(Alliance News) - Stocks in London opened mostly lower on Wednesday as the US ramps up pressure on Russia, while Imperial Brands rose after saying it was on track to deliver full-year results in line with revised guidance.
The US was expected to announce tough new sanctions on Russia Wednesday, including a ban on new investments, a day after Ukraine's president showed the UN Security Council harrowing images of violence and accused Moscow of widespread atrocities.
A new sanctions package being prepared by Europe, meanwhile, is set to include oil and coal, France's foreign minister said at EU talks in Luxembourg.
The FTSE 100 index was down 9.06 points, or 0.1%, at 7,604.66 early Wednesday. The mid-cap FTSE 250 index was down 12.71 points, or 0.1%, at 21,344.27. The AIM All-Share index was flat at 1,057.17.
The Cboe UK 100 index was up 0.2% at 757.62. The Cboe 250 was flat at 18,808.25, and the Cboe Small Companies was 0.3% higher at 15,576.61.
In Paris, the CAC 40 index was down 0.3%, while the DAX 40 in Frankfurt fell 0.2%.
"Further pressure on any general economic recovery is likely to follow later, with the expectation being that the US and its allies will ratchet up the ever-growing list of sanctions on Russia, in an attempt to ensure the country’s prolonged economic isolation. The current newsflow from the region seems to have moved away from the prospects of conciliation towards growing evidence of death and destruction in Ukraine," said Interactive Investor's Richard Hunter.
In the FTSE 100, Imperial Brands was the best performer, up 2.6%, after the tobacco maker backed annual guidance and added it forecasts a "broadly flat" first-half revenue performance, with tobacco market struggles in Europe offset by progress elsewhere.
Imperial Brands said net revenue for the six months ended March 31 is expected to be broadly flat annually on a constant currency basis, in line with expectations.
Interim adjusted operating profit is expected to grow by around 2% on a constant currency basis, benefiting primarily from reduced losses in the Next Generation Product range, which includes Blu. The tobacco performance, meanwhile, will be weighted to the second half.
In the first half of financial 2021, it reported net revenue of GBP3.57 billion. For the whole of that year, it reported revenue of GBP7.59 billion, as well as an organic adjusted operating profit of GBP3.57 billion.
Imperial said it was on track to deliver full-year results in line with revised guidance issued in March. It forecasts a full-year net revenue performance ranging from flat to 1% growth on a constant currency basis. It expects adjusted operating profit growth of around 1%.
In the FTSE 250, Redrow was down 2.0% after it became the latest housebuilder to sign the UK government's pledge to for developers fund the remediation of life critical fire safety issues on high-rise buildings.
The housebuilder said that in signing the pledge it will be remediating all the buildings in which it was involved, going back 30 years.
Redrow said this was a "highly complex matter" and the exact remediation work required and for the exact number of buildings would take time to determine. Its existing provision for fire safety in high rise buildings is GBP36 million.
However, it believes an additional provision of GBP164 million would be required as a result of the pledge. This will be treated as an exceptional item in the results for the 2022 financial year, it explained.
Hilton Food Group was down 1.6%. The food packaging company said it delivered a strong annual financial performance with volumes and revenue both growing.
For the year ended January 2, the company generated revenue of GBP3.3 billion, up 22% from GBP2.8 billion the year before, driven by growth across proteins and geographies.
However, annual pretax profit was GBP47.4 million, down 12% from GBP54.0 million a year ago after exceptional items of GBP8.2 million. Adjusted pretax profit rose 13.0% to GBP67.2 million from GBP61.1 million.
Elsewhere, Avon Protection was down 18% after the military protection maker warned of lower-than-expected annual earnings after a soft start to its financial year.
Trading in the six months to the end of March saw a continuation of some of the challenges seen last year, it said, but with performance accelerating through the second quarter.
However, the personal protection company said half-year profit was hit by a weaker than expected sales mix and additional manufacturing costs, particularly in the helmets business, due to "supply chain and process inefficiencies."
Profitability is expected to improve in the second half versus the first but still not offset the weakness seen in the first six months of its financial year - and, as a result, full-year underlying earnings will be below previous expectations.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.6%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong was down 1.3%. The S&P/ASX 200 in Sydney ended down 0.5%.
China's services sector contracted in March, as rising Covid-19 cases took their toll, survey data revealed on Wednesday.
The Caixin services purchasing managers' index fell to 42.0 points in March from 50.2 in February. March's figure moved below the 50.0 no-change mark, and it also suggested the sharpest activity decline since the virus first emerged back in February 2020.
China reported over 20,000 Covid-19 cases on Wednesday, the highest daily tally given since the start of the pandemic, with Shanghai the heart of the virus surge despite being in lockdown. The country's "zero-Covid" strategy has come under immense strain as cases spike.
Until March, China had kept daily cases low with snap localised lockdowns, mass testing, and strict restrictions on international travel. But the caseload has hit thousands per day in recent weeks, with officials saying they have detected a mutation of the highly transmissible Omicron variant near Shanghai.
The pound was quoted at USD1.3050 early Wednesday, down from USD1.3115 at the London equities close Tuesday.
The euro was priced at USD1.0885, down from USD1.0927. Against the yen, the dollar was trading at JPY123.91 in London, up from JPY123.38.
Brent was quoted at USD106.80 a barrel Wednesday morning, down from USD107.07 late Tuesday. Gold stood at USD1,919.35 an ounce, soft from USD1,926.80.
In the international economics events calendar on Wednesday, there is a UK construction PMI at 0930 BST, eurozone producer prices at 1000 BST and Fed meeting minutes at 1800 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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