Proactive Investors –
- climbs 11 points
- Oil prices up modestly after Iran missile attack on Israel
- JD Sports interim results disappoint
Markets slip after more missiles fired into Israel
In the past few minutes the FTSE 100 has given up almost all its early gains, with the FTSE 250 also diving further into the red.
The London blue-chip gauge is up just under 11 points at 8,287, having been up over 40 earlier, while the mid-cap index has dropped 77 points.
This follows Hezbollah saying it targeted areas north of Israeli city Haifa with a large missile salvo, while Iran’s president said if any further “mistakes” are committed by Israel they will “receive a stronger and more destructive response”.
The Iranian leader also warned that if America and European countries “leave the region, wars will end and the countries of the region will be able to live in peace”
There’s not been much big economic data apart from European unemployment, which remained at 6.4% as expected.
Elsewhere, Iceland’s central bank unexpectedly cut rates by 25 basis points, container shipping giant Maersk said it continued to serve its customers in Lebanon with two weekly callings in Beirut, and Citibank’s economic surprise index for the US continues to drift higher.
UBS suggests strategies to reduce the impact of market swings
UBS is another investment bank to state this it believes the Middle East conflict poses risks of market volatility but its ‘base case’ is to expect is that the conflict stops short of an all-out war between Israel and Iran, and their allies.
“We also assume that energy flows from the Middle East will continue without sustained interruptions.
“Meanwhile, we believe the outlook for equities will be supported by a soft economic landing in the US, combined with Fed rate cuts, strong earnings, and optimism over the commercialization of artificial intelligence.
“At the same, we do think investors should consider strategies to reduce the impact of market swings on their portfolios.”
Gold is noted as continuing to have appeal as a hedge against geopolitical risks and potential US political shifts following the election.
Gold should also benefit from further Fed rate cuts, robust central bank demand, and rising investor appetite via exchange traded funds, UBS said, with the Swiss bank expecting to reach $2,750 an ounce by the end of the year and $2,900 by the final quarter of 2025, up from just over $2,650 now.
Small cap risers and fallers
Looking outside the , musicMagpie PLC (LON:) is the biggest mover this morning, up 48% after it agreed to be bought by AO World.
Saga PLC (LON:) is up 14% following its confirmation of talks to sublet its insurance arm to Ageas (LON:), in a deal that is reported to possibly include a sizeable up-front payment to help trim its debt pile.
Celadon Pharmaceuticals PLC (LON:) has jumped 12% on the back of saying it has signed a new five-year sales contract with “a newly established healthcare company for the supply of its medicinal cannabis product from its UK facility”, with a minimum order of up to £10.5 million.
Among the fallers, One Heritage Group PLC (LON:) dropped 25% after announcing a major restructuring and strategic pivot, including rebranding to Zentra Group and a shift away from in-house construction and co-living services due to rising costs and market challenges.
Technology Minerals (LON:) has slid 19% after saying a fire broke out at its 48.35% owned battery recycling business, Recyclus Group’s LiBatt plant in Wolverhampton. The fire was separate from the recycling plant and was quickly contained, it says, with the plant building unaffected and expected to reopen today
Inspiration Healthcare Group PLC (LON:) is down 12% after its interim results reflected a challenging period with “encouraging signs of recovery” from its neonatal business, plus a warning that the sales mix in the second half will continue to hit gross margins and therefore full-year earnings expectations.
Wynnstay Group PLC fell 9.4% as the agricultural supplies group warned that “more challenging conditions” had been experienced in seasonally important months, meaning results for the financial year will be materially lower than last year and current market expectations.
Topps Tiles PLC (LON:) saw 2.2% chipped off its share price as it reported a 5.7% fall in sales, as persistently weak demand in the repair, maintenance and improvement sector set the stage for “very challenging” trading conditions.
JD numbers ‘solid’
Shares in JD Sports are down 3.1% after reporting first half results.
Analysts at Panmure Liberum felt the numbers were “solid”, with flat profits and flat adjusted operating margins, “despite slower like-for-likes and continued investments in its supply chain, people and IT as it corrects past underinvestment”.
In trading too, they say it is “worth acknowledging” the 3.3% LfL growth in North America despite its biggest brand partner Nike (NYSE:) reporting double digit declines.
While guidance range for full year adjusted PBT has been maintained, currency headwinds are greater than previously expected at £25 million versus £15 million previously, which implies a 1% cut to underlying consensus expectations.
‘Little impact’ unless Middle East conflict widens
The financial market impact of the Iranian missile attack on Israel should “remain limited”, JP Morgan said, as long as it does not broaden to include countries like Saudi Arabia or UAE directly, other countries outside the region, nor blocks the Straits of Hormuz.
Iran’s missiles plus the incursion of Israeli troops into Lebanon “indicate to us a greater risk of a wider regional conflict than any point we have seen since the 7 October attacks by Hamas”, strategists at the investment bank say in a note written last night.
“MENA stock markets, oil and more generally global equities have been little impacted by the growing conflict in Israel and its neighbors, even the April missile attacks by Iran on Israel had little lasting market impact.”
Looking at data from the previous spikes in geopolitical risk around the 7 October attacks and the 14 April bombing of Israel by Iran, the JP Morgan team noted a small impact each time.
Wizz and easyJet down, China funds up
Wizz Air Holdings PLC (LON:) shares are flying lower after the airline reported emptier planes over the course of September, while its shares have also been hit by wider concerns about the impact of the Middle East fighting and other geopolitical tensions.
Passenger numbers ticked up 3.9% to 5.76 million during the month, but load factors fell by 0.7% to 91.7% as flights were more empty.
The shares are down 1.85%, while easyJet PLC (LON:) is also down 1.2%.
Overall, the is slightly in the red, down 17 points to just below 20,900, a fall of less than 0.1%.
Risers among the mid caps are led by Fidelity China Special Situations (LON:), one of several China-aimed stocks on the front foot as they extend gains from the past week. Schroder Oriental Income Fund Ltd and Schroder AsiaPacific Fund PLC are also near the top of the 250 leaderboard.
The FTSE 100 is maintaining its early level, up 30 points at 8,307, a gain of 0.4%.
In Europe, the is just above flat, while the has added 0.2% in early trading in Paris, while in Madrid the is 0.1% lower.
FTSE 100 opens higher
The FTSE 100 has opened higher as it rolls with the punches of Middle Eastern geopolitics, rising 31 points to 8,308 in the opening minutes of trading.
Oil titans BP PLC (LON:) and Shell PLC (LON:) are topping the early leaderboard, up either side of 2%, with defence group BAE Systems (LON:) not far behind at 1.9%.
Mining giants including Rio Tinto (LON:) , Anglo American PLC (LON:) and Glencore PLC (LON:) are also among the top risers, along with Asia-focused financial names like Prudential PLC (LON:) and HSBC Holdings PLC (LON:).
JD Sports Fashion PLC (LON:) is down over 3% after its half-year update disappointed.
AO World moves into circular economy
AO World PLC (LON:) has agreed a £10 million cash takeover of AIM-listed musicMagpie PLC, which and resells second hand CDs, games and electronics.
The offer is priced at 9.07p per share, representing a premium of 58% to yesterday’s closing price of 5.75p, which has been the average level for the past month.
Directors of musicMagpie, with advice from Shore Capital, consider the terms fair and reasonable and said they intend to unanimously recommend the deal to shareholders.
