(Alliance News) - London's blue-chips were struggling for direction around midday on Thursday, underperforming European peers, as a profit warning from retailer Frasers sparked alarm.
The FTSE 100 index fell 3.86 points at 8,331.95. The FTSE 250 eased 13.28 points, 0.1%, at 20,991.87, and the AIM All-Share dropped 1.67 points, 0.2%, at 736.54.
The Cboe UK 100 was slightly higher at 837.15, the Cboe UK 250 was down 0.1% at 18,480.57, and the Cboe Small Companies rose 0.2% to 16,038.78.
European markets shrugged off the political drama in France to forge ahead with the DAX 40 hitting another new high.
The CAC 40 in Paris rose 0.3% while the DAX 40 in Frankfurt climbed 0.4%.
Dan Coatsworth at AJ Bell noted the French political crisis has "failed to knock European indices off course".
However, he cautioned that it might be the "calm before the storm if the pressure grows on president Emmanuel Macron to resign and there is a full breakdown of the current regime."
On Wednesday, French lawmakers ousted the government of Prime Minister Michel Barnier leaving President Emmanuel Macron seeking a replacement.
A vote of no confidence was passed meaning Barnier's government collapsed after just three months in office.
Holger Schmieding at Berenberg thinks the political turmoil "could cost France dearly".
"The fact that the political right and left ousted Barnier highlights the risk that they may jointly undo some of Macron’s previous pro-growth reforms, going beyond the partial reversal of Macron’s corporate tax cuts which Barnier had already proposed. Combined with higher political uncertainty and elevated risk premia, this prospect will likely weigh on business investment," he remarked.
He did suggest there could be a silver lining.
"Crises can be handmaidens of change. With luck, the hit to growth due to the current political turmoil may encourage the centre-left to finally break ranks with left-wing firebrand Jean-Luc Melenchon. Or Le Pen may realise that her chances of winning the presidency in 2027 would not be helped if she now presents herself as an agent of chaos. However, that is a hope, not a forecast."
Elsewhere, bitcoin smashed through the USD100,000 barrier after US President-elect Donald Trump chose crypto-friendly Paul Atkins to run Wall Street regulator, the Securities and Exchange Commission.
The cryptocurrency has been lifted in recent weeks by hopes that Trump's return to the White House will usher in a new era of lighter regulation and supportive policies.
US stocks are called slightly lower. The Dow Jones Industrial Average is called down 0.1%, as is the S&P 500 while the Nasdaq Composite is seen 0.2% lower.
The pound was quoted at USD1.2733 early Thursday afternoon, up from USD1.2717 at the time of the London equities close on Wednesday. The euro stood at USD1.0537, little changed from USD1.0536. Against the yen, the dollar was trading at JPY150.11, up from JPY150.06.
Still to come on Thursday are US weekly jobless claims figures at 1330 GMT.
In London, shares in Frasers Group plunged 10% after it blamed weaker consumer confidence for a reduction in annual profit guidance.
The retailer which owns Sports Direct and House of Fraser said pretax profit fell by a third to GBP207.2 million in the 26 weeks to October 27 from GBP310.2 million a year prior.
Chief Executive Michael Murray said it has been "another period of progress" and the group is set to deliver "another year of profitable growth."
But he said "weaker consumer confidence leading up to and following the budget", means full-year adjusted pretax profit is now forecast in the range of GBP550 million to GBP600 million.
The company had previously expected an outcome between GBP575 million and GBP625 million. Adjusted pretax profit in financial 2024 totalled GBP544.8 million. In the recent half-year, it declined 1.5% to GBP299.2 million.
Speaking to Bloomberg, Murray said that "the skulduggery around the budget is mind-blowing" and that the decisions had damaged consumer confidence.
The warning from Frasers dragged Primark owner AB Foods down by 1.5% and Next down by 1.1%.
British Land, down 4.2%, was another prominent faller as it traded ex-dividend.
Insurer Admiral led the blue-chip risers, gaining 2.6% benefiting from an upgrade by Deutsche Bank to 'buy' from 'hold'.
Deutsche also upgraded FTSE 100 listed Aviva to 'buy' from 'hold' in an upbeat assessment of prospects for the European insurance sector heading into 2025.
The broker said it was remaining "gently positive" on the sector into 2025, supported by "resilient balance sheets and a focus on diversified growth".
Deutsche said this can be seen through the sector’s dividend-bond yield spread, which should create a source of alpha for the insurers in 2025.
The broker lifted Just Group to 'buy' from 'hold' but downgraded M&G to 'hold' from 'buy'.
Aviva rose 1.1%, Just Group climbed 0.7% but M&G fell 0.8%.
Housebuilders were mixed after a survey showed house building activity declined at its sharpest pace since June.
The S&P Global UK construction purchasing managers' index rose to 55.2 points in November from 54.3 in October.
But housebuilding at 47.9, and below the 50.0 no change mark, remained by far the weakest-performing category of construction work in November.
"Construction companies once again noted that elevated borrowing costs and fragile consumer confidence had an adverse impact on demand conditions," S&P Global said.
The upturn in construction output was driven by the strongest rise in commercial work for two-and-a-half years at 58.1 while civil engineering activity, 55.9, also expanded at a strong pace in November.
Taylor Wimpey was 1.9% lower, Persimmon slipped 0.5% but Vistry rose 1.0%.
Earnings generated some sizeable moves on the FTSE 250.
Future jumped 13% after announcing plans for a new GBP55 million share buyback as it welcomed a return to organic sales growth in the second half of the financial year.
The Bath, England-based online magazine publisher and owner of price comparison website Go Compare hailed progress from its Growth Acceleration Strategy launched last December.
"We've made good progress in the first year of the plan, resulting in the group's return to organic growth," Future said in a statement.
Full-year revenue was little changed at GBP788.2 million from GBP788.9 million, but up 1% on an organic basis. This included a strong second half performance, up 5%.
Watches of Switzerland clocked a 13% rise as it backed full-year guidance and flagged an encouraging start to third quarter trading.
Half-year profit dropped 40% to GBP40.5 million in the 26 weeks to October 27 from GBP66.5 million a year prior but sales rose 3.1% to GBP784.8 million from GBP761.4 million.
Chief Executive Brian Duffy said the results reflected an "encouraging improvement in trading in [the second quarter], driven by growing demand in the UK and US".
Duffy said the third quarter trading has "started encouragingly".
"Our trading momentum through November, visibility of intake and second half opening of large showroom investments support our full year guidance, which is unchanged," he stated.
John Wood bounced 6.3% after signing three "major agreements" with oil major BP for engineering and project delivery services.
Brent oil was quoted at USD71.82 a barrel early Thursday afternoon, falling from USD73.20 late on Wednesday. Gold was lower at USD2,652.07 an ounce from USD2,653.48.
By Jeremy Cutler, Alliance News reporter
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