LONDON MARKET CLOSE: FTSE lifted by oil as mood sours ahead of US CPI

Tue, 09th Aug 2022 17:00

(Alliance News) - The FTSE 100 outperformed on Tuesday due to oil price strength, but the mood was tetchy on the eve of a key US inflation data print.

The FTSE 100 index closed up 5.78 points, or 0.1%, at 7,488.15. The FTSE 250 ended down 206.04 points, or 1.0%, at 19,912.40, and the AIM All-Share closed down 5.16 points, or 0.6%, at 914.75.

The Cboe UK 100 ended flat at 747.80 and the Cboe UK 250 closed down 0.9% at 17,273.63. The Cboe Small Companies ended up 2.2% at 14,287.14, boosted by RPS Group's takeover.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.5%, while the DAX 40 in Frankfurt fell 1.1%.

"The FTSE 100 is once again outperforming due to its heavier weighting in oil and gas, with the higher oil price acting to push BP and Shell higher on the day," said Michael Hewson, chief markets analyst at CMC Markets.

Shares in BP rose 1.5% while Shell advanced 1.1%.

Brent oil was quoted at USD97.62 a barrel at the London equities close Tuesday, up from USD96.22 late Monday, after the supply of Russian oil to three European countries through Ukraine was halted.

Russian firm Transneft said the Ukrainian side stopped the oil transport "due to not receiving funds for these services".

"On August 4, the delivery of Russian oil via the territory of Ukraine was halted," the oil pipeline operator said in a statement, adding that this had affected deliveries to Hungary, Slovakia and the Czech Republic.

However, deliveries to Poland and Germany via Belarus were continuing "as usual", Transneft added.

Higher oil prices helped London's FTSE 100 outperform while stocks elsewhere struggled. Wall Street posted losses as anticipation grows ahead of Wednesday's US inflation reading.

Stocks in New York were largely lower at the London equities close, with the DJIA flat, the S&P 500 index down 0.3%, and the tech-heavy Nasdaq Composite down 1.0%.

"For traders, there is an innate risk associated with the widespread expectation that inflation will remain at 9.1%, for any upside surprise could easily spark fears of another sharp increase in rates thanks to Friday's bumper jobs report. With earnings season drawing to an end (89% reported), there is a distinct possibility that we will see the focus shift back to the worrisome economic and monetary policy outlook that lies ahead," said Joshua Mahony, senior market analyst at online trading platform IG.

In London, the focus was on earnings, with abrdn's interim report ill-received. Shares in the asset manager closed down 6.8%.

The FTSE 100 constituent reported a swing to an interim loss and lowered its outlook, saying it feels the current market volatility will see it take longer to hit its revenue growth and cost-to-income ratio targets.

abrdn's Investment unit ended the first half ended June 30 with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows. The Edinburgh-based company booked a GBP320 million loss in the six months to June 30 versus a GBP113 million profit achieved a year prior.

abrdn also scaled back its outlook. "Current market uncertainty means our ambitions for revenue growth and improved cost/income ratio are likely to take longer than originally expected," it said.

At the bottom of the FTSE 250 was IWG, as its interim results also disappointed. The office space provider fell 11% as it said it will keep dividend payments on ice due to a continued uncertain environment, despite posting a strong first half performance.

For the six months ended June 30, IWG reported a pretax loss of GBP70.2 million, narrowed from GBP163.3 million the same period a year before, on revenue which grew 25% year-on-year to GBP1.28 billion from GBP1.04 billion.

Despite the encouraging performance, the group said it would keep dividend payments on hold, due to the current macroeconomic climate and geopolitical tensions. However, IWG said it plans to return to its progressive dividend policy "at the earliest possible opportunity".

Towards the top of the mid-caps was PageGroup, rising 4.2% after Monday's 7.2% slide in the wake of its interims.

Just Group rose 2.9% as it reiterated its confidence in meeting its growth targets as it eyes larger DB de-risking deals.

In the six months to June 30, its pretax loss widened significantly to GBP296 million from a GBP87 million loss the year prior. Gross premiums written slipped to GBP880 million from GBP909 million. Net premium revenue fell to GBP868 million from GBP898 million.

"This is a strong set of results which continues to demonstrate our ability to generate profitable growth within a sustainable capital model," Chief Executive David Richardson said.

Back in the FTSE 100, IHG fell 1.0% despite saying trading continued to be strong in the first half of 2022, with increased demand for travel driving profit to more than double for the period.

For the six months ended June 30, the FTSE 100-listed Holiday Inn- and Crowne Plaza-owner posted a pretax profit of USD299 million, more than tripled from USD67 million the same period a year before, on revenue which grew 52% year-on-year to USD1.79 billion from USD1.18 billion.

Comparable RevPAR grew 51% for the first half of 2022, compared to a year prior. Compared to pre-pandemic levels of 2019, however, RevPAR still was down 11%.

Elsewhere, RPS shares soared 74% after agreeing to be bought out by Toronto-listed consultancy firm WSP Global in a deal worth just over GBP590 million.

WSP will buy RPS for 206 pence per share, in cash. The deal values the professional services firm at GBP591.1 million. The RPS board backed the deal.

WSP provides engineering consulting services in the energy, maritime, infrastructure and rail and transport spaces. RPS works in fields including health and safety, exploration and development, planning and approvals and communications.

The dollar was broadly higher amid the risk-off mood. The pound was quoted at USD1.2086 at the London equities close Tuesday, down compared to USD1.2114 at the close on Monday. Against the yen, the dollar was trading at JPY134.96, up compared to JPY134.61 late Monday.

However, the euro stood at USD1.0223 at the European equities close Tuesday, firm against USD1.0217 at the same time on Monday.

Gold was another beneficiary of the risk-off tone. The precious metal was quoted at USD1,793.82 an ounce at the London equities close Tuesday, up against USD1,789.50 at the close on Monday.

The economic calendar on Wednesday has inflation readings from China, Germany at the US at 0230 BST, 0700 BST and 1330 BST respectively. Outside of this are Japanese producer prices overnight.

Wednesday's UK company calendar has half-year results from insurer and asset manager Prudential, insurer Aviva, interdealer broker TP ICAP and food delivery platform Deliveroo. Anglo-German tour operator TUI reports third-quarter results.

By Lucy Heming; lucyheming@alliancenews.com