(Alliance News) – London’s FTSE 100 opened in the red on Wednesday, underperforming its European peers, with the CAC 40 moving ahead despite uncertainty over the French government.
The FTSE 100 index lost 18.05 points, or 0.2%, to 8,341.36. The FTSE 250 gained 31.42 points, 0.2%, to 20,924.16, and the AIM All-Share rose 0.75 points, 0.1%, to 735.84.
The Cboe UK 100 lost 0.3% to 838.05, the Cboe UK 250 rose 0.2% to 18,423.95, and the Cboe Small Companies edged lower to 15,967.00.
The CAC 40 in Paris rose 0.4% in early trading. The DAX 40 in Frankfurt rose 0.6%.
The French government faces votes of no confidence on Wednesday that could spell the end of Prime Minister Michel Barnier’s short-lived administration, plunging the country into unprecedented political chaos.
The overthrow of the Barnier government after just three months in office would present President Emmanuel Macron with an unenviable dilemma: how to move forward and who to appoint in his place.
The National Assembly is due to debate two motions tabled by the hard left and the far right as part of a standoff with Mr Barnier over the budget, which saw the prime minister force through the budget of the social security without a vote.
The far-right National Rally (RN) of Marine Le Pen, a three-time presidential candidate, is expected to vote in favor of the motion presented by the left, which would give it enough weight to be adopted.
The greenback was mixed, but ING analysts believe geopolitics is just another reason to hold on to the dollar.
“The strength of the dollar is not entirely due to the second coming of Donald Trump. A lame-duck government in Germany and potentially in France too today if a vote of no confidence is successful, plus this Korean news, will only add to confidence that relatively high rates (one-week USD deposit rate at 4.6%) and liquidity make the dollar the most compelling currency in which to place cash balances at the moment,” ING added.
The pound was trading at $1.2693 early Wednesday, down from $1.2660 when London stock markets closed on Tuesday. The euro settled at USD 1.0510, down slightly from USD 1.0513. Against the yen, the dollar traded at 150.42 yen, up from 149.44 yen.
South Korean stocks fell. The Kospi index ended down more than 1%, after losing as much as 2.3% at the open, after President Yoon Suk Yeol declared martial law, before later reversing his decision .
In Asia, China’s Shanghai Composite Index fell 0.4% and Hong Kong’s Hang Seng Index edged lower. The Nikkei 225 gained 0.1% in Tokyo, while Sydney’s S&P/ASX 200 lost 0.4%.
Brent oil was trading at $73.75 a barrel early Wednesday, up from $73.67 late Tuesday. Gold was down at $2,640.41 an ounce from $2,644.88.
In London, Legal & General shares rose 3.5% as the company presented a decent outlook for a unit and suggested shareholders could benefit from investment returns. The life insurer expects single-digit growth in operating profit for 2024, in line with its guidance. Thereafter, it plans to achieve its target of 6% to 9% compound annual growth in core operating earnings per share between 2024 and 2027.
This update comes ahead of a “deep dive” into its Institutional Retirement division, the first in a series of events that will cover all of its units.
“The global pensions risk transfer market is growing and attractive, and the group is well positioned to continue to capture this opportunity,” L&G said.
Its pipeline of PRT contracts is “as strong as it’s ever been.” Its target of £50bn to £65m of UK pension risk transfers between 2024 and 2028 remains unchanged. In the Institutional Retirement division, it expects compound annual operating profit growth of between 5% and 7% between 2023 and 2028.
L&G added: “Since the start of the year, we have underwritten aggregate PRT volumes of £10.0 billion and we have exclusivity on a further £500 million which is expected to close in 2024. On of this GBP 10.5 billion, GBP 8.4 billion is subscribed in the UK and GBP 2.1 billion internationally, with L&G having subscribed the highest volumes of its history in the United States and Canada.
The claims ratio was also lower than expected, standing at 1%, while initial forecasts were below 4%.
“We plan to return to shareholders some of the capital that has not been deployed this year. This will be part of the board’s broader consideration of repurchase capacity, which will be presented during the financial year results 24 in March 2025, and will be in addition to the capital return intentions indicated during the capital markets event in June,” the company added.
Elsewhere in London, vehicle rental and fleet management company Zigup lost 5.5%. It said it was “confident in its full-year guidance” but reported a fall in half-year profits.
Turnover for the six months to October 31 fell 0.8% to £903.6 million, compared with £911.3 million the previous year. Pre-tax profit fell 42%, from £97.4 million to £56.2 million.
Underlying revenue, however, increased by 5.6%, from £733.8 million to £775.0 million. This measure excludes vehicle sales.
“Our strategy continues to be successful and we are well positioned with our growing position in the critical mobility services market. We are pleased to report underlying revenue growth and operating income in line with expectations, whilst reflecting the normalization of disposal profits as previously reported,” said Martin Ward, Chairman and Chief Executive Officer.
The company added: “Recent vehicle supply contracts have provided good visibility for fleet growth for the year 2025, and expected increases in infrastructure spending are also positive for our rental customer base in UK medium term Spain continues to benefit from record demand Although the normalization of residual values results in lower divestment profits, as expected, our confidence in the business and our prospects is. unchanged and remains in line with expectations of the market.
On the AIM, Biome fell 39% after issuing a warning on its annual turnover due to component delivery delays.
The company specializing in bioplastics and radio frequency technologies said two projects in the latter division were unlikely to start by the end of the year.
“Additional complexities related to component deliveries for the two major projects, which were to be completed in 2024, have emerged recently. In two specific cases, externally manufactured parts and purchased assemblies had to be reworked or returned to their suppliers to be replaced,” Biome explained.
“The technical pathways for recovery and replacement are clear. However, despite the considerable efforts made recently to accelerate this work, the timetables are such that this work cannot be carried out within a time frame allowing the construction of the two machines to be completed and the acceptance process for internal tests and customer tests before the end of 2024. The internal completion dates have therefore been revised to the first quarter of 2025 and new final acceptance dates are under discussion with the customers.”
The company now expects revenue to be “materially below current market expectations, with a consequent impact on profitability.”
By Eric Cunha, Editor-in-Chief of Alliance News
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