LONDON MARKET CLOSE: Stocks rise as House Speaker Pelosi leaves Taiwan

(Alliance News) - Stocks in London ended higher on Wednesday as investor concerns over US-China tensions eased following House Speaker Nancy Pelosi's concluded trip to Taiwan.

Taipei struck a defiant tone Wednesday as it hosted Pelosi, with a furious China gearing up for military exercises dangerously close to the island's shores in retaliation for the visit.

Pelosi landed in Taiwan on Tuesday despite a series of increasingly stark threats from Beijing, which views the island as its territory and had said it would consider the visit a major provocation.

China responded swiftly, announcing what it said were "necessary and just" military drills in the seas just off Taiwan's coast - some of the world's busiest waterways.

"In the current struggle surrounding Pelosi's Taiwan visit, the US are the provocateurs, China is the victim," Beijing's foreign ministry said.

But Taiwanese President Tsai Ing-wen said the island of 23 million would not be cowed.

"Facing deliberately heightened military threats, Taiwan will not back down. We will... continue to hold the line of defence for democracy," Tsai said at an event with Pelosi in Taipei.

She also thanked the 82-year-old US lawmaker for "taking concrete actions to show your staunch support for Taiwan at this critical moment".

China tries to keep Taiwan isolated on the world stage and opposes countries having official exchanges with Taipei.

Pelosi, second in line to the presidency, is the highest-profile elected US official to visit Taiwan in 25 years.

Further, the US house speaker pledged Washington's support for Taiwan during a visit to the island that has drawn Beijing's ire.

"Today, our delegation...came to Taiwan to make unequivocally clear: we will not abandon our commitment to Taiwan, and we're proud of our enduring friendship," Pelosi said.

The FTSE 100 closed up 36.57 points, or 0.5%, at 7,445.68. The FTSE 250 index ended up 144.77 points, or 0.7%, at 20,018.84. The AIM All-Share index finished up 10.97 points, or 1.2%, at 920.31.

The Cboe UK 100 index closed up 0.3% at 742.82. The Cboe 250 closed up 0.6% at 17,426.24. The Cboe Small Companies closed up 0.5% at 13,954.24.

In Paris, the CAC 40 stock index closed up 1.0%, while in Frankfurt, the DAX 40 finished 1.0% higher.

"European markets have had a more buoyant tone with the news that US House Speaker Nancy Pelosi has left Taiwan, for South Korea, leaving the heightened tensions of the last few days behind her, and the risk of a confrontation much diminished," said CMC Markets analyst Michael Hewson.

"With those geopolitical concerns potentially behind us in the short term, attention has returned to earnings numbers both current and upcoming, although the FTSE 100 is underperforming its European peers. It’s still notable that UK index is being led higher by resilience in tech and housebuilders," Hewson added.

In the FTSE 100, Avast was the standout performer, up 44%, after the UK Competition & Markets Authority said it has provisionally cleared NortonLifeLock's acquisition of the cybersecurity firm, following an in-depth probe of the deal.

FTSE 250-listed cybersecurity provider Darktrace gained 4.5% in a positive read-across.

The deal, announced back in August 2021, valued Avast at up to USD8.6 billion at the time. Avast currently has a market capitalisation of GBP7.06 billion, about USD8.61 billion.

Shares in Tempe, Arizona-based NortonLifeLock were up 6.7% in New York.

Taylor Wimpey was up 5.0% after the housebuilder reported a rise in interim profit as it trimmed expenses. It also hailed the resilience of the UK housing market.

Revenue in the half-year that ended July 3 came in slightly lower, however, at GBP2.08 billion, down 5.4% from GBP2.20 billion a year earlier.

Pretax profit rose 16% year-on-year to GBP334.5 million from GBP412.5 million. Net operating expenses were 15% lower at GBP189.9 million.

"The housing market continues to be resilient despite inflationary pressures in the wider economy and recent rises in the Bank of England base rate," it said.

The Bank of England meets again on Thursday, with Threadneedle Street widely expected to jack up rates by 50 basis points to counter soaring inflation.

Rolls-Royce closed up 3.4%. The jet engine maker got the seal of approval from the Spanish government for the EUR1.7 billion sale of its ITP Aero subsidiary to a consortium of investors led by Bain Capital Private Equity.

At the other end of the large-caps, precious metals miner Fresnillo was the worst performer, down 4.9%, tracking spot gold prices lower.

Gold stood at USD1,757.20 an ounce at the London equities close, lower against USD1,778.85 late Tuesday.

Centrica ended down 4.1% after Citigroup downgraded the British Gas parent to 'neutral' from 'buy'.

The pound was quoted at USD1.2110 at the London equities close, down sharply from USD1.2210 at the close Tuesday.

Sterling took a knock after data showed the UK services sector expanded at the slowest pace in 17 months, amid meek new business despite firms stepping up hiring.

The latest S&P Global/CIPS UK services PMI faded to 52.6 points in July, from 54.3 in June. The tracker has registered above the 50.0 no change mark for 17 months in-a-row, though the latest PMI figure was the weakest since February 2021.

The composite PMI similarly weakened, declining to 52.1 points in July from 53.7 in June. It was the slowest rate of expansion since February 2021.

The euro stood at USD1.0125 at the European equities close, down from USD1.0195 late Tuesday, following disappointing economic data from the continent.

The eurozone's private sector started the third quarter in the doldrums, dragged down by the manufacturing sector and stoking fears of recession.

July's S&P Global composite purchasing managers' index dropped to a 17-month low of 49.9 points in July from 52.0 in June. New business slumped.

Save for declines seen during Covid-19 lockdowns, new business intake fell at the fastest pace since 2013. The eurozone services PMI faded to 51.2 points in July from 53.0 in June. July's figure was six-month low.

Against the yen, the dollar was trading at JPY134.30, up sharply from JPY131.80 late Tuesday.

Stocks in New York were higher at the London equities close on a busy day of company news. The DJIA was up 0.6%, the S&P 500 index up 0.8% and the Nasdaq Composite up 1.5%.

On Wall Street, PayPal was up 11% after the payments processor, late Tuesday, said activist investor Elliott Management has taken a stake in the company, as it delivered upbeat guidance.

Brent oil was quoted at USD98.50 a barrel at the equities close, down from USD99.99 at the close Tuesday.

The OPEC+ oil cartel agreed to a tiny increase in production Wednesday, an amount analysts say will disappoint US President Joe Biden after he personally lobbied Saudi leaders for help to tame soaring energy prices.

The cartel led by Saudi Arabia and Russia decided to raise production by 100,000 barrels per day for September, much lower than previous increases, according to a statement issued after a ministerial videoconference.

The economic events calendar on Thursday has construction PMI readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. The Bank of England interest rate decision is at midday.

The UK corporate calendar on Thursday has interim results from commodities house Glencore, paper and packaging company Mondi and business publisher Informa. Clothing retailer Next puts out a trading statement.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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