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(Alliance News) - Stocks in London ended mixed on Wednesday as sentiment was stifled after Russia announced it would cease gas exports to Bulgaria and Poland, while heavyweight miners kept the FTSE 100's head above water.
The Bulgarian Energy Ministry said late Tuesday the Bulgarian natural gas supply company Bulgargaz had received a notification of the gas cut from Russia's state-backed energy giant Gazprom. Bulgaria has taken steps towards alternative gas supplies, said the ministry, adding that for the time being no limits on gas consumption was necessary.
The Polish natural gas company PGNiG said Tuesday afternoon that Gazprom was stopping gas flows as of Wednesday morning because Warsaw refused a demand by Moscow to pay for its supplies in roubles. Polish officials said the country has been preparing for such a scenario and that gas storage facilities are currently 76% full, compared to 39% a year ago.
The FTSE 100 index closed up 39.42 points, or 0.5%, at 7,425.61. The mid-cap FTSE 250 index ended down 54.35 points, or 0.3%, at 20,437.77. The AIM All-Share index closed down 7.44 points, or 0.7%, at 1,016.85.
The Cboe UK 100 index ended up 0.7% at 740.52. The Cboe 250 closed down 0.5% at 18,031.04, and the Cboe Small Companies ended down 0.3% at 15,075.70.
In mainland Europe, the CAC 40 stock index in Paris closed up 0.5%, while the DAX 40 in Frankfurt ended up 0.3%.
"It's been another choppy session for markets in Europe with today's attempt at a rebound once again being capped by concerns that Russia will expand its insistence on being paid in roubles beyond Poland and Bulgaria, to the likes of Germany and Italy. This seems the most likely outcome given reports by TASS, which Austria have strenuously denied, that they have agreed to pay Russia in roubles," said CMC Markets analyst Michael Hewson.
"Whether true or not, it appears that Russia is striving to create division by cranking up the pressure on European countries to pay in roubles or risk being cut off... The FTSE 100 is outperforming, largely due to a rebound in metals prices, led by gains in the likes of Anglo American, Rio Tinto and Antofagasta, after a strong recovery in Chinese markets," Hewson added.
In the FTSE 100, miners Anglo American, Antofagasta and Rio Tinto ended the best performers, up 5.9%, 5.2% and 4.1% respectively.
GlaxoSmithKline closed up 2.4% after the drugmaker reported first quarter earnings growth amid "cost discipline" as it readies the demerger of consumer healthcare firm Haleon in the summer.
Revenue in the first quarter of 2022 was GBP9.78 billion, up 32% from a year ago. Pretax profit jumped 71% to GBP2.60 billion from GBP1.52 billion year-on-year. Following the results, GSK affirmed its full-year outlook and said it is on track to demerge and list Haleon in July.
GSK declared a quarterly dividend of 14 pence, down from 19p a year ago. It expects to pay 27p for the first half of 2022, split as 22p from the remaining business - referred to as new GSK - and 5p from the consumer business. New GSK will pay a 22p dividend for the second half of 2022 as well and 45p for 2023, the company said.
Lloyds Banking closed up 0.7% after the bank reported a dip in first quarter profit and noted that the outlook for the UK economy "remains uncertain", but the lender still upgraded its guidance for all of 2022.
Underlying net interest income for the first quarter of 2022 rose 10% to GBP2.95 billion, with total net income for the period up 12% to GBP4.11 billion. Despite this increase, pretax profit fell 14% to GBP1.62 billion, with Lloyds's profit hit by a GBP177 million underlying impairment versus a net credit of GBP360 million a year before.
At the other end of the large-caps, Aveva Group ended the worst performer, down 16%. The industrial software firm warned revenue growth in the year ahead is set to slow and earnings will come under pressure from higher costs.
Aveva warned that revenue growth in the new financial year is expected to slow and margins are set to reduce amid cost pressures. It cautioned that reported revenue will be impacted by the timing of revenue recognition as it strives to boost annual recurring revenue growth, and also warned that revenue will be knocked by the war in Ukraine and sanctions on Russia.
Adjusted earnings before interest and tax in the current financial year will be pressured by additional costs, including wage inflation, increased travel and event costs post-Covid and investment, the company said.
Persimmon closed down 4.8% as the housebuilding sector faces significant cost pressures and a UK consumer confidence hit.
Chief Executive Dean Finch said Persimmon is trading in line with expectations so far in 2022. Its private average sales rate is 2% higher year-on-year so far in 2022. Back in March, when reporting results for 2021, Persimmon said its sales rate at the start of the year was also 2%.
Persimmon plans to pay a 110p surplus capital return per share in July, given its "successful trading" in 2021. There will be no further dividends in relation to 2021, the company said.
The company said: "Persimmon remains well-positioned in its markets. By offering high quality homes at attractive prices we are widening the opportunity of home ownership to customers who otherwise may not be able to afford it.
Rivals Berkeley, Barratt Developments and Taylor Wimpey closed down 3.3%, 3.5% and 3.0% respectively in a negative read-across.
"Unlike its peer Taylor Wimpey, housebuilder Persimmon did not impress the market with its latest trading statement. Nothing too alarming was revealed but build rates are lagging behind a little and overall, the company seems a little less bullish than Taylor Wimpey," said AJ Bell's Russ Mould.
London Stock Exchange Group lost 1.5%. The exchange operator said it is on track to meet all financial targets despite expecting a hit from actions taken in response to Russia's invasion of Ukraine. Total income excluding recoveries was GBP1.75 billion in the first three months of 2022, up 8.0% on a year before. Gross profit rose 7.6% to GBP1.59 billion. The revenue hit from Russia's invasion of Ukraine is anticipated to be around GBP60 million in 2022.
On AIM, Loopup Group shares doubled after the remote meetings software provider won a two-year contract with Spain's Telefonica with a minimum value of EUR200,000 and potential for expansion and extension. Telefonica inked the deal with company's recently-acquired Hybridium, which holds LoopUp's "hybrid auditorium & events technology".
The pound was quoted at USD1.2509 at the London equities close, down sharply from USD1.2622 at the close Tuesday.
The euro stood at USD1.0525 at the European equities close, sinking from USD1.0655 late Tuesday.
The single currency fell to an intraday low of USD1.0520 versus the greenback - a level not seen since April 2017 - after Russia's decision to halt natural gas supplies to EU member states Bulgaria and Poland, raising fears that other nations in the bloc could be next.
Against the yen, the dollar was trading at JPY128.45, up from JPY127.27 late Tuesday.
New York was attempting to rebound at the London equities close following a sell-off on Tuesday, amid fears of interest rate hikes and slowing growth.
The DJIA was up 0.3%, the S&P 500 index up 0.7% and the Nasdaq Composite up 0.6%. The tech-heavy index is in bear market territory, sitting around 22% below its most-recent high.
Dow member Boeing was 8.8% lower after reporting a USD1.2 billion first-quarter loss, hit by a series of new one-time costs on its Russia business, the Air Force One presidential jet and the new 777X plane.
Brent oil was quoted at USD105.34 a barrel at the equities close, rising from USD103.65 at the close Tuesday.
Gold stood at USD1,885.50 an ounce at the London equities close, lower against USD1,903.55 late Tuesday.
The economic events calendar on Thursday has the Bank of Japan interest rate decision overnight, Germany inflation data at 1300 BST and US GDP at 1330 BST.
The UK corporate calendar on Thursday has annual results from hospitality firm Whitbread and supermarket chain J Sainsbury.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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