LONDON MARKET OPEN: Currys outperforms; Wood Group plummets

(Alliance News) - Stock prices in London opened higher on Monday, as a strong performance from mining stocks helped to bolster a cautious optimism, despite concerns over the potential of a US debt default.

The FTSE 100 index opened up 21.07 points, 0.3%, at 7,775.69. The FTSE 250 was up 19.44 points, 0.1%, at 19,207.81, and the AIM All-Share was down 0.55 of a point at 816.41.

The Cboe UK 100 was up 0.3% at 777.50, the Cboe UK 250 was down 0.1% at 16,776.73, and the Cboe Small Companies was up 0.1% at 13,626.46.

In European equities, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.2%.

Sterling was quoted at USD1.2486 early Monday, up from USD1.2465 at the London equities close on Friday. The euro traded at USD1.0875, higher than USD1.0857. Against the yen, the dollar was quoted at JP135.91, up versus JPY135.39.

A weaker yen helped attract investors to Japan's equities, with the Nikkei 225 index in Tokyo closing 0.8%. The S&P/ASX 200 in Sydney closed up 0.1%.

Meanwhile in China, trading was positive as the People's Bank of China extended long-term liquidity in May, in a bid to boost growth. However, it left its medium-term lending facility rate unchanged. The Shanghai Composite closed up 1.2%, while the Hang Seng index in Hong Kong was up 1.5%.

London's large-cap miners were performing well with Anglo American up 1.2%, and Endeavour Mining rising 1.8%.

However, Shell and BP fell 0.8% and 0.4% respectively, as oil prices fell to USD73.97 for a barrel of Brent, from USD74.87 late Friday. The ongoing weakness suggests investors are feeling concerned about the pace of the global economic recovery, following Friday's weak consumer confidence print in the US, and recent lacklustre data from China.

This week, there will be data on China's retail sales, industrial output and house prices for investors to scrutinise.

Gold was quoted at USD2,018.83 an ounce early Monday, higher than USD2,010.46 on Friday.

Meanwhile, Flutter Entertainment rose 1.4%, as Citigroup raised the stock to 'buy', and Goldman Sachs raised its price target.

British American Tobacco traded flat as it announced new leadership.

BAT's Finance Director Tadeu Marroco will take over as its new chief executive, replacing Jack Bowles who is stepping down with immediate effect. Marroco has been with the firm since 1992.

In the midcaps, Currys was the top performer, adding 6.6%.

The electronics retailer raised annual profit guidance for its financial year that ended April 29. It now expects adjusted pretax profit to be between GBP110 million and GBP120 million, compared to previous guidance of around GBP104 million. It also expects net debt at year-end to be around GBP100 million, compared to the previous guidance of between GBP100 million and GBP150 million.

Over the recent year, Currys said, like-for-like group sales were 7% down on the previous year in both the UK & Ireland and in the International division, where Nordics were particularly weak.

"Constantly moving goalposts are never usually a good sign but investors gave some early cheer to the better-than-expected display in the UK & Ireland," said Hargreaves Lansdown's Aarin Chiekrie.

At the other end of the FTSE 250 was John Wood Group, plunging 38%.

Apollo Management Holdings confirmed it does not intend to make a takeover offer for the company. In April, the energy sector-focused engineering and consulting business said it would engage with Apollo to see if a firm takeover offer could be made on the same terms as its previous proposal. In early April, Apollo had proposed a potential offer of 240 pence per share in cash - a 59% premium to Wood's share price at the time.

On Friday, fellow London-listed firm THG announced potential takeover discussions with Apollo had collapsed.

Diploma added 2.0%, as it raised its annual guidance, after a strong half-year.

In the six months that ended March 31, the specialised technical products and services company said revenue jumped 30% year-on-year to GBP582.8 million from GBP448.5 million, lifting pretax profit by 50% to GBP78.7 million from GBP52.3 million.

Diploma now expects annual organic revenue growth of around 7% for the full year, with another 7% to come from acquisitions, net of disposals. It expects operating margin to be 19% - the top end of its previously guided range.

On AIM, IOG jumped 20%.

The UK-focused offshore gas developer said the Blythe H2 well control event encountered from the Hauptdolomit was successfully isolated, without any need to sidetrack the well. The H1 will be shut in once the H2 well is fully on stream, but will remain available for production, IOG said.

"I am pleased to say that the 6" hole section has so far been drilled efficiently and it is encouraging that the top reservoir has been encountered within expectations," said CEO Rupert Newall.

In the US on Friday, Wall Street ended mostly lower, with the Dow Jones Industrial Average flat, the S&P 500 down 0.2% and the Nasdaq Composite down 0.4%.

Last week's concerns about progress in US debt ceiling negotiations continue, with postponed discussions set to resume on Tuesday

On Sunday, President Joe Biden said he remains "optimistic" about finding an agreement with his Republican opponents to raise the US debt limit and avoid a default, which his administration warned would cause "catastrophic" consequences.

Congressional Republicans are demanding budget cuts in exchange for lifting the US borrowing limit, while the White House has insisted for months that the nation's credit should not be up for negotiation.

Alarm bells are meanwhile ringing over the possibility of a first-ever US default, with uncertainty over the actual date the government would stop being able to pay its bills.

In the economic calendar on Monday, there's the European Commission spring economic forecast. EU industrial production data are at 1000 BST.

By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.