(Alliance News) - Stock prices in London were lower at midday on Monday amid fears that the US Federal Reserve will reduce its support for the economy sooner than previously expected, while SSE rose on takeover hopes.
The FTSE 100 index was down 21.46 points, or 0.3%, at 7,101.54. The mid-cap FTSE 250 index was down 58.06 points, or 0.3%, at 23,398.29. The AIM All-Share index was down 0.2% at 1,258.71.
The Cboe UK 100 index was down 0.3% at 707.50. The Cboe 250 was down 0.4% at 21,178.65, and the Cboe Small Companies flat at 15,413.34.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were both down 0.1%.
New York stock market futures were pointed mostly lower. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 down 0.2%, but the Nasdaq Composite was called up 0.1%.
"European stocks started the week without a clear direction as investors struggle to assess the global near-term outlook. While last week's strong US jobs report has confirmed the recovery is well on its way, it also sparked concerns of a stimulus withdrawal, with tapering expected to be announced by the Federal Reserve no later than next month," said analysts at ActivTrades.
In the FTSE 100, SSE was the best performer, up 3.6%. The Mail on Sunday reported over the weekend that US activist investor Elliot Management has secretly built up a large stake in the UK electricity utility.
Fellow utilities Severn Trent and United Utilities were just behind, up 1.5% and 1.3% respectively.
The newspaper reported that Elliot's stake could mean a possible takeover bid of around GBP20 billion for SSE. However, the report noted it was not clear how large Elliott's shareholding in SSE was and why it has taken the position in the London-listed energy provider.
Elliot, which is backed by US billionaire Paul Singer, has built a reputation for buying holdings across numerous sectors and then pushing aggressively for changes.
This was seen earlier this year after Elliot built a significant stake in GlaxoSmithKline and called for a drastic overhaul of the leadership at the blue-chip drugmaker after its consumer division gets spun off.
In response, GSK vigorously leapt to the defence of its under-fire CEO.
At the other end of the large-caps, Hargreaves Lansdown was the worst performer, down 12%, even as the fund supermarket reported positive annual results.
For the financial year that ended June 30, revenue rose 15% to GBP631.0 million from GBP550.9 million last year, but pretax profit was GBP366.0 million, down 3.0% from GBP378.3 million. The revenue and profit figures missed consensus estimates from Jefferies of GBP636.7 billion and GBP383.0 million, respectively.
The Bristol-based firm reported strong growth in assets under administration, which were up 30% to GBP135.5 billion from GBP104.0 billion. Net new business inflows were up 13% to GBP8.7 billion from GBP7.7 billion. However, this also missed Jefferies forecasts of GBP136.3 billion and GBP9.2 billion respectively.
Looking ahead, Chief Executive Officer Chris Hill said: "With this continued investment in our people, proposition, service and technology as well as the cost of servicing an enlarged and growing client base, we expect 2022 costs to reflect this investment and continue to be broadly aligned to client growth."
Hargreaves Lansdown also warned it has seen a slowdown in dealing volumes and client activity versus the elevated levels at the time last year.
"While market share increased marginally and retention remains 92% on a client numbers and AUA basis, the problem of having more, less profitable, clients is emerging. With new and aggressive competitors joining the UK market, revenue margins falling and costs rising, financial 2022 will see these trends continue. Despite strong client recruitment and retention and clear market leadership, we think HL may be vulnerable," said analysts at Jefferies.
In the FTSE 250, Vectura Group was up 5.2% at 172.60 pence. The respiratory medicines maker noted Philip Morris International's increased offer, which values the firm at over GBP1 billion, and subsequently withdrew its backing for Carlyle's bid made on Friday.
However, Vectura decided not to back Philip Morris's new offer and instead an auction was set by the UK Takeover Panel, the regulatory body which deals with takeovers and mergers. This will start on Wednesday and run for five days, ending on Tuesday next week.
Vectura, Philip Morris and Carlyle have all agreed to the auction, the Takeover Panel said.
Earlier Monday, Philip Morris confirmed that it had upped its bid for Vectura to 165 pence per share, as the Marlboro cigarette maker goes head-to-head in a bidding war with private equity firm Carlyle.
New York-based Philip Morris was bested on Friday by Carlyle after the private equity firm increased its offer for FTSE 250-listed Vectura to 155p per share, beating Philip Morris's 150p a share offer made in July. Carlyle itself had previously offered 136p per Vectura share in May.
Philip Morris's new offer of 165p per Vectura share values the company at GBP1.02 billion.
Clarkson was up 4.4% after the shipping services provider reported a robust set of interim earnings, with strong trading across all areas of the business.
For the six months to June 30, revenue was GBP190.1 million, up 5.4%, GBP180.4 million last year, and pretax profit rose 31% to GBP27.3 million from GBP20.9 million.
The company declared an interim dividend of 27p, up 8% from 25p paid out at the halfway stage last year.
At the other end of the mid-caps, PageGroup was down 5.1%. The recruiter upgraded its full-year outlook after the recruitment firm swung to profit in the first half of 2021.
The Surrey-based headhunter's pretax profit for the six months that ended June 30 was GBP63.7 million, swung from a loss of GBP800,000 in the same period last year. Pretax profit for the same period in 2019, meaning before the virus pandemic, was GBP74.6 million.
Revenue surged by 17%, climbing to GBP766.4 million for the half year from GBP655.0 million in 2020, though still short of GBP820.5 million in 2019.
PageGroup upgraded its full-year outlook after the interim performance and now expects an operating profit in the range of GBP125 million to GBP135 million. Its operating profit in the first half was GBP64.3 million, up from just GBP400,000 in 2020, but down from GBP75.6 million in 2019.
However, Chief Executive Officer Steve Ingham said the outlook for the recruitment market is unclear. "Looking ahead, there continues to be a high degree of global macro-economic uncertainty as Covid-19 remains a significant issue and restrictions continue in a number of the group's markets," Ingham said.
Elsewhere, Deliveroo was up 7.8% after German rival Delivery Hero has bought a 5.1% stake in the company.
Berlin-based Delivery Hero, like London-based Deliveroo, uses a network of restaurants and gig-economy couriers to provide food delivery.
Delivery Hero was down 1.3% to EUR129.40 in Frankfurt. It has a market cap of EUR32.36 billion, about GBP27.50 billion, making it four times larger than Deliveroo.
The pound was quoted at USD1.3886 at midday on Monday, up from USD1.3862 at the London equities close Friday.
The euro was priced at USD1.1759, marginally lower from USD1.1760. Against the Japanese yen, the dollar was trading at JPY110.14, down from JPY110.30.
Brent oil was quoted at USD67.85 a barrel Monday at midday, down sharply from USD70.92 late Friday. Gold was trading at USD1,742.26 an ounce, down from USD1,764.55.
"Oil prices fell as the US dollar rallied strongly. What are disturbing oil markets the most, though, is the delta-variant Covid-19 strain which has vast swathes of the planet in its grip. That is increasing fears that the global recovery will stutter and become very uneven, thus reducing oil consumption even as OPEC+ continues to increase production," explained Oanda Markets analyst Jeffrey Halley.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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