London share prices started lower on Wednesday, underperforming markets on the continent, after a survey showed a plunge in financial confidence among UK households faced with rocketing electricity and gas prices this winter.
Suggesting the pressure on energy costs is not about to relent, Brent oil prices moved back above $100 a barrel.
With little significant economic or company news on Wednesday, investors are awaiting the start of a gathering of central bankers in Wyoming on Thursday. The annual Jackson Hole Economic Symposium this year is being held under the theme 'Macroeconomic Policy in an Uneven Economy'. US Federal Reserve Chair Jerome Powell delivers the keynote speech on Friday.
The FTSE 100 index was down 41.03 points, or 0.6%, at 7,447.08 early Wednesday. The mid-cap FTSE 250 index was down 86.28 points, or 0.5%, at 19,220.61. The AIM All-Share index was down 1.93 points, or 0.2%, at 897.76.
The Cboe UK 100 index was down 0.5% at 743.59. The Cboe 250 was down 0.5% at 16,551.53, and the Cboe Small Companies down 0.1% at 14,136.01.
In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.1% early Wednesday.
‘The Jackson Hole symposium kicks off tomorrow, and while PMIs sent grim signals on the economic outlook, markets are broadly holding on to their hawkish expectations. We think the post-PMI dollar correction may be fully reversed today, but a quiet calendar across major markets suggests a potentially calmer environment,’ said ING.
Ahead of Jackson Hole, traders were left to process Tuesday's largely downbeat economic data and energy supply threats.
The euro fell to a fresh two-decade low against the dollar on Tuesday as weak private sector survey results combined with energy supply worries after Russia's Gazprom said the Nord Stream pipeline would be closed for maintenance at the end of the month.
The euro traded at $0.9954 early Wednesday, down from $0.9987 late Tuesday. The single currency hit a low of $0.9900 on Tuesday.
Energy prices remained elevated on Wednesday. Brent oil was trading at $100.30 a barrel, back above the $100 mark and up from $99.90 late Tuesday.
In the UK, a new survey has shown satisfaction with living standards and income has plunged amid devastating predictions for Friday's new energy price cap.
The Which? consumer insight tracker shows satisfaction with living standards and income has crashed to its lowest point since 2014, even before Ofgem is widely expected to announce a new price cap for October topping £3,500 on Friday, up from £1,971 today.
Some 93% of consumers said they were worried about energy prices.
Sterling was quoted at $1.1824 early Wednesday, lower than $1.1864 at the London equities close on Tuesday.
In a quiet day for UK corporate news, Lookers rose 6.7% after the car dealer reported a strong first half despite supply chain issues.
Revenue for the six months to June 30 rose 3.6% to £2.23 billion from £2.15 billion a year before, driven by increases in used vehicles and aftersales. Pretax profit slipped marginally to £49.9 million versus £50.4 million.
Profit performance was ‘underpinned by material improvement in new vehicle gross profit margin’, the firm said. Lookers's margin strengthened to 12.7% from 12.0%.
The company resumed its interim dividend at 1.00p, having not paid out anything a year before. Lookers last paid an interim dividend for the first half of 2019. It resumed final dividend payments alongside its results for 2021.
Lookers said supply disruption during the half made trading conditions ‘challenging’. Trading in July and August has been in line with expectations and the company has managed to maintain margins at first-half levels.
‘Whilst mindful of the pressures facing consumers, we are confident in our strategic direction and retain our expectations for the remainder of the year,’ said Chief Executive Mark Raban.
Costain advanced 5.0% after reporting interim profit growth, as the infrastructure construction firm grappled with supply chain pressures.
Revenue for the first half of 2022 rose 19% to £665.2 million from £556.8 million a year before, reflecting ‘primarily volume growth and inflation protection mechanisms within contracts’.
Pretax profit increased 23% to £11.2 million from £9.1 million, even as the operating margin slipped to 1.8% from 2.0%.
‘Despite material availability and inflation challenges, we have managed the supply chain pressures effectively, while delivering a robust operational performance with new contracts being won on attractive commercial terms with appropriate risk,’ said Chief Executive Alex Vaughan.
He added that there was a ‘very high level’ of bidding activity in the period, with award decisions expected later this year and into early 2023.
Allied Minds slumped 42% after saying it will consult with shareholders over a possible share delisting from London following a strategic review.
Under the review, the board weighed up the costs of its listing in London and decided it is ‘prohibitively high’ relative to the company's size.
Allied Minds said it judged that maintaining a public listing is ‘no longer in the best interests’ of the company and its shareholders.
‘The Allied Minds board therefore now intends to formally consult with shareholders regarding a possible delisting of the company,’ the Boston, US-based firm said.
The Nikkei 225 index in Tokyo closed down 0.5%. The Shanghai Composite ended down 1.9%, while the Hang Seng index in Hong Kong was down 1.3%. In Sydney, the S&P/ASX 200 was bucking the trend, closing up 0.5%.
Against the yen, the dollar was quoted at JP¥136.67 versus JP¥136.28.
Gold was quoted at $1,746.11 an ounce early Wednesday, down from $1,751.38 on Tuesday.
In the economic calendar, there are US durable good orders at 1330 BST.
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