London close: Stocks mixed amid energy concerns, US CPI fears

The FTSE 100 ended the session up 0.08%, or just 5.78 points, at 7,488.15, while the FTSE 250 was down 1.02% at 19,912.40.

Sterling was also mixed, last strengthening 0.06% on the dollar to trade at $1.2089, while it weakened 0.25% against the euro to change hands at €1.1820.

“It’s been a mixed day for European markets on reports that oil flows through the Southern Druzhba pipeline - which supplies Hungary, Czech Republic and Slovakia - had been suspended due to non-payment of transit fees,” said CMC Markets chief market analyst Michael Hewson.

“Russia has claimed Ukraine was behind the suspension because sanctions had prevented the required payment from going through.

“It’s a timely reminder, if any were needed, of how vulnerable Europe is to the continued weaponisation of energy by Russia as we head into winter.”

In economic news, new figures from the British Retail Consortium and accounting giant KPMG showed UK retail sales growing in July, as Britons spent more in person than online.

Sales grew 2.3% year-on-year across all channels last month, decelerating from July 2021 when sales jumped 6.4% from the previous year, and below the 12-month average of 2.7%.

On a like-for-like basis, stripping out the effect of shop openings and closures, sales were up 1.6% from the previous year.

Online non-food sales dropped 3.9%, while in-store non-food sales increased 2% in total and 1.2% on a like-for-like basis.

In the three months to 31 July, food sales grew 2.3% in total and 1.8% on a like-for-like basis.

Over the same period, non-food retail sales dropped 2% in total and by 2.5% like-for-like - below the 12-month average of 4.5%.

“Summer clothing, picnic treats and electric fans all benefited from the record temperatures as consumers made the most of the sunshine,” said BRC chief executive Helen Dickinson.

“However, with inflation at over 9% many retailers are still contending with falling sales volumes during what remains an incredibly difficult trading period.

“Consumer confidence remains weak, and the rise in interest rates coupled with talk of recession will do little to improve the situation.”

Dickinson noted that the Bank of England was now expecting inflation to reach over 13% in October when energy bills rise again, further tightening the screws of struggling households.

“This means that both consumers and retailers are in for a rocky road throughout the rest of 2022.”

Across the pond, US non-farm labour productivity and unit labour costs improved by less than expected during the second quarter, according to the Department of Labor.

It said productivity fell at a quarter-on-quarter annualised rate of 4.6% over the three months to June, slightly more than the 4.5% economists had pencilled in.

That was the result of a 2.1% decline in output, even as the number of hours worked increased by 2.6%.

Hourly compensation, meanwhile, was ahead by 5.7%, leading to a slowing in labour unit cost growth to 10.8% from 12.6%, falling shy of expectations for a slowdown to 9.9%.

On London’s equity markets, asset manager Abrdn slumped 6.82% after it posted a drop in first-half profit and revenue and struck a cautious note on its outlook.

Adjusted pre-tax profit fell to £99m from £163m in the same period a year ago, while adjusted operating profit slid 28% to £115m and fee-based revenues were down 8% to £696m.

Abrdn said that was driven by market movements, while on an IFRS basis, the company swung to a pre-tax loss of £320m from a profit of £113m.

Legal & General Group dipped 0.59% even after the insurer reported a rise in interim operating profits, driven by higher interest rates and a strong annuity portfolio performance.

Workspace provider IWG tumbled 11.4% despite reporting that its first-half losses had narrowed amid strong demand for hybrid working.

“IWG’s latest results indicate progress in the business, with improvements in both occupancy rates and pricing,” said AJ Bell financial analyst Danni Hewson.

“Unfortunately, it cannot escape the cost pressures hurting companies worldwide.

“Neither can it be relaxed about Covid as certain markets continue to experience lockdowns, which has a negative impact on demand for some of its serviced offices.”

Hewson noted that the market’s reaction to the results was certainly negative, with the shares diving more than 17% in early trading.

“Before the numbers came out, analysts had forecast IWG returning to profit this year at £48.6m.

“Given the ongoing cost pressures and lockdown disruptions, it seems likely this estimate will have to be scaled back.”

InterContinental Hotels Group lost 0.98% even after it posted a jump in half-year profits and revenue and hailed increased demand for travel in most of its markets.

Housebuilder Bellway fell 2.26% despite reporting a 13% rise in annual housing revenue, driven by strong home prices which offset pressure from higher costs.

Housing revenue for the year ended 31 July rose to more than £3.5bn, while completions rose 10.5% to a record 11,198 homes at an average selling price of £314,400, compared with £306,479 last year.

On the upside, FTSE 100 giants BP and Shell jumped a respective 1.5% and 1.06% after oil prices shot higher, following the news from Russia that oil exports to Europe through the southern leg of the Druzhba pipeline had been suspended since early August.

The suspension was reportedly blamed on Western sanctions over the country’s ongoing invasion of Ukraine preventing the receipt of transit fees.

Energy plays were also in the green on the FTSE 250, with Capricorn Energy up 3%, Energean rising 3.26%, and Tullow Oil ahead 1.45%.

Elsewhere, Just Group rose 2.93% after the pensions outfit reported a 15% improvement in first-half underlying operating profits to £74m, driven by higher in-force operating profit and lower finance costs.

The company said that in the six months ended 30 June, retirement Income sales were down 3% to £879m, as defined benefit de-risking sales increased 3% and retail sales fell 14%.

It signed its largest defined benefit de-risking transaction to date in July, consisting of a £0.5bn buy-in insuring 4,800 members, with 50% of the liabilities reinsured, adding £24m of new business profit post-30 June.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Iain Gilbert and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,488.15 0.08%
FTSE 250 (MCX) 19,912.40 -1.02%
techMARK (TASX) 4,325.01 -0.89%

FTSE 100 - Risers

Imperial Brands (IMB) 1,864.50p 1.69%
Pearson (PSON) 893.80p 1.57%
National Grid (NG.) 1,152.50p 1.54%
BP (BP.) 422.55p 1.50%
HSBC Holdings (HSBA) 553.50p 1.47%
Airtel Africa (AAF) 154.20p 1.38%
Centrica (CNA) 84.12p 1.35%
SSE (SSE) 1,810.00p 1.26%
Harbour Energy (HBR) 364.20p 1.25%
British American Tobacco (BATS) 3,309.50p 1.21%

FTSE 100 - Fallers

Abrdn (ABDN) 161.15p -6.82%
JD Sports Fashion (JD.) 127.80p -5.13%
Scottish Mortgage Inv Trust (SMT) 875.20p -4.58%
Entain (ENT) 1,276.50p -3.59%
Intermediate Capital Group (ICP) 1,473.00p -3.21%
Berkeley Group Holdings (The) (BKG) 4,007.00p -2.95%
Rightmove (RMV) 636.40p -2.78%
Flutter Entertainment (CDI) (FLTR) 8,614.00p -2.78%
Ocado Group (OCDO) 867.40p -2.67%
Auto Trader Group (AUTO) 644.20p -2.66%

FTSE 250 - Risers

Telecom Plus (TEP) 2,190.00p 4.29%
Pagegroup (PAGE) 436.40p 4.15%
Beazley (BEZ) 575.00p 3.51%
Energean (ENOG) 1,236.00p 3.26%
Capricorn Energy (CNE) 226.60p 3.00%
Just Group (JUST) 77.20p 2.93%
Lancashire Holdings Limited (LRE) 456.20p 2.24%
Polymetal International (POLY) 205.00p 1.99%
Hays (HAS) 123.20p 1.99%
Hiscox Limited (DI) (HSX) 918.20p 1.98%

FTSE 250 - Fallers

IWG (IWG) 171.00p -11.40%
Carnival (CCL) 688.60p -8.67%
Baltic Classifieds Group (BCG) 148.00p -6.92%
Molten Ventures (GROW) 412.20p -6.58%
Aston Martin Lagonda Global Holdings (AML) 482.00p -6.06%
ASOS (ASC) 975.00p -5.84%
Genus (GNS) 2,642.00p -5.59%
Trainline (TRN) 373.60p -5.04%
Micro Focus International (MCRO) 280.30p -4.79%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,320.00p -4.72%