The FTSE 100 status of Rio Tinto is in focus after an activist investor urged the mining giant to ditch its primary London listing.
The pressure by Palliser Capital came as Rio held an event in London outlining “a clear plan for a decade of profitable growth”.
In a lacklustre session for the FTSE 100 index, traders are focused on political events in France and South Korea and the outcome of tomorrow’s OPEC meeting.
FTSE 100 Live Wednesday
- Rio Tinto urged to drop FTSE listing
- South Korea stocks fall amid turmoil
- Centrica urges faster net zero progress
Market update: FTSE 100 run ends as defensive stocks struggle, Astra down 3%
10:27 , Graeme EvansThe best run for the FTSE 100 index since August was today in danger of petering out amid the weakness of heavyweights AstraZeneca and Unilever.
The top flight’s fall of 0.3% or 28.90 points to 8330.51 came after five days in positive territory last night left the index within 100 points of its record close.
London’s lacklustre performance was out of line with Europe after the Dax in Frankfurt rose 0.8% and the Cac40 in Paris weathered the country’s political turmoil with a 0.3% rise.
Scope Markets analyst Joshua Mahony said the European buying followed the latest disappointing PMI figures from the region’s services sector.
He said: “The market expectations around the European Central Bank point towards a faster pace of easing compared with their US and UK counterparts, and the contraction in Italian, French, German, and eurozone services sectors serve to further highlight the need to act swiftly.”
Asia markets also calmed after their initial reaction to events in South Korea, where the country’s president yesterday declared and then reversed martial law.
The Korean Composite Stock Price Index closed down by 1.4% after an earlier reverse of 2.3%, while the shares of heavyweight stock Samsung finished 0.9% lower.
US markets are poised to open higher, with the tech-focused Nasdaq Composite seen continuing this week’s strong run to move deeper into record territory.
In contrast, defensive stocks from the utilities, pharmaceuticals and consumer goods sectors were out of favour in London’s FTSE 100 index.
AstraZeneca led with a decline of 3% or 282p to 10,508p, while GSK lost 13.5p to 1354.5p, Severn Trent fell 28p to 2699p and Unilever reversed 42p to 4652p.
The mining sector was also under pressure as Anglo American gave up recent progress with a decline of 40p to 2531p and Glencore fell 3.85p to 378.15p.
Rio Tinto dipped 51p to 4969p on the day it held a seminar in London to update on its strategy for the “long-term delivery of attractive shareholder returns”.
Chief executive Jakob Stausholm said: "We have all the building blocks we need to become a global leader in energy transition materials, and we have a clear plan for a decade of profitable growth.”
His comments came on the day that an activist shareholder called on the company to follow the lead of rival BHP by ditching its primary London listing.
Palliser Capital wants the company to focus on its Australian market listing, believing that the current dual structure has led to $50 billion of shareholder destruction.
The FTSE 250 index outperformed the top flight by rising 57.22 points to 20,949.96, led by polymers firm Victrex as its post-results rebound continued with a gain of 5% or 46p to 1050p.
Vehicle rental business Zigup fell 8% or 30.5p to 352.5p after reiterating full-year expectations alongside interim results showing a 17.2% drop in underlying profits to £82 million.
The shares of photo booth and laundry services business ME Group are up more than 70% this year but fell back 6p to 219.5p despite an update showing it is on track for another record annual profit haul.
Photo booth firm ME on course for new profit peak
09:28 , Graeme EvansPhoto booth and laundry services business ME Group is set for another record profit haul after posting its year-end trading update today.
The FTSE 250 group expects pre-tax profit to be not less than £73 million, up more than 10% on a year earlier. Revenues should be at least £308 million, up 3%.
Wash.ME Revolution laundry operations have been the key growth driver after revenues rose 19%, driven by the installation of a record 1,111 machines across key regions including France and the UK.
The photo booth operations performed as expected, with revenues slightly higher.
Shares are up more than 70% in 2024 but fell 10.2p to 215.3p following today’s update.
Peel Hunt, which has a price target of 350p, said: “We see significant upside potential given the roll-out of Laundry and the steady growth and cash flow profile of Photo.”
AstraZeneca leads FTSE 100 lower, Legal & General up 3%
08:32 , Graeme EvansThe FTSE 100 index is 23.39 points lower at 8336.02, with AstraZeneca among the stocks under pressure after its shares fell 2% or 180p to 10,610p.
National Grid and Severn Trent fell 1% amid weakness across the utilities sector.
Legal & General is top of the FTSE 100 index, up 3% or 5.8p to 228.7p after releasing details of a City presentation in which it highlights the “highly attractive” potential of the pension risk transfer market.
The FTSE 250 index rose 9.33 points to 20,902.07, with polymers firm Victrex up another 16p to 1030p after yesterday’s strong results-day performance.
Rio Tinto under pressure to ditch dual listing
08:18 , Graeme EvansRio Tinto is under pressure to review its FTSE 100 status after a shareholder called for the unification of the miner’s dual listed company structure.
Palliser Capital today released a presentation and letter to the board outlining why it thinks Rio should be a single Australian domiciled holding company.
It believes the current dual structure has led to approximately $50 billion in value destruction for shareholders since its inception, including through limitations on the company’s ability to pursue stock-based M&A.
Palliser said it refutes arguments made by Rio Tinto management against unification, noting the example of former FTSE 100-listed BHP.
The shareholder has called on the board to launch an “independent, comprehensive and transparent review” of the merits of unification.
The pressure came on the day that Rio held a briefing in London to outline its strategy for “the long-term delivery of attractive shareholder returns”.
Chief executive Jakob Stausholm said: "We have all the building blocks we need to become a global leader in energy transition materials, and we have a clear plan for a decade of profitable growth.”
Political upheaval keeps markets on edge
07:48 , Graeme EvansThe Kospi index today fell 1.4%, having been down as much as 2.3% after South Korea’s president declared and then reversed martial law.
The shares of Samsung, which is the country’s biggest company, recovered from an initial 3% slide to stand about 1% cheaper.
IG Index said the year-to-date loss for the Kospi of 7.5% was the worst in Asia.
It added: “The won stabilised with suspected intervention but remains the region’s weakest currency, down 9% against the dollar this year.”
Political upheaval in France has also kept the euro near a two-year low and widened bond spreads. The Cac40 finished slightly higher yesterday, despite selling pressure on banks including Societe Generale.
Centrica urges faster pace on switch to net zero technologies
07:28 , Graeme EvansExtensions to the operating life of four nuclear power stations have been confirmed by Centrica, which holds a 20% stake in the fleet alongside EDF.
Heysham 1 and Hartlepool are now expected to generate electricity until March 2027, one year later than previously expected.
Heysham 2 and Torness have been extended by two years and are now expected to generate until March 2030.
The extensions are expected to add around 9 TWh to Centrica’s electricity generation volumes between 2026 and 2030.
They will support the UK's net zero ambitions and maintain grid stability at a time when cleaner, but more intermittent, renewable generation is being added to the energy mix.
Centrica chief executive Chris O’Shea said: "There is no silver bullet that will achieve net zero, but a diversified energy system underpinned by nuclear power is a positive further step towards a greener, fairer future.”
“We're delighted that a further extension was possible which allows us the time necessary to develop other zero carbon dispatchable electricity generation options such as new nuclear and hydrogen fired generation.
“We must move at a faster pace to ensure that these replacement technologies are deployed in time."
FTSE 100 seen lower, oil rises ahead of OPEC+ meeting
07:00 , Graeme EvansThe FTSE 100 index is set to open 16 points lower at 8344, having risen by 0.6% or 46.52 points in yesterday’s session.
The reverse follows a mixed session in New York, where the Dow Jones Industrial Average lost 0.2% but the S&P 500 index ended slightly higher.
The strong week for tech stocks continued as the Nasdaq Composite added another 76.96 points.
The price of Brent Crude rose to $73.87 amid signs that OPEC+ producers will delay their planned increase in output at a meeting later this week.
