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Stocks lower as stickier than expected inflation dampens mood / Image source: Adobe

European stock prices were in the red on Tuesday afternoon, as the political deadlock in France continued following the election.

Amongst individual stocks, BP took a hit on the FTSE 100 index after warning of a hit to refining margins.

The FTSE 100 index was down 6.21 points, 0.1%, at 8,187.28. The FTSE 250 was down 15.55 points, 0.1%, at 20,782.77, and the AIM All-Share was down just 0.070 of a point at 775.09.

The Cboe UK 100 was down 0.1% at 815.95, the Cboe UK 250 was down 0.1% at 18078.63, and the Cboe Small Companies was down 0.4% at 17052.52.

In European equities on Tuesday, the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was down 0.2%.

European stock indices were mostly lower at midday on Tuesday, with the CAC 40 in Paris taking the biggest hit.

Following France’s election round on Sunday, there is political stalemate.

On Monday, President Emmanuel Macron has refused the resignation of the country’s prime minister, asking him to remain temporarily as the head of the government after chaotic election results left the government in limbo.

Voters split the legislature on the left, centre and far right, leaving no faction even close to the majority needed to form a government.

Political uncertainty is not limited to France, though, with concerns in US mounting as the election race heats up.

President Joe Biden insisted again Monday he would not quit the US election race, as the White House denied he had Parkinson’s disease following a disastrous debate performance.

Still to come on Tuesday’s economic calendar, investors await comments from Federal Reserve officials, including Jerome Powell’s testimony to Congress which may bring hints on the timing of rate cuts.

‘Today’s highlight is Federal Reserve Chair Jerome Powell’s testimony to the Senate, which will be replicated in the House tomorrow. It won’t be easy to extract relevant policy comments amid the often not so relevant questions by policymakers, and the market impact will be concentrated around the release of opening remarks. We stand by our view that if there is any deviation from the recent narrative, it should be on the dovish side, as Powell might see the June Dot Plot revisions as too hawkish and want to fine-tune communication on the back of recent data,’ analysts at ING said.

Further, eyes are on Thursday’s US consumer price index data, which will see if the US is tracking towards its 2% target.

Stocks in New York were called higher, showing some quite optimism amongst investors. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.4%.

The pound was quoted at $1.2817 at midday on Tuesday in London, lower compared to $1.2829 at the equities close on Monday. The euro stood at $1.0824, down against $1.0833. Against the yen, the dollar was trading at JP¥160.99, higher compared to JP¥160.71.

In the FTSE 100, BP was the biggest loser at midday, falling 4.2%.

‘A teaser ahead of second-quarter results later this month from BP suggests they won’t be a winner,’ said AJ Bell’s Russ Mould.

‘The major issue is a big hit to refining margins, reflecting both market dynamics but also operational issues for the company.’

BP said it expects second-quarter results to be hit by ‘post tax asset impairments and one-off contract provisions of between $1 billion and $2 billion’. This includes the impact of the scaling back of refining operations at the Gelsenkirchen refinery in Germany from 2025, due to high costs and declining demand for fuels.

In a negative read across the board, oil major Shell lost 0.1%.

In the FTSE 250 index, PageGroup lost 5.1%, after it warned that full-year operating profit would be below previous guidance, reflecting soft trading in the second quarter.

The Weybridge, Surrey-based international recruiter now expects full year 2024 operating profit to be in the region of £60 million. In April, PageGroup lowered its forecast to £90 million from £101 million previously.

Chief Executive Nicholas Kirk said: ‘We continued to see challenging market conditions throughout the group in [the second quarter] and we experienced a softening in activity levels through the quarter, particularly in terms of new jobs registered and number of interviews.’

Amongst London’s small-caps, Capita rose 19%, after it announced an agreement to sell its software business to a subsidiary of MRI Software.

The London-based outsourcing and professional services company said the deal values the standalone software business, Capita One Ltd, at £200 million on a cash-free and debt-free basis.

The disposal, Capita said, follows an evaluation of ‘certain activities’ it has deemed ‘not core to the group’s future strategy’.

Brent oil was quoted at $85.41 a barrel at midday in London on Tuesday, down from $86.16 late Monday.

Gold was quoted at $2,363.60 an ounce, lower against $2,370.69.

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Issue Date: 09 Jul 2024