LONDON MARKET MIDDAY: Stocks rise but markets "politically charged"

(Alliance News) - European equities were up solidly heading into Monday afternoon, despite election uncertainty on the continent hanging over stocks.

The FTSE 100 index traded 33.76 points higher, 0.4%, at 8,271.48. The FTSE 250 was up 74.04 points, 0.4%, at 20,516.39, though the AIM All-Share fell just 0.34 of a point to 772.23.

The Cboe UK 100 rose 0.4% to 822.88, the Cboe UK 250 climbed 0.6% to 17,872.96, but the Cboe Small Companies was 0.3% lower at 16,872.38.

In European equities on Monday, the CAC 40 in Paris was up 0.7% and the DAX 40 in Frankfurt rose 0.5%.

Bannockburn Global Forex analyst Marc Chandler commented: "The markets remain politically charged. The US will see its first presidential debate, but European politics overshadow it. In the next fortnight, the European Union will have a new executive arm, though it has not stopped the outgoing one to announce tariffs on Chinese-produced EVs and from initiating "excessive deficit procedures" against several members.

"The two big parties in the EU, the centre-left and centre-right will likely reach out to the Greens, who have not held an EC post before, rather than turn to [Italian Prime Minister Giorgia] Meloni's faction. In France, the middle has been eroded but neither the left nor right alliance looks to win outright. In the UK, recent polls warn Prime Minister Sunak may lose his seat, and Labour could see the largest majority in a couple generations."

The pound was quoted at USD1.2665 early Monday afternoon, rising from USD1.2628 at the time of the London equities close on Friday. The euro stood at USD1.0730, up from USD1.0685. Against the yen, the dollar was trading at JPY159.54, largely flat from JPY159.52.

In the UK, two opinion polls have been published in the past 24 hours, both of which show Labour well ahead of the Conservatives and Reform in third place.

A poll by Savanta, carried out online from June 19-21 among 2,103 UK adults, gives Labour a 23-percentage point lead.

The figures are Labour 42%, Conservative 19%, Reform UK 16%, Liberal Democrats 9%, Green 5%, SNP 3%, Plaid Cymru 1% and other parties 5%.

The latest poll by Opinium, carried out online from June 19-21 among 2,052 UK adults, puts Labour 20 points ahead.

The figures are Labour 40%, Conservative 20%, Reform 15%, Lib Dems 12%, Green 8%, SNP 2%, Plaid Cymru 1% and other parties 2%.

In New York, the Dow Jones Industrial Average is called up 0.3%, the S&P 500 up 0.1%, but the Nasdaq Composite down 0.1%.

In London, Prudential shot up 6.3%. The Asia-focused insurer kicked off the first trance of a USD2 billion share buyback and said progress towards its 2027 financial objectives will "increase the potential for further cash returns to shareholders".

Prudential Chief Executive Anil Wadhwani commented: "I am pleased with the progress we continue to make in executing our strategy, as we drive towards generating growth in both value and cash returns for shareholders over the long term.

"The significant growth opportunity ahead of us has not changed and we remain focused on realising that opportunity."

Wadhwani added that the firm's dividend policy is unchanged, with it still targeting annual growth in the 7% to 9% range.

Going forward, Prudential said it would seek to operate with a free surplus ratio of between 175% to 200%.

The free surplus ratio, will be defined as the group's capital resources, being free surplus (excluding intangibles) plus the European embedded value required capital of the life business, divided by the EEV required capital of the life business.

If the free surplus ratio is above the operating range over the medium capital will be returned to shareholders, Prudential said.

In addition, Prudential said annual premium equivalent "sales trends" in the second-quarter are similar to the first. They had risen 4.2% on-year in the first-quarter, or 7.3% at constant currency.

Britvic rose 8.6%. Suitor Carlsberg announced an agreement with PepsiCo, removing a potential obstacle as it attempts to buy Britvic.

Danish brewer Carlsberg said US drinks firm PepsiCo has agreed to waive a so-called change-of-control clause as part of its long-term bottling agreement with British soft drinks group Britvic.

This waiver will come into effect should an acquisition of Britvic by Carlsberg proceed to completion.

The clause was viewed effectively as a poison-pill arrangement that could have prevented an acquisition of Britvic by allowing Pepsi to end its bottling deal, making the UK company a less attractive takeover target.

So far, soft drinks manufacturer Britvic, the maker of Robinsons and famed for its 'posh tonics', has rebuffed approaches from Carlsberg.

Elsewhere in London, SIG tumbled 12%. The Sheffield-based supplier of insulation, roofing, commercial interiors and construction products said market conditions have remained challenging in the calendar year to date.

Like-for-like sales in May and June to date are down around 7%, similar to that seen in the first four months of the year, but behind expectations, SIG said.

SIG said softness in the building and construction sector has been most notable in French and German markets, and in the end markets of its UK Interiors business.

As a result, SIG expects 2024 full year underlying operating profit to be in the range GBP20 million to GBP30 million, below the current analyst range.

SIG put the analyst range at between GBP36.7 million to GBP43.0 million, as of Friday.

A barrel of Brent oil was quoted at USD84.62 early Monday afternoon, down from USD85.73 at the time of the London equities close Friday. Gold was quoted at USD2,325.14 an ounce, largely unmoved from USD2,326.10.

By Eric Cunha, Alliance News news editor

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