a more stable financial environment but that won’t help the head chef, Prime Minister Rishi Sunak, in the popularity stakes."
The FTSE 100 index was down 15.08 points, or 0.2%, at 6,998.40. The mid-cap FTSE 250 was down 53.44 points, or 0.3%, at 17,778.19, though the AIM All-Share was down just 0.11 of a point at 799.33.
The Cboe UK 100 was down 0.2% at 699.57, the Cboe UK 250 down 0.1% at 15,202.98, and the Cboe Small Companies flat at 12,269.58
In European equities on Tuesday, the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was 0.2% lower.
In London, Scottish Mortgage Investment Trust was down 1.9% in early dealings as its tech stock-heavy investment portfolio was suffering from the disappointing results overnight from Alphabet and Microsoft.
Big technology shares Alphabet and Microsoft both lost more than 6% after releasing quarterly figures - Alphabet A shares lost 6.6% in after-hours trade in New York, while Microsoft lost 6.7%.
Alphabet reported a sharp fall in quarterly income on higher costs and foreign exchange headwinds but recorded a rise in revenue.
The California-based Google owner reported a 27% fall in net income to USD13.91 billion in the third quarter of 2022 compared to USD18.94 billion a year before.
More positively, revenue rose by 6.1% to USD69.09 billion in the period from USD65.12 billion. The company attributed the revenue growth to healthy fundamental growth in Search and momentum in the Cloud business.
Microsoft reported a rise in first-quarter earnings, with Chair & Chief Executive Satya Nadella arguing that digital technology was the "ultimate tailwind" in a world facing increasing challenges.
In the three months that ended September 30, revenue totalled USD50.12 billion, up 11% from USD45.32 billion the previous year. Revenue in the Intelligent Cloud segment increased by 20% against the previous year, while revenue in Productivity & Business Processes grew by 9.0%.
Microsoft, however, saw a fall in net income. The figure dropped 14% to USD17.56 billion from USD20.51 billion a year prior.
In the US, the week's strong rally continued, with stocks ending sharply higher on Tuesday, with the Dow Jones Industrial Average up 1.1%, the S&P 500 up 1.6%, and the Nasdaq Composite up 2.3%.
Back in London, WPP was at the bottom of the FTSE 100, giving back 3.5%.
Its third-quarter revenue rose 10% to GBP3.57 billion, with like-for-like revenue up 2.7%. The advertising and marketing firm noted its revenue less pass-through costs increased 13% to GBP2.99 billion.
Chief Executive Mark Read said the firm "continues to show strong momentum". He added: "Our growth over the year has been strong with full year like-for-like revenue less pass-through costs now upgraded to 6.5% to 7.0%."
Reckitt Benckiser was 3.0% lower.
The consumer healthcare firm's revenue increased by double-digit percentages in the third quarter, with its Hygiene, Health and Nutrition all seeing strong growth.
Total revenue was up 14% to GBP3.74 billion, with like-for-like revenue up 7.4%.
"Reckitt delivered another quarter of broad-based growth amidst challenging market conditions, as we continue to innovate and improve on our in-market execution," Chief Executive Nicandro Durante said.
"My priority is firmly focussed on continuing to execute on our strategic path, to deliver sustainable mid-single digit growth, and mid-20s adjusted operating margins by the mid-2020s." Reckitt narrowed its like-for-like net revenue growth target for 2022 upward to 6% to 8% from 5% to 8% previously.
At the other end of the blue chips, AstraZeneca was up 2.6% - crowning the FTSE 100.
The healthcare giant was on the rise after its CAPItello-291 Phase III trial showed its capivasertib, in combination with Faslodex, demonstrated a statistically significant and clinically meaningful improvement in progression-free survival versus placebo in patients with advanced or metastatic breast cancer.
The trial met both primary endpoints.
Susan Galbraith, executive vice president of Oncology R&D at Astra, said the data was "exciting" and shows capivasertib could become a "new first-in-class treatment option".
The euro traded at USD1.002 early Wednesday, moving back above parity for the first time since the start of October, and up from USD0.9963 late Tuesday. Against the yen, the dollar was quoted at JPY147.38, down from JPY147.77.
In Asia, the Shanghai Composite closed up 0.8% and the Hang Seng index in Hong Kong added 0.7%. The Japanese Nikkei 225 index closed up 0.7%.
The S&P/ASX 200 stock index in Sydney closed up 0.2%.
Gold was quoted at USD1,666.70 an ounce early Wednesday, higher than USD1,655.96 on Tuesday evening in London. Brent oil was trading at USD90.49 a barrel, down from USD91.91 late Tuesday.
In the economic calendar, there's a US goods trade balance print, before the Bank of Canada issues an interest rate decision at 1500 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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