LONDON MARKET MIDDAY: FTSE 100 outperforms in muted European session

(Alliance News) - Blue-chip equities in Europe traded mostly lower on Wednesday, though London bucked the trend, helped by share price gains for its big oil stocks and financial services firms, while New York stock market futures were higher after a rough session on Tuesday.

The pound's initial boost following a UK inflation report eased somewhat, also helping London's FTSE 100 index, which is stacked with international earners.

The FTSE 100 was up 5.82 points, or 0.1%, at 7,039.88. The mid-cap FTSE 250 index was down 84.55 points, 0.4%, at 23,602.71. The AIM All-Share index was down 0.72 of a point, 0.1%, at 1,277.23.

The Cboe UK 100 index was up 0.1% at 700.72. The Cboe 250 was down 0.5% at 21,352.10, and the Cboe Small Companies was down marginally at 15,478.88.

In mainland Europe, the CAC 40 stock index in Paris was 0.4% lower, and the DAX 30 in Frankfurt was down 0.1%.

The pound was quoted at USD1.3826 midday Wednesday in London, down from USD1.3845 late Tuesday. It was trading at USD1.3812 shortly before the inflation data was released, however, and reached an intraday high of USD1.3842.

Among London stocks, "surging UK inflation figures and more volatility in Asian shares didn't upset the apple cart too much," AJ Bell analyst Russ Mould commented.

The UK's annual inflation rate raced to 3.2% in August from 2.0% in July, the 1.2 percentage point surge was the largest since records began, the Office for National Statistics said.

Meanwhile, growth in China's retail sales slowed to a 12-month low in August, as parts of the country were hit by lockdowns and other measures to fight the worst Covid outbreak since its initial spread in 2020.

Retail sales grew 2.5% last month, well short of the 7% forecast and sharply down from the 8.5% witnessed in July.

"Weakness among airlines and Burberry, whose fortunes are closely tied to China, reflected a shift in investors' concerns from the risks of the economy overheating to the recovery being knocked off course," AJ Bell's Mould added.

Luxury retailer Burberry was down 2.3%, peer Moncler dropped 3.9% in Milan, while over in Zurich, Richemont was 2.4% lower. The weak economic data from China also hit the travel sector, with IAG, the parent of UK flag carrier British Airways, down 2.4% and Wizz Air falling 1.7%.

On the China data, analysts at ING commented: "Covid has led to unexpectedly weak retail sales growth, while chip shortages continue to put pressure on automobile investment, production and sales. Government policies are adding even more stress to the economy. We expect a cut in the reserve requirement ratio in October."

Brent oil was quoted at USD74.52 a barrel midday Wednesday, up from USD73.74 a barrel at the London equities close on Tuesday. The North Sea benchmark is at roughly its best price since early-August.

OANDA analyst Jeffrey Halley commented: "Tropical Storm Nicholas has disrupted oil production and refining recovery in the Gulf of Mexico, coming after the devastation of Hurricane Ida. In the bigger picture, natural gas prices are rocketing in the Northern Hemisphere ahead of winter, especially in Europe and Asia."

In London, BP shares were up 2.1%, while Royal Dutch Shell's A stock climbed 1.1% and its B stock was up 1.2%.

Also lifted by the rising Brent price, Tullow Oil topped the mid-cap index, rising 3.2%. In addition, the oil and gas exploration firm on Wednesday reported a swing to a pretax profit of USD213 million in the six months to June 30 from a loss of USD1.44 billion a year earlier.

Revenue slipped 0.6% year-on-year to USD726.8 million from USD731.0 million.

Working interest production volumes fell to 61,230 barrels of oil equivalent per day, from 77,700 boepd.

Looking ahead, Tullow expects annual output of between 58,000 and 61,000 boepd. It had previously guided for annual output of 55,000 to 61,000 bopd.

Meanwhile, Chief Financial Officer Les Wood has "mutually agreed with the board that he will step down," the company said. He will leave at the end of March 2022.

Back among the blue-chips, banking stocks enjoyed a decent session, with Lloyds rising 1.7%, NatWest up 1.6% and Barclays up 0.6%.

Just Eat Takeaway.com fell 3.7% the worst-performing blue-chip stock. Fellow takeaway delivery firm Deliveroo rose 1.1%.

Deliveroo will offer all users of Amazon Prime free delivery on orders over GBP25, deepening its relationship with the e-commerce firm. Amazon back in May 2019 was named as the largest investor in a USD575 million fundraise by Deliveroo.

The euro stood at USD1.1828 midday Wednesday, slightly up from USD1.1821 at the European equities close on Tuesday. Against the yen, the greenback was trading at JPY109.27, down from JPY109.65.

Gold was lower despite the greenback's weakness. The precious metal quoted at USD1,801.90 an ounce midday Wednesday, down from USD1,807.10 late Tuesday.

New York stock market futures were higher. The Dow Jones Industrial Average and the S&P 500 are called up 0.2% and the Nasdaq Composite 0.3% higher.

Apple's stock was up 0.4% in pre-market trade, after declining 1.0% on Tuesday. The tech company unveiled the iPhone 13 range which will come with bigger batteries and better cameras, as Chief Executive Tim Cook hailed them as the "best iPhones we have ever created".

After a major redesign of the popular smartphone last year, Apple has instead made a series of incremental changes across the four versions of the handset, most notably improving battery life by at least 1.5 hours on each of the devices.

While Apple has racked up massive profit driven by the demand for its devices during lockdown restrictions, it faces legal battles, new laws and the scrutiny of regulators around the world that has added up to a series of challenges against the company.

AJ Bell's Mould commented: "Apple's shares didn't do much at all in response to boss Tim Cook's launch of iPhone 13 and updated versions of its Watch and iPad, but this seems to be a normal trading pattern for product releases from the tech giant and as much the result of the old formula of 'buy on the rumour and sell on the fact' as anything else.

"In the six months before prior next-generation product announcements Apple’s shares have risen by an average of nearly 23% but in the three-month and six-month periods afterwards they have advanced by an average of just 3.3% and 9.3% respectively."

Still to come on Wednesday are US import and export prices at 1330 BST and US industrial production at 1415 BST.

By Eric Cunha; ericcunha@alliancenews.com

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