LONDON MARKET MIDDAY: Shares find support after week to forget

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Investors on Monday were coming to terms with the recent flurry of interest rate hikes and economic growth warnings, with company updates and activity also distracting from monetary policy for the moment.

A recession in the US is not ‘inevitable’, but the economy is likely to slow, Treasury Secretary Janet Yellen said Sunday, days after the US Federal Reserve hiked interest rates, raising fears of a contraction. ‘I expect the economy to slow’ as it transitions to stable growth, she said on ABC's 'This Week', but ‘I don't think a recession is at all inevitable.’

The FTSE 100 index in London was up 65.12 points, or 0.9%, at 7,082.42 midday Monday. The index had lost 4.1% over the course of last week.

The mid-cap FTSE 250 index was up 33.11 points, or 0.2%, at 18,959.02. The AIM All-Share index was down 3.34 points, or 0.4%, at 897.63.

The Cboe UK 100 index was up 1.0% at 706.10. The Cboe 250 was up 0.1% at 16,666.93. The Cboe Small Companies down 0.4% at 13,730.71.

In mainland Europe, the CAC 40 stock index in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.5%.

AJ Bell's Russ Mould commented that a rise in the FTSE 100 was a ‘good enough reason’ for investors to be more optimistic about the equities market, following last week's ‘brutal’ sell-off for stocks globally.

‘Stability often comes before recovery and markets being more composed would suggest investors are no longer panicking,’ said Mould.

In the FTSE 100, Associated British Foods was up 1.0% after the Primark clothing chain owner said its third-quarter trading performance was in line with expectations, and, as a result, it kept its outlook unchanged.

For the 36 weeks to May 28, revenue increased by 29% against the previous year to £11.93 billion. In its third quarter ended May 28, revenue rose 32% to £4.05 billion.

At Primark, all stores traded during the period, in contrast to last year when most stores were closed until the middle of April, it explained.

AB Foods said sales at Primark in the quarter were 81% ahead of last year as a result and year to date were 69% ahead of the comparable period a year before.

Looking ahead, AB Foods said: ‘Our full-year outlook remains unchanged, with significant progress expected in adjusted operating profit and adjusted earnings per share for the group.’

In the FTSE 250, Euromoney Institutional Investor was the standout performer, up 26% at 1,382.87 pence.

The business information publisher and events organiser confirmed it received an approach from a consortium of Astorg Asset Management and Epiris regarding a possible cash offer for Euromoney of 1,461 pence per Euromoney share, valuing the company at £1.6 billion.

Euromoney said the proposal follows earlier approaches from the consortium to the board regarding a possible all-cash offer at 1,175p, 1,250p, 1,310p and 1,350p per share.

The latest offer represents a 34% premium to Friday's closing share price of 1,094.00p.

Rank Group was down 14% after the gambling operator lowered its annual profit guidance for a second time, trading at its Grosvenor casinos continued to soften and inflationary cost pressures persist.

In the fourth quarter ending June 30 to date, the Maidenhead, England-based gambling firm reported that performance across the Grosvenor casino chain was ‘considerably weaker than expected’.

This was mostly due to ‘higher spending’ overseas customers that have been slow to return to its London casinos, as well as depressed visitor numbers across the UK, and a lower-than-average casino win margin in the quarter.

Accordingly, it has dropped its guidance to £40 million for like-for-like underlying operating profit, from a range of £47 million to £55 million back in April.

This was the firm's second profit revision, with pre-April guidance at a range of £55 million to £65 million. In financial 2021, Rank Group recorded an underlying operating loss of £67.0 million, swung from a profit of £48.0 million the year before.

easyJet was down 2.1%. The budget airline warned about rising costs, caused by the recent disruption of flights and the need to lease additional aircraft, as well as higher crew costs and airport charges.

The Luton Airport-based airline said it expects the extra costs to be a one-off occurrence this summer, with more system resilience built in time for the 2023 peak season. Further, easyJet said it expects to fly 87% of pre-pandemic capacity in its current quarter and 90% in its financial fourth quarter, which ends on September 30.

Elsewhere, Deliveroo was down 0.5% after JPMorgan cut the food delivery firm to 'underweight' from 'neutral'.

Deliveroo has hired Scilla Grimble as its new chief financial officer. Grimble, who is currently CFO at price comparison site MoneySupermarket.com, is expected to start no later than June 2023.

Deliveroo said Adam Miller will be stepping down as CFO on September 17, with David Hancock, currently vice president of Investor Relations, to serve as interim CFO. It gave no reason for Miller's departure. Moneysupermarket said a search for a new CFO is underway.

Moneysupermarket shares were up 0.6%.

Marks & Spencer was up 2.1% after the retailer appointed Alex Freudmann as managing director of the M&S Food unit.

Freudmann will join M&S on November 1. He is currently managing director of the Australian liquor supermarket Dan Murphy's and will succeed Stuart Machin, who was recently promoted to M&S group chief executive.

The dollar was lower across the board. The pound was quoted at $1.2242 at midday on Monday, up from $1.2211 at the London equities close Friday.

The euro was priced at $1.0530, up from $1.0465. Against the yen, the dollar was trading at JP¥134.85 in London, lower against JP¥135.17.

French President Emmanuel Macron lost his parliamentary majority after major election gains by a newly formed left-wing alliance and the far right, in a stunning blow to his plans for major second-term reform.

The result from Sunday's second round poll threw French politics into turmoil, raising the prospect of a paralysed legislature or messy coalitions, with Macron forced to reach out to new allies.

Macron, 44, now also risks being distracted by domestic problems as he seeks to play a prominent role in putting an end to Russia's invasion of Ukraine and as a key statesman in the EU. Macron's 'Together' coalition will still be the biggest party in the next National Assembly.

But with 245 seats, according to full interior ministry results announced in the early hours of Monday, it is well short of the 289 seats needed for a majority in the 577-member chamber.

‘Perhaps because it is also a US public holiday today, EUR/USD has barely budged on the news that President Macron's party has failed to secure a majority in parliament. This may also be because it is too early to conclude how Macron's government will govern and which alliances can be secured on a policy-by-policy basis. Macron's loss of an overall majority and the likely struggle ahead to implement his reform agenda looks to be a mild negative for the euro,’ said analysts at ING.

Brent oil was quoted at $113.15 a barrel on Monday midday, down from $114.22 late Friday. Gold stood at $1,838.82 an ounce, lower against $1,841.66.

Financial markets in the US are closed on Monday in observance of the maiden Juneteenth public holiday.

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