(Alliance News) - Stock prices in London opened mixed on Thursday with a number of ex-dividend stocks weighing on the FTSE 100, while Cineworld was the standout FTSE 250 performer as it considered plans for a potential US listing.
The FTSE 100 index was down 10.85 points, or 0.2%, at 7,210.43. The mid-cap FTSE 250 index was up just 3.07 points at 23,759.90. The AIM All-Share index was up 0.1% at 1,268.97.
The Cboe UK 100 index was down 0.1% at 718.30. The Cboe 250 was up 0.3% at 21,255.35, and the Cboe Small Companies flat at 15,496.34.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were both up 0.1%.
In the FTSE 100, Aviva was the best performer, up 2.1%, after the insurer raised its dividend and pledged to return more cash to shareholders.
Aviva reported pretax profit from continuing operations for the six months that ended June 30 of GBP396 million, down from GBP739 million a year before. Total income more than doubled to GBP14.78 billion from GBP6.98 billion, as Aviva swung to net investment income of GBP7.35 billion from a net investment expense of GBP1.28 billion.
However, the company booked a GBP8.45 billion hit on changes in investment contract provisions, swung from a GBP5.72 billion gain a year before. Net earned premiums declined by 12% to GBP6.65 billion from GBP7.51 billion a year ago.
Aviva declared an interim dividend of 7.35 pence a share, up 5.0% from 7.00p a year before. In addition, the London-based firm said it aims to buy back up to 300 million shares for up to GBP750 million to reduce its share capital. Overall, Aviva said it will return at least GBP4 billion to shareholders in dividends and buybacks in the next 12 months.
Fellow blue-chip insurers Phoenix Group and Admiral were up 1.4% and 1.2% respectively, in a positive read-across.
At the other end of the large-caps, Rio Tinto, Evraz and Legal & General were the worst performers, down 8.3%, 5.7% and 1.9% respectively after the stocks went ex-dividend. This means new buyers no longer qualify for the latest payout.
In the FTSE 250, Cineworld Group was the best performer, up 8.5%, after the multiplex chain expressed confidence in its prospects as lockdown restrictions ease and said it is considering a US listing.
Cineworld said its pretax loss narrowed to USD576.4 million in the first half of 2021 from USD1.64 billion a year before, as its movie houses were allowed to reopen. Revenue totalled USD292.8 million, down from USD712.4 million a year before, a period that included some time pre-pandemic.
The Brentford, London-based firm declared no interim dividend, the same as last year. With 9,269 screens worldwide, Cineworld said it expects strong trading in the fourth quarter due to a strong film slate and pent-up demand and said the actions it took to cope with the virus pandemic have strengthened the business.
In addition, Cineworld said it was mulling a listing of itself or a partial listing of its US movie theatre business Regal Entertainment on Wall Street, pointing to US equity capital markets as the "largest and most liquid" in the world as rationale for the move.
Cineworld acquired Regal in 2018 for USD3.6 billion, making it the second largest global cinema chain behind AMC Entertainment, which has a market capitalisation of USD15.83 billion. For perspective, Cineworld's market value currently stands at just GBP898.9 million, following the damage caused by the pandemic.
"The board is therefore considering options to maximise shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or a partial listing of Regal in the US. The board will evaluate these options over the coming months and will consult with shareholders in due course if any formal proposals are to be made," Cineworld said.
The Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was down 0.7%. The S&P/ASX 200 in Sydney closed down 0.1%.
China on Wednesday unveiled plans to tighten regulation across multiple sectors over the coming years, weeks after it hit stocks by cracking down on a range of industries including tech firms.
A statement said sectors including private tutoring, and food and drugs would see tougher legal enforcement, fuelling concerns officials were not finished with moves to tighten their grip on the economy.
The pound was quoted at USD1.3863 early Thursday, unchanged from at the London equities close on Wednesday, despite encouraging domestic economic growth figures.
The UK economy rebounded sharply on an annual basis in June as the economy continued to reopen and the country pressed head with its mass-vaccination drive, said the Office for National Statistics on Thursday.
In the three months to June, UK gross domestic product grew 4.8% quarter-on-quarter, following a contraction of 1.6% in the first quarter of 2021. The print was in line with market forecasts, cited by FXStreet.
On an annual basis, the UK economy expanded 22% in the second quarter, rebounding significantly from the height-of-pandemic comparison, having shrank by 6.1% in the first quarter from a mostly pre-pandemic comparative period. The second-quarter reading was in line with the market estimate.
Robert Alster, chief investment officer at Close Brothers Asset Management, said: "It is clear the UK is entering its economic honeymoon period. The surge in household spending naturally incentivised by the rapid vaccine roll-out and a long-awaited termination of lockdown measures is propelling an unparalleled economic rebound - though admittedly from a low base in 2020.
"But the government's economic roadmap out of lockdown is filled with many bumps and potholes, which could make for an uncertain and uneven recovery. A smooth journey is contingent on us not facing another wave of Covid which increases hospitalisations and cripples the NHS, as well as a relatively suppressed 'pingdemic' to ensure businesses can stay open and meet the thriving consumer demand. Importantly, the impact of the end of the furlough scheme is unpredictable - it could cause a wave of unemployment, which will certainly have a negative effect on broader economic growth."
The euro was priced at USD1.1738, flat from USD1.1737. Against the Japanese yen, the dollar was trading at JPY110.41, down from JPY110.47.
Brent oil was quoted at USD71.25 early Thursday, up sharply from USD70.14 a barrel late Wednesday. Gold was trading at USD1,755.50 an ounce, higher against USD1,748.19.
Thursday's economic events calendar has EU industrial output numbers at 1000 BST, before US producer prices and the latest jobless claims at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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