LONDON MARKET CLOSE: Stocks waver as Pelosi touches down in Taiwan

(Alliance News) - Stocks in London ended lower on Tuesday as tensions between the US and China flared following US House Speaker Nancy Pelosi's arrival in Taiwan.

Pelosi said Tuesday upon arrival that her controversial visit demonstrated Washington's strong commitment to the self-ruled island, which China views as part of its territory.

"Our congressional delegation's visit to Taiwan honours America's unwavering commitment to supporting Taiwan's vibrant democracy," the most senior US legislator said in a statement moments after her plane landed.

Pelosi, the highest-ranked elected US official to visit Taiwan in 25 years, said her trip "in no way" contradicted official US policy, which recognises "one China" and has not officially recognized Taiwan as an independent state.

China vowed Tuesday to launch "targeted military actions" in response. Beijing considers self-ruled, democratic Taiwan its territory and has vowed to one day seize the island, by force if necessary. It tries to keep Taiwan isolated from the world stage and opposes countries having official exchanges with it.

"The Chinese People's Liberation Army is on high alert and will launch a series of targeted military operations to counter this, resolutely defend national sovereignty and territorial integrity, and resolutely thwart external interference and 'Taiwan independence' separatist attempts," defence ministry spokesman Wu Qian said in a statement condemning the visit.

The FTSE 100 index closed down 4.31 points, or 0.1%, at 7,409.11. The FTSE 250 ended down 205.16 points, or 1.0%, at 19,874.07. The AIM All-Share closed down 9.29 points, or 1.0%, at 909.34.

The Cboe UK 100 index closed down 0.1% at 740.58. The Cboe 250 shed 1.1% at 17,328.83. The Cboe Small Companies lost 0.3% at 13,886.63.

In mainland Europe, the CAC 40 stock index in Paris closed down 0.4%, while the DAX 40 in Frankfurt ended 0.2% lower.

"European markets have slipped back as the rising uncertainty created by US House Speaker Nancy Pelosi's trip to Taiwan, has served to keep markets on edge," said CMC Markets analyst Michael Hewson.

"The increase in noise over this trip by China has upped the ante and raised the prospect of a serious miscalculation which neither side really wants. This appears to be a classic case of sabre rattling, with neither side wanting to be seen to back down," Hewson added.

In the FTSE 100, BP closed up 2.9% after the oil major said it continued to "perform while transforming" as second quarter profit jumped on stronger refining margins, though a hit from exiting Russia ensured a weaker first-half bottom line.

Alongside the results, the energy major declared a USD3.5 billion share buyback and 10% dividend hike, as net debt dropped to USD22.82 billion at the end of June from USD32.71 billion a year before.

By its preferred metric, BP's replacement cost more than trebled to USD7.65 billion in the second quarter of 2022, from USD2.38 billion a year earlier. On an underlying basis, RC profit was USD8.45 billion, up from USD2.80 billion.

Pretax profit surged to USD14.06 billion from USD5.14 billion. Total second-quarter revenue improved 85% to USD69.51 billion from USD37.60 billion. BP swung to a first half loss, however. It posted a replacement cost loss of USD15.40 billion, swinging from a profit of USD5.71 billion a year earlier. Profit was wiped out by a first quarter USD24.4 billion post-tax charge related to BP's exit from its near 20% stake in Russian business Rosneft, following the invasion of Ukraine.

BP lifted its quarterly dividend by 10% to 6.006 cents per share from 5.460 cents a year prior. The first-half payout is up 7.1% to 11.466 cents. It said it expects to be able to increase the dividend by 4% annually through 2025.

Rival Shell rose 1.4% in a positive read-across.

At the other end of the large-caps, housebuilders ended the worst performers following the release of industry data that missed forecasts. Taylor Wimpey closed down 6.2%, Barratt Developments down 5.6%, Berkeley down 5.0% and Persimmon down 4.2%.

Annual house price growth in the UK accelerated slightly in July on an annual basis, while on a monthly basis, the measure rose by the 12th month in succession, though at a slower pace than in June.

Mortgage lender Nationwide's latest tracker showed house prices surged 11% year-on-year in July, quickening slightly from a 10.7% hike in June. The monthly rise came in at a more modest 0.1% in July. House prices had risen 0.2% in June from May.

Growth fell short of FXStreet cited consensus, however. Annual growth had been forecast to quicken to 11.5% and monthly growth of 0.3% was expected.

"The housing market remains robust despite concerns about an economic slowdown and near 10% inflation," said Victoria Scholar, of interactive investor. "However, there are tentative signs that the housing market is starting to cool with July's figures falling short of expectations and declining month-on-month as rising price levels and a softening economy take their toll."

In the FTSE 250, Biffa ended the best performer, up 11%, after the the waste management firm reported record profit after an "eventful" year.

Adjusted operating profit surged to a record high of GBP96.6 million in the year to March 25, from GBP44.2 million the year prior.

Biffa's pretax loss narrowed to GBP28.6 million from GBP52.8 million. The statutory profit measures includes a GBP104 million hit from adjusting items, up from GBP82 million a year earlier.

One-off items this year included a GBP25 million impairment from its Company Shop buy and a GBP17 million provision for a probe related to UK landfill tax laws. Landfill tax is a levy imposed on a firm that disposes of materials in waste sites.

Biffa's revenue surged 39% to GBP1.44 billion from GBP1.04 billion.

It reinstated payouts during the year, declaring a final dividend of 4.69 pence. This takes Biffa's total dividend to 6.89p, a substantial increase from the last annual payout of 2.47p in financial 2020.

At the other end of the mid-caps, Synthomer was the worst performer, down 12%. The Essex-based chemicals maker said pretax profit in the first half of 2022 dropped 55% to GBP115.5 million from GBP254.4 million a year before.

Synthomer said demand for nitrile butadiene rubber weakened after it surged due to the pandemic. NBR is used in latex and surgical gloves.

The pound was quoted at USD1.2210 at the London equities close, down from USD1.2270 at the close Monday.

The euro stood at USD1.0195 at the European equities close, down from USD1.0270. Against the yen, the dollar was trading at JPY131.80, soft from JPY131.85.

Stocks in New York were mixed at the London equities close. The DJIA was down 0.5%, the S&P 500 index down 0.1%, but the Nasdaq Composite was up 0.4%.

On Wall Street, Caterpillar was weighing on the Dow, down 4.7%. The industrial machinery manufacturer posted better-than-expected earnings but pointed to supply chain problems and strong dollar as headwinds.

Uber Technologies surged 17% as it reported quarterly revenue more than doubled to USD8.1 billion amid strong demand for the company's ride-hailing and food delivery services.

Brent oil was quoted at USD99.99 a barrel at the equities close, down from USD100.70 at the close Monday.

Gold stood at USD1,778.85 an ounce at the London equities close, lower against USD1,766.01 late Monday amid dollar weakness.

The economic events calendar on Wednesday has services PMI readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. There are also eurozone retail sales and producer prices at 1000 BST.

The UK corporate calendar on Wednesday has interim results from Endeavour Mining, insurer Hiscox and housebuilder Taylor Wimpey.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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