LONDON MARKET OPEN: Rentokil, Rightmove, Mondi weigh on FTSE 100

(Alliance News) - Stock prices in London opened lower on Thursday, amid some disappointing updates from large-cap companies, which added to a gloomy market sentiment amid rising US Treasury yields and growing consternation in the Middle East.

The FTSE 100 index opened down 83.64 points, 1.1%, at 7,504.36. The FTSE 250 was down 129.61 points, 0.7%, at 17,273.85, and the AIM All-Share was up 0.81 of a point, 0.1%, at 685.61.

The Cboe UK 100 was down 1.1% at 749.06, the Cboe UK 250 was down 0.6% at 14,970.27, and the Cboe Small Companies was down 0.1% at 12,980.29.

In European equities on Thursday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 0.2%.

"Investors seem unsure as to which way to turn at the moment, with rising tensions in the Middle East driving some investors towards haven assets as risk aversion increasingly takes hold. At the same time, the dawning realisation that interest rates in the US are likely to remain higher for longer has taken some of the wind from the sails of what had been a high-flying equity market," said interactive investor's Richard Hunter.

In the FTSE 100, Rightmove shares tumbled 12%.

This followed news that New York-listed property group CoStar had struck a deal to acquire Rightmove's AIM-listed property portal rival, OnTheMarket.

The offer is for 110 pence for each OTM share, valuing the firm at around GBP99 million. The price is a premium of 56% to OTM's closing price of 70.50p on Wednesday. Shares in OTM jumped 55% to 108.98p in early dealings on Thursday.

For CoStar, the deal is an "attractive strategic entry point" to enter the UK residential property market, the release said.

It was also a tough morning for Rentokil Initial, with its shares dropping 15%.

The pest control and hygiene firm warned that tricky market conditions in North America mean its full-year outturn in the region will be worse than expected.

Revenue in the third-quarter surged 53% on-year to GBP1.38 billion from GBP901 million. At constant currency, revenue was 60% higher. Its top-line got a boost from acquisitions, including Terminix, a USD6.7 billion deal it sealed around this time last year.

The group said it expects to achieve "good growth" in the group over the remainder of the year, and said it is on track to meet full-year guidance.

Shares in Mondi dropped 5.4%.

The packaging company updated on its third quarter, which saw continued challenging market conditions. It said demand remained soft, but the lower average selling prices were "largely" mitigated by lower input costs and tight fixed cost control.

A "much-reduced" forestry fair value gain of EUR14 million led to lower underlying earnings before interest, tax, depreciation and amortisation of EUR261 million, when compared to the second quarter, which saw a fair value gain of EUR72 million and underlying Ebitda of EUR329 million.

Hargreaves Lansdown also struggled, losing 4.9%.

The retail investment platform said it saw net new business of GBP600 million in its first quarter ended September 30, slowing annually from GBP700 million, reflecting "moderated flows" seen across the market. Net new clients grew by 8,000 over the quarter, bringing its total to 1.8 million active clients, at a 91.7% retention rate. However, this was markedly slower than the 13,000 net new clients won over the prior quarter.

Revenue grew 13% year-on-year to GBP183.8 million from GBP162.9 million, as growth in net interest margin offset the revenue impact of lower share dealing volumes.

In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.0%, the S&P 500 down 1.3%, and the Nasdaq Composite down 1.6%.

Equities came under pressure as bond yields climbed once more. The combination of resilient US economic figures and the events in the Middle East helped to push US Treasury yields to levels not seen since 2007.

These factors somewhat overshadowed a fairly robust US earnings season so far.

"The current earnings season has started strongly, with the vast majority of companies having reported so far beating expectations," ii's Hunter noted.

Shares in Tesla fell 4.2% in after-hours trade, as the electric car marker said its profit was squeezed by a lower margin.

The Elon Musk-headed firm said revenue in quarter ended September rose by 9% to USD23.35 billion from USD21.45 billion the year before, with automotive revenue up 5% to USD19.63 billion from USD18.69 billion. The figure was below the FactSet consensus of USD24.16 billion, however.

GAAP net income fell 44% to USD1.85 billion from USD3.29 billion reflecting the reduced average selling price, due to pricing and mix, an increase in operating expenses driven by Cybertruck, artificial intelligence and other R&D projects, the cost of production ramp and a negative FX impact.

Sterling was quoted at USD1.2140 early Thursday, lower than USD1.2151 at the London equities close on Friday. The euro traded at USD1.0544, up from USD1.0533. Against the yen, the dollar was quoted at JPY149.78, down a touch versus JPY149.86.

Gold was quoted at USD1,949.01 an ounce early Thursday, higher than USD1,941.78 on Friday.

Brent oil was trading at USD91.07 a barrel, little changed from USD91.10.

In Asia on Thursday, the Nikkei 225 index in Tokyo closed down 1.9%. In China, the Shanghai Composite closed down 1.7%, while the Hang Seng index in Hong Kong was down 2.2% in late dealings. The S&P/ASX 200 in Sydney closed down 1.4%.

All the while, tensions continued to run high on the geopolitical front, with a wider conflict in the Middle East region seeming increasingly possible after the Gaza hospital strike.

US President Joe Biden on Wednesday delivered full US backing for Israel in person, on a solidarity visit in which he blamed Islamist militants for the deadly rocket strike on a Gaza hospital and announced the resumption of urgent aid to the besieged Palestinian enclave. Biden will deliver a primetime speech about the conflicts in Israel and Ukraine on Thursday evening in the US.

UK Prime Minister Rishi Sunak said Thursday that Israel has suffered an "unspeakable horrific act of terrorism" as he became the latest western leader to carry out a solidarity visit. His Foreign Secretary James Cleverly is due to visit Egypt, Turkey and Qatar "in the coming days", according to Downing Street.

Meanwhile, Chinese President Xi Jinping told Egypt's prime minister that Beijing hoped to work with his country to bring "more stability" to the Middle East, Chinese state media reported.

Iranian President Ebrahim Raisi called on the Islamic world to break off relations with Israel, in view of the war in the Middle East. Islamic states should expel Israeli ambassadors and close their missions, Raisi demanded during a speech in Tehran.

Iran has also warned of a possible pre-emptive strike and called for an oil embargo.

Thursday's economic calendar has the latest US jobless claims data at 1330 BST, and remarks from various Federal Reserve officials, including the central bank's chair, Jerome Powell.

By Elizabeth Winter, Alliance News senior markets reporter

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