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LONDON MARKET CLOSE: FTSE down as National Grid weighs on utilities
Stock prices in London ended largely lower on Thursday, with the FTSE 100 underperforming peers in mainland Europe, while stocks in New York opened mixed.
The FTSE 100 index closed down 31.10 points, or 0.4%, at 8,339.23. The FTSE 250 ended down 78.77 points, or 0.4%, at 20,631.30, and the AIM All-Share closed up 0.1%, or 1.15 points, at 805.02.
The Cboe UK 100 ended down 0.3% at 832.63, the Cboe UK 250 closed down 0.3% at 18,088.22, and the Cboe Small Companies ended down 0.9% at 16,551.03.
In European equities on Thursday, the CAC 40 in Paris and the DAX 40 in Frankfurt each ended up 0.1%.
‘While politics has moved to the top of the agenda as the UK general election campaigning machine prepares to get underway, the only shock for investors is the date of the big vote. It’s sooner than expected but until we get full election manifestos from the Conservatives and Labour, markets have stayed calm,’ said Russ Mould, investment director at AJ Bell.
On Wednesday, UK Prime Minister Rishi Sunak called a general election for July 4.
The announcement from Sunak followed favourable UK inflation data. The UK consumer price index rose by 2.3% in April from a year before, slowing from a 3.2% annual increase in March, according to the Office for National Statistics.
Numbers on Thursday showed the UK manufacturing sector returned to growth in May. The headline seasonally adjusted S&P Global UK flash purchasing managers’ index composite output index - including both services and manufacturing - fell to 52.8 points in May from 54.1 in April. This was behind market consensus, with FXStreet citing a forecast of 54 points.
The services PMI business activity index fell to 52.9 points from 55.0. More positively, the manufacturing PMI rose to 51.3 points from 49.1. This signals a return to growth and a 22-month high.
The pound was quoted at $1.2710 at the London equities close on Thursday, down compared to $1.2732 at the close on Wednesday.
The euro stood at $1.0830 at the European equities close Thursday, against $1.0840 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥157.13 compared to JP¥156.55 late Wednesday.
In the US, the private sector recorded its strongest month in around two years in May, preliminary numbers showed.
The S&P Global flash composite purchasing managers’ index, calculated using a weighted average of the services and manufacturing data, shot-up to 54.4 points in May from April’s final tally of 51.3.
The flash manufacturing PMI climbed to 50.9 points in May, from the 50.0 neutral mark it achieved in April. The May reading was a two-month-high. The services PMI surged to a one-year-high of 54.8 points in May from 51.3 in April.
Federal Reserve officials grew more concerned about the lack of progress in tackling inflation, minutes from the latest Federal Open Market Committee meeting on Wednesday showed, with some members even suggesting rates should rise.
‘Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate,’ the minutes showed.
At its May meeting, the Federal Reserve kept its benchmark short-term borrowing rate in a targeted range between 5.25% to 5.50%. The federal funds rate has been at that level since July 2023.
Officials noted a ‘lack of further progress’ towards the central bank’s 2% inflation target with recent monthly data showing ‘significant increases in components of both goods and services price inflation.’
‘Members agreed that they did not expect that it would be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainably toward 2%,’ the minutes stated.
Stocks in New York were mixed at the London equities close, with the DJIA down 0.8%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.7%.
In the FTSE 100, National Grid lost 12%, pushing it to the bottom of the index.
National Grid launched a £7.0 billion rights issue to support plans for £60 billion of investment in UK and US energy infrastructure.
The London-based multinational electricity and gas utility said the investment from financial 2025 to 2029 will be nearly double that of the previous five-year period and will deliver a ‘significant step-change’ in critical energy infrastructure in the UK and US.
Also on Thursday, National Grid reported pretax profit fell 15% to £3.05 billion in the financial year that ended March 31 from £3.59 billion the year before. Operating profit fell 8.1% to £4.48 billion from £4.88 billion.
Utility stocks in London fell in a negative read-across. Severn Trent lost 5.2%, United Utilities fell 4.8% and British Gas owner Centrica lost 2.3%.
In the FTSE 250, Qinetiq ended up 14%.
The Farnborough, Hampshire-based company raised its financial outlook after delivering ‘strong’ annual results in the face of ‘difficult market conditions in the US’.
For the year ending March, QinetiQ said pretax profit fell 4.8% to £182.7 million from £192.0 million a year prior. Revenue, however, rose 21% to £1.91 billion from £1.58 billion.
Hargreaves Lansdown jumped 11%.
The wealth management platform rejected a takeover approach from a group of private equity firms including CVC Advisers.
In a brief statement, the consortium which includes CVC Advisers, Nordic Capital XI Delta, and Platinum Ivy B 2018 RSC, a wholly-owned subsidiary of Abu Dhabi Investment Authority confirmed making a bid for the investment platform and financial services company.
Hargreaves Lansdown said the proposal ‘substantially undervalues’ it and its future prospects.
Elsewhere in London, Capital & Regional shot up 18%.
Vukile Property Fund confirmed it had made a ‘non-binding indicative proposal’ to acquire Capital & Regional in a possible cash-share deal. Meanwhile, NewRiver REIT made a proposal to Growthpoint Properties, which has a 68% stake in Capital & Regional.
Vukile, a Johannesburg-based real estate investment trust, which indicated this offer is at an early stage, has until June 22 to make a firm offer to Capital & Regional.
On AIM, Eqtec soared 42%.
The thermochemical conversion technology company has secured refinancing of its existing secured lending facility. The new funding replaces the previous funding with a non-convertible secured term loan facility with no scheduled repayments until May 2026.
Brent oil was quoted at $81.58 a barrel at the London equities close on Thursday, down from $82.21 late Wednesday.
Gold was quoted at $2,340.90 an ounce at the London equities close on Thursday, down against $2,389.20 at the close on Wednesday.
On Friday’s UK corporate calendar, there is a trading statement from Intertek, a testing laboratories company, and full-year results from Volvere, a turnaround investment fund.
Meanwhile, the economic calendar has a UK retail sales reading at 0700 BST, before US durable goods orders at 1330 BST.
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