LONDON MARKET OPEN: Stocks down on new Nord Stream leaks; Next falls

(Alliance News) - Stock prices in Europe opened lower on Thursday, as news of another leak in the Nord Stream pipeline quickly soured sentiment.

The news came too late for some, but not all, of Asian markets to avoid a sell-off. Equity market futures were pointing to a higher European open during Asian trade, before tumbling when news of the leak emerged.

"There are two leaks on the Swedish side and two leaks on the Danish side," a Swedish Coast Guard official said, after three leaks were confirmed earlier this week on the Nord Stream pipelines in the Baltic Sea.

Suspicions of sabotage emerged after the leaks were detected. Moscow denied it was behind the explosions, as did the US, saying Moscow's suggestion it would damage the pipeline was "ridiculous".

The FTSE 100 index was down 141.06 points, or 2.0%, at 6,864.33 early Thursday. The mid-cap FTSE 250 index was down 326.46 points, or 1.9%, at 16,994.51. The AIM All-Share index was down 5.03 points, or 0.3%, at 808.95.

The Cboe UK 100 index was down 1.9% at 685.87. The Cboe 250 also was down 2.0%, at 14,528.77, and the Cboe Small Companies was down 0.2% at 12,674.97.

The CAC 40 stock index in Paris slumped 1.0% early Wednesday, while the DAX 40 in Frankfurt was down 0.9%.

The Nikkei 225 in Tokyo closed up 1.0%, while the S&P/ASX 200 in Sydney surged 1.4%.

However, in China, the Shanghai Composite closed 0.1% lower, having been up 1.0% in earlier dealings. The Hang Seng in Hong Kong was down 0.9% shortly before the close of play, having earlier traded up 1.9%.

Investor mood had been boosted on Wednesday after the Bank of England announced a move to intervene to calm wild UK gilt markets.

The UK central bank on Wednesday said it will buy up long-dated government bonds to "restore orderly market conditions".

"The surprise intervention from the BoE gave an energy boost to the markets yesterday, proving once again how the markets are addicted to the central bank money, and how they are depressed without it," Swissquote analyst Ipek Ozkardeskaya commented.

"Yesterday's price action was a sugar rush, triggered by the BoE intervention. Enthusiasm will likely fall as the level of blood sugar falls across the financial markets."

The pound was up on Thursday morning, but remained below the USD1.08 mark. Sterling fetched USD1.0787 early Thursday, firm from USD1.0763 at the London equities close on Wednesday. It had fallen to USD1.0540 on Wednesday, shortly after the BoE announced it would buy long-dated gilts.

The euro rose to USD0.9656 early Thursday from USD0.9645 on Wednesday. Against the yen, the dollar rose to JPY144.74 from JPY144.41.

In London, Next shares slid 9.8%, among the worst large-cap performers.

The clothing and homewares retailer knocked annual guidance as it believes tough trading in August and cost-of-living pressures will offset any boost from recent UK government stimulus measures.

Full price sales advanced 12% year-on-year in the first half ended July 30, though the company now expects a decline for the second half. Full price sales are to shrink by 1.5% year-on-year.

It had previously guided for 1% growth. Next also lowered bottom-line guidance. It now expects annual pretax profit of GBP840 million, down from the previous GBP860 million guidance, but up 2.1% on last year.

Half-year revenue climbed 12% to GBP2.38 billion from GBP2.12 billion a year earlier. Pretax profit advanced 16% year-on-year to GBP400.6 million from GBP346.7 million.

Synthomer also lowered guidance. The Essex-based chemicals maker was the worst FTSE 250 performer, with the stock down 28%.

It now expects its 2022 earnings before interest, tax, depreciation and amortisation to be 10% to 15% below previous expectations.

"Since August, macroeconomic conditions have deteriorated, leading to reduced demand in construction and coatings end markets. This has impacted trading in Synthomer's European business," the company warned.

Another stock to slide was All Bar One-owner Mitchells & Butlers. Its shares were down 3.9%.

The pub chain welcomed UK energy price cap measures but warned it expects its total energy and utility costs to have risen to GBP150 million for the full year, up from the pre-pandemic comparative of GBP80 million.

"Even with the cap in place, [we] anticipate a further increase on that for FY 2023," it warned.

Fourth-quarter sales topped pre-virus levels, however, despite the pub and bar owner facing extreme hot weather in the UK and rail strikes. In the quarter ended September 24, total sales rose 1.5% from three years earlier, before the onset of the pandemic.

Elsewhere in London, Avon Protection rose 4.3%. The personal protection company has received a first delivery order from the US Army for a "next generation" helmet. The order is worth USD42.1 million.

AIM-listed HSS Hire added 3.9%. The tool and equipment rental firm reinstated its interim dividend with a 0.17 pence per share payout.

In the half-year ended July 2, revenue rose 9.3% annually to GBP159.9 million from GBP146.3 million. HSS Hire's pretax profit, however, declined to GBP6.5 million from GBP6.8 million.

Attraqt was the standout performer on London's junior market, however, surging 66% to 29.00 pence, giving it a market capitalisation of GBP58.5 million.

Attraqt backed a GBP63.2 million takeover offer. Technology company Crownpeak will pay 30p cash per share in the London-based provider of online search, merchandising and personalisation solutions for e-commerce.

Gold traded at USD1,643.24 an ounce, down from USD1,653.20. Brent oil fell to USD87.70 a barrel from USD88.17.

In the international economic events calendar on Thursday, there is a eurozone consumer confidence reading at 1000 BST, followed by a German inflation at 1300 BST and US gross domestic product and core personal consumption expenditures at 1330 BST.

By Eric Cunha; ericcunha@alliancenews.com

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