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(Alliance News) - London stocks crawled into the green at midday on Wednesday, managing to overcome a sharp fall for gold in the wake of less dovish than expected comments from the US Federal Reserve.The FTSE 100 index was up 3.81 points, or 0.1%, at 7,426.24 Wednesday midday. The FTSE 250 was just 2.05 points higher at 19,288.56, while the AIM All-Share was flat at 924.82.The Cboe UK 100 index was flat at 12,596.52. The Cboe UK 250 was also flat at 17,247.09, while the Cboe UK Small Companies was down 0.1% at 11,449.04.In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 0.3% and 0.6% respectively in afternoon trade. In New York, stocks were pointed towards a broadly higher start, with the Dow seen flat and both the S&P 500 and Nasdaq 100 called up 0.1%. This comes after Wall Street ended firmly in the red on Tuesday, with the Dow down 0.7%, the S&P 500 down 1.0% and Nasdaq down 1.5%."US markets got a wakeup call from Fed officials yesterday after Fed chair Jay Powell reasserted the US central banks independence, as well as saying the Fed was in a no hurry to cut interest rates. He stated that while the outlook for had become more uncertain, the Fed would adopt a 'wait and see' approach when it came to the data and would act as appropriate," said Michael Hewson at CMC Markets. In addition, known Fed dove James Bullard said that a 50 basis point rate cut in July would be too much."Gold prices had a much sharper reaction to the slightly less dovish tone, with a sharp thrust to the downside after posting six year highs yesterday," CMC's Hewson observed. The precious metal was quoted at USD1,405.41 Wednesday midday, down from USD1,428.08 an ounce at the London equities close Tuesday.Gold's pull-back knocked Mexican miner Fresnillo, down 2.3% as the stock rested at the bottom of the FTSE 100. So far this month, however, gold remains 7.8% higher and Fresnillo up 14%.The safe haven asset has enjoyed a buoyant May as tensions have boiled between the US and Iran and as the US added a new front to its trade wars: neighbouring Mexico. "Uncertainty around this weekend G-20 continues to drive the gold bus as the meeting between Presidents Trump and Xi will arguably have the most significant impact on shaping gold near term direction given the meeting outcome will have a far-reaching effect on all risk assets," said Stephen Innes at Vanguard Markets.US President Donald Trump and Chinese President Xi Jinping are set to meet later this week at the G20 summit in Osaka, Japan.Also lower in the FTSE 100 was distribution firm Bunzl, down 1.3% as it anticipated only slight revenue growth in the first half of 2019. The FTSE 100-listed company said its revenue for the six months to the end of June increased by 4% at actual exchange rates. Revenue at constant exchange rates - and also adjusted for the impact of the number of trading days in the period relative to the prior year - is expected to have risen by around 2%.Bunzl said its financial expectations for 2019 remain unchanged, with overall trading consistent with the slowing underlying revenue growth it had noted a few months ago. Back in April, the company warned that the rate of revenue growth slowed due to "mixed macroeconomic and market conditions" across the countries in which it operates.In the FTSE 250, John Wood Group climbed 5.9% as the oilfield services provider said it expects interim earnings growth. John Wood said its revenue in the six months to June 30 is in line with a year before, but the company has seen earnings growth and margin improvements. The company said the margin improvement was led by its energy activities within its Asset Solutions unit in Europe, Africa, Asia & Australia. The Environment & Infrastructure Solutions unit also saw margin improvements, John Wood said. BCA Marketplace was up 2.6% at 241.60 pence after the car seller reported a rise in annual profit and separately agreed the terms of a GBP1.91 billion takeover.BBD Bidco - owned indirectly by funds managed by private equity firm TDR - is offering 243p in cash for each BCA Marketplace share held, representing a premium of 25% to the closing price on June 19. BCA Marketplace directors intend to unanimously recommend the deal to shareholders, and BBD Bidco has received support from shares representing 44% of BCA Marketplace's share capital.Separately, BCA Marketplace said revenue for the year to March 31 rose 25% to GBP3.03 billion from GBP2.43 billion the year before, with pretax profit up 18% to GBP89.5 million from GBP75.9 million.There was a conspicuously less warm reaction to a recommended takeover offer for struggling retailer Bonmarche. Shares in Bonmarche were down 27% at midday to 11.38p.In April, Spectre - a Dubai-registered company 100% owned by Edinburgh Woollen Mill owner Philip Day - approached the fashion retailer with a GBP5.7 million offer.The offer is priced at 11.445 pence per share, which marked a 34% discount to Bonmarche's GBP8.7 million market value the day before the offer was made. While Bonmarche said it continues to believe Spectre's takeover offer "does not adequately reflect the potential longer term value of the business", heightened uncertainty makes the "certainty" presented by the deal more attractive in the short term.This change of heart from the struggling retailer came as Bonmarche reported a "poor" performance in the first quarter of the new financial year due to continued weakness in the underlying clothing market and a lack of seasonal weather.As a result, Bonmarche said it is now of the view, supported by advisor Investec, that the terms of the offer are fair and reasonable, and recommends shareholders take up the deal. "Shareholders will be hugely disappointed by the retailer having to be bailed out at a cheap price, but it is perhaps better to get something back than nothing at all which is the alternative if Bonmarche can't be saved," commented Russ Mould, investment director at AJ Bell.Another stock stumbling in London morning session was RPS Group, down 34% following a profit warning. RPS said its results in 2019 will be "materially below" management and market expectations, blaming recent trading conditions in the company's Australia Asia Pacific business. According to RPS, Australia is experiencing its slowest growth since 2009.In 2018, the professional services firm posted a GBP41.0 million pretax profit on revenue of GBP637.4 million. RPS considers the market expectations for its fee income to be GBP594.0 million with consensus profit before tax & amortisation seen at GBP49.9 million. London Midday is available to subscribers as an email newsletter. Contact info@alliancenews.com
7 Mar 2023 11:12
