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(Alliance News) - Stock prices in London opened lower on Thursday, with ITV and Glencore weighing on the FTSE 100 after reporting disappointing interim results.
The UK flagship index was down 38.98 points, or 0.7%, at 6,065.74. The mid-cap FTSE 250 index was down 132.65 points, or 0.8%, at 17,505.65. The AIM All-Share index was flat at 910.25.
The Cboe UK 100 index was down 1.1% at 601.19. The Cboe 250 was down 0.5% at 14,897.68, and the Cboe Small Companies was down 0.2% at 9,202.65.
In mainland Europe, the CAC 40 in Paris was down 0.1%, while the DAX 30 in Frankfurt was up 0.6%.
The pound was quoted at USD1.3155 Thursday morning, firm from USD1.3144 at the London equities close Wednesday, after the Bank of England held UK interest rates unchanged.
"Maintaining its combative relationship with its currency, the FTSE moved in the opposite direction, dropping 0.7%. It wasn't just sterling and the Bank of England weighing on the UK index, however. After rising on Wednesday in tandem with gold's record highs, the FTSE's miners went into retreat. This backtracking was led by Glencore, which slumped more than 4%...BP and Shell were also down, as Brent crude's gains stalled out around the USD45.30 mark," Spreadex analyst Connor Campbell said.
On the London Stock Exchange, Aviva was the best blue-chip performer, up 6.0% after the insurer resumed its dividend payments.
The company declared a second interim dividend in respect of 2019 of 6.0 pence per share, having skipped paying a final dividend for 2019. Avva also said it will take the opportunity to review its longer-term dividend policy, with the intent of a sustainable pay-out and lower levels of debt.
For the half-year ended June 30, Aviva reported attributable pretax profit of GBP1.08 billion, down from GBP1.52 billion last year. Operating profit was GBP1.23 billion, down from GBP1.39 billion.
"We will focus Aviva on our strongest businesses in the UK, Ireland and Canada and aim to be the UK's leading insurer. We are going to focus on those businesses where we have the necessary size, capability and brilliant customer service to generate superior shareholder returns. This is where we will invest and grow. Where we cannot meet our strategic objectives, we will take decisive action and we will withdraw capital," said Chief Executive Amanda Blanc.
Mondi was up 5.0% after the Anglo-South African paper and packaging firm resumed dividend payments.
For the half-year ended June 30, revenue was down 8.5% to EUR3.45 billion from EUR3.77 billion the year before and pretax profit fell 26% to EUR466 million from EUR632 million.
However, Mondi declared a 19.00 euro cents per share interim dividend for 2020 and a dividend of 29.75 euro cents per share relating to 2019. Both dividends, amounting to a total of 48.75 euro cents per share, will be paid as interim dividends in September, the company said.
At the other end of the large-cap index, Glencore was the worst performer, down 4.0% after the Swiss commodities trader scrapped its own payouts.
For the half-year ended June 30, Glencore swung to a net loss of USD2.60 million from a USD226 million profit last year, as revenue fell to USD70.96 billion from USD107.43 billion. Glencore also reported a 13% drop in half-year adjusted earnings before interest, tax, depreciation and amortisation to USD4.83 billion.
Glencore said it will not pay its deferred dividend, saying the economic outlook is too uncertain due to the coronavirus. The dividend was put on hold earlier this year due to the pandemic.
CEO Ivan Glasenberg said: "The outlook remains uncertain in the short-term. Notwithstanding our cash-generative business and secure liquidity positions, the board has concluded that it would be inappropriate to make a distribution to shareholders in 2020, instead prioritising the acceleration of net debt reduction to within our target range, currently expected to occur by the end of 2020."
ITV was down 3.8% after the broadcaster reported a sharp fall in profit in the first half of the year as its production and advertising took a hit from the coronavirus pandemic.
For the half-year ended June 30, revenue fell 17% to GBP1.45 billion from GBP1.75 billion a year before, and pretax profit fell 93% to GBP15 million from GBP222 million.
Advertising revenue fell 21%, while ITV Studios revenue was down 17%.
ITV said it has decided not to pay an interim dividend in light of continued economic uncertainty.
Looking ahead, ITV said that given the level of uncertainty for both ITV Studios and the Broadcast unit it is not possible to provide financial guidance for the third quarter or the remainder of the year.
"Coronavirus has swiped ITV's two main ways of making money: advertising and production. The broadcaster had been struggling with squeezed advertising revenues for a while, but this pandemic has compounded the problem. When times are tough, the first thing market departments do is slash the marketing and advertising budgets, which then causes firms like ITV, which rely heavily on this cash, to suffer," said eToro analyst Adam Vettese.
Meanwhile, the Bank of England on Thursday said its policymakers unanimously voted to keep monetary policy unchanged in light of the challenges posed by the coronavirus pandemic.
The BoE's nine-member Monetary Policy Committee all voted to keep the UK's key interest rate at 0.1% and asset purchases at GBP745 billion, as widely expected.
The central bank noted global activity has strengthened over recent months, but generally remains below its level in late 2019. Covid-19 has continued to spread rapidly within a number of emerging market economies, however, and there has been a renewed rise in cases in many advanced economies, the bank highlighted.
"In choosing to keep the Bank Rate and the [asset purchases] unchanged at this meeting, the BoE still has the door open for further policy action - probably at the November meeting when a new MPR is released and we will know more about the UK's future relationship with the EU. Notably, the BoE's scenario assumes that the UK moves to a comprehensive free trade agreement with the EU by 2021," said analysts at ING.
The Japanese Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is down 1.5%.
The euro was priced at USD1.1885, soft from USD1.1901. Against the yen, the dollar was quoted at JPY105.48, flat from JPY105.47.
Gold was trading at USD2,049.55 an ounce early Thursday in London, firm from USD2,046.16 late Wednesday. Brent oil was quoted at USD45.37 a barrel, lower from USD45.96.
Thursday's economic calendar has UK construction PMI at 0930 BST, with US initial jobless claims at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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