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(Alliance News) - Stocks in London were lower at midday on Wednesday after personal attacks and interruptions marred the first televised US presidential election debate overnight.
The large-cap FTSE 100 index was down 16.87 points, or 0.3%, at 5,880.63. The mid-cap FTSE 250 index was up 20.76 points, or 0.1%, at 17,194.42. The AIM All-Share index was down 0.2% at 954.37.
The Cboe UK 100 index was down 0.4% at 584.92. The Cboe 250 was flat at 14,548.42, but the Cboe Small Companies was down 0.1% at 9,125.85.
In mainland Europe, the CAC 40 in Paris was down 0.7%, while the DAX 30 in Frankfurt was 0.8% lower.
Challenger Joe Biden told a raging President Donald Trump to "shut up" in an opening debate that turned almost immediately into a shouting match 35 days ahead of the most highly contested US election in recent memory.
The debate in Cleveland, Ohio, was as bad-tempered as had been feared, with Trump leading the way in yelling over his challenger and the Fox News moderator Chris Wallace alike.
"European markets are on the back foot in early trade today, with the overnight US election debate doing little but confuse voters in a chaotic affair. Pollsters point towards a potential Biden gain in the polls following yesterday's debate with Donald Trump, with the president's erratic style likely helping Biden to shift the focus away from his often lacklustre memory and debating abilities," said IG Group's Josh Mahony.
"With less than five-weeks left until the election, we are seeing a president that increasingly speaks of voter fraud which appears to show a candidate laying the groundwork for defeat. From a market perspective, while Biden is likely to be more than willing to spend freely in a bid to reduce inequalities, there is also a worry that he will be significantly less business and investor-friendly," Mahony added.
US stock market futures were called lower since the debate did little to remove election uncertainty as the campaign trail enters the home stretch.
The Dow Jones Industrial Average was called down 0.9%, the S&P 500 down 0.8%, and the Nasdaq Composite down 0.7%, based on futures trading.
"With Joe Biden leading in the polls, President Trump seems determined to take to heart Dylan Thomas' cry 'Do not go gentle into that good night' and his aggressive stance and apparent determination to challenge the election result - should he lose - will put financial markets on edge," said AJ Bell's Russ Mould. "The prospect of a contested result will stir bad memories of the November 2000 ballot when George W Bush and Al Gore wrangled over a recount in Florida, argued over 'hanging chads' and ultimately had to go to the Supreme Court to settle the matter."
On the London Stock Exchange, housebuilders were among the blue-chip risers after industry data showed the average UK house price hit a new record in September, pushing over GBP225,000 for the first time.
Taylor Wimpey was up 2.3%, Barratt Developments up 2.2%, Persimmon up 2.0%, Berkeley Group up 1.3%.
Nationwide Building Society said the average UK house price was GBP226,129 in September – the first time it has been above the GBP225,000 mark. In August, the average house price was GBP224,123. House prices increased by 5% annually in September, marking the highest growth rate in four years. Prices increased by 0.9% month-on-month.
Robert Gardner, Nationwide's chief economist, said: "The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown."
Royal Dutch Shell 'A' and 'B' shares were essentially flat, up 0.2% and down 0.2% respectively, after the oil major said it will cut as many as 9,000 jobs as the company makes a structural shift into low-carbon energy.
Shell said it expects to cut 7,000 to 9,000 jobs by the end of 2022 following the plunge in demand for oil and gas. The "reduced organisational complexity" and other measures, Shell said, are expected to deliver sustainable annual cost savings of between USD2.0 billion to USD2.5 billion by 2022.
"While unpleasant, changes such as these have been a long time coming for the oil and gas majors, and it is good to see the likes of Shell, as well as BP, taking steps to deal with these significant changes to the global energy mix. Now they need to go the extra mile and invest a greater percentage of their annual capex in the renewables side of their business, and steal a march on their US counterparts who appear to be asleep at the wheel," commented CMC Markets analyst Michael Hewson.
At the other end of the large caps, Compass Group was down 4.5% after the contract caterer said it was expecting a sharp revenue drop for its 2020 financial year, though there have been signs of improvement in its fourth quarter.
Compass said revenue for its financial year ending Wednesday was down 19%, having fallen 44% in the third quarter and 36% in the fourth. The company said it saw some improvement in the fourth quarter as students began to return to schools and workers to offices.
The Surrey-based firm is reviewing its contract portfolio and currently estimates that, subject to audit, it will have to impair around GBP100 million of contract assets. Including these impairments, it expects to post a negative underlying operating margin of about 3% for the fourth quarter, improved from a 5.3% negative underlying operating margin in the third quarter. Before impairments, its operating margin was at breakeven in the fourth quarter.
However, Compass said the pace at which revenue and margins will recover remains unclear, given the possible increase in lockdown measures in the Northern Hemisphere through the winter months.
In the FTSE 250, 888 Holdings was the standout performer, up 27% after the gambling firm forecast annual profit to top prior expectations and declared a special dividend.
For the half year ended June 30, revenue increased 37% to USD379.1 million from USD277.3 million last year and pretax profit more than doubled to USD50.9 million from USD22.2 million.
888 declared a special payout of 2.8 US cents per share along with an interim dividend of 3.2 cents per share.
Looking ahead, 888 said annual adjusted earnings before interest, tax, depreciation and amortisation are expected to be "significantly ahead of prior expectations".
At the other end of the midcaps, TP ICAP was the worst performer, down 13%. The interdealer broker, late Tuesday, said it is in advanced discussions over a potential acquisition of New York-based electronic trading network Liquidnet Holdings, for a price ranging from USD600 million from USD700 million.
The payment comprises an upfront consideration of USD550 million, and a deferred non-contingent consideration of USD50 million and an earn-out of up to USD100 million.
In addition, TP ICAP said July trading activity had slowed down and was materially lower than 2019 levels, in line with activity levels in the wider market and remains reliant on higher market volatility and trading activity in the fourth quarter.
"Since we closed our bear position in May, the stock has continued to drift lower and we expect yesterday's announcement will put further downwards pressure on it, particularly since yield is no longer a meaningful support," said analysts at Shore Capital.
The pound was quoted at USD1.2855 at midday on Wednesday, flat on USD1.2859 at the London equities close Tuesday.
The UK economy's second-quarter slump was not as bad as first estimated, according to the latest figures from the Office for National Statistics on Wednesday.
On an annual basis, UK gross domestic product fell by a revised 21.5% in the three months to June, having contracted 1.7% in the first quarter of 2020. The second-quarter reading was revised to a slightly smaller annual decline from the original estimate of 21.7%.
On a quarterly basis, UK GDP shrank by 19.8%, revised from the initial estimate of a 20.4% fall, having contracted 2.2% in the first three months of 2020. The quarterly figure was in line with the consensus estimate. The ONS said this was the largest quarterly contraction in the UK economy since quarterly records began in 1955.
The euro was priced at USD1.1713 midday Wednesday, down from USD1.1741 at the European equities close Tuesday. Against the yen, the dollar was trading at JPY105.65, flat compared to JPY105.61.
On the continent, European Central Bank President Christine Lagarde said that the eurozone should have an inflation goal "that the public can easily understand" and is calculated in a way that better reflects people's everyday lives.
The ECB currently has an inflation target of "close to, but below" 2.0%, a goal agreed in 2003 when rapid price increases were a real concern.
Inflation in the 19-nation eurozone has however stayed stubbornly low for years despite unprecedented economic stimulus from the ECB, keeping the target well out of reach and fuelling calls for a rethink.
"We should have an inflation aim that the public can easily understand," Lagarde told a conference in Frankfurt.
The ECB has recently resumed a "strategic review" of its tools and goals, after a brief pause forced by the coronavirus pandemic. Results are not expected until September 2021 but they could lead to a major overhaul of the bank's policies and priorities.
Brent oil was quoted at USD41.01 Wednesday midday, flat from USD41.08 a barrel at the London equities close on Tuesday. Gold was quoted at USD1,883.01 an ounce, lower against USD1,892.11.
The economic calendar for Wednesday has US ADP employment due at 1315 BST and GDP at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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