FTSE 100 edges up as US, Iran trade blows

(Alliance News) - Stock prices in London opened higher on Wednesday, despite tit-for-tat strikes between the US and Iran, while WH Smith shares plunged after it cut profit guidance and set out plans for a large capital raise.

The FTSE 100 index opened up 11.61 points, 0.1%, at 10,238.94. The FTSE 250 was up 44.11 points, 0.2%, at 22,882.07, and the AIM all-share was down 4.97 points, 0.6%, at 775.84.

The Cboe UK 100 was down slightly at 1,016.82, the Cboe UK 250 was down 0.1% at 19,708.68, and the Cboe small companies was up 0.2% at 18,601.87.

In European equities on Wednesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was slightly lower.

Sterling was at USD1.3390 on Wednesday morning, up from USD1.3381 at the London equities close on Tuesday. Against the euro, sterling rose slightly to EUR1.1585 from EUR1.1581.

The euro was a little higher at USD1.1553 from USD1.1551. Against the yen, the dollar edged up to JPY160.38 from JPY160.29.

Investors were again focused on the latest developments in the Middle East on Wednesday, as Iran attacked US bases in Jordan and Bahrain amid a spate of tit-for-tat strikes between the US and Iran.

The fresh Iranian strikes came after the US carried out its own attacks on the Islamic republic, after Tehran shot down an American helicopter.

Iranian forces fired "long-range missiles" and "targeted and destroyed four major targets" in Jordan, including F35 fighter nests at an air base and the US command centre in Al-Azraq, the country's Revolutionary Guards said in a statement quoted by state-run IRNA news agency early on Wednesday.

US Central Command, which oversees American forces in the Middle East, said on X that it had "struck Iranian air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz with precision munitions from US Air Force and Navy fighter jets".

In response, Brent crude was trading higher at USD91.44 a barrel on Wednesday morning from USD90.90 on Tuesday.

Focus is also on US inflation data for May, which is due out later today. The headline US inflation rate is set to top 4% year-on-year.

Following on from strong jobs data on Friday, this could put more pressure on the Federal Reserve to consider raising interest rates.

In Asia on Wednesday, the Nikkei 225 in Tokyo was down 1.9%. In China, the Shanghai Composite was 0.4% lower, while the Hang Seng Index in Hong Kong fell 0.8%. The S&P/ASX 200 in Sydney rose 0.6%.

In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.2%, while the S&P 500 fell 0.3% while the Nasdaq Composite lost 1.0%.

The yield on the US 10-year Treasury was quoted at 4.53%, narrowed slightly from 4.56%. The yield on the US 30-year Treasury slimmed a little to 5.01% from 5.03%.

Back in London, WH Smith shares sank 17% on the FTSE 250 index as it cut its profit guidance and proposed a placing to strengthen its capital position.

The Swindon, England-based travel retailer now expects to deliver headline pretax profit before non-underlying items of between GBP75 million and GBP90 million, down from April's guidance for between GBP90 million and GBP105 million. Before that, earlier guidance was for between GBP100 million and GBP115 million.

Revenue in the 14 weeks to June 6 rose 5% on a constant currency basis, with like-for-like revenue up 2%.

WH Smith said its revised expectations for the full year "reflect the observed and anticipated decline in passenger numbers and weakening consumer demand across all divisions".

WH Smith proposed a capital raise, including a non-pre-emptive placing, of up to around 26 million new shares, representing 20% of share capital.

Executive Chair Leo Quinn said: "There is no doubt that current economic uncertainty and its effect on consumer appetite for spending has created headwinds. In this environment, sorting legacy issues while investing in the core model requires the financial flexibility of a stronger balance sheet in lock-step with self-help. This placing is a prudent and proactive step to accelerate our transformation of what is, at heart, a good business with some great people and clear opportunity for profitable growth."

Shares in water utility Pennon were down 1.5%, as it swung to a pretax profit of GBP114.4 million in the financial year to the end of March from a loss of GBP72.7 million a year prior.

Underlying earnings before interest, tax, depreciation and amortisation improved by 55% to GBP519.2 million from GBP335.6 million. Revenue grew 23% to GBP1.29 billion from GBP1.05 billion.

It upped its final dividend by 3.1% to 20.03p, bringing the total payout to 29.29p, down 7.2% from 31.57p.

Among small caps, Fuller, Smith & Turner shares climbed 8.5% as it raised its dividend after "another strong year".

The London-based pubs and hotels operator said pretax profit fell 13% to GBP29.5 million in the 12 months to March 28 from GBP33.8 million a year earlier.

However, revenue climbed 5.7% to GBP397.8 million from GBP376.3 million. The company made a GBP800,000 profit from disposal of property, down from GBP18.9 million a year earlier.

Adjusted earnings before interest, tax, depreciation and amortisation climbed 10% to GBP74.6 million from GBP67.6 million.

The firm declared a final dividend of 13.35 pence per share, up from 12.35p a year prior. This took the total dividend to 21.20p per share, an increase of 7.3% from 19.76p.

Executive Chair Simon Emeny said: "As we move into our summer season, preparations have gone well. Our garden investment programme has seen fresh space created for peak trading, advance bookings for the World Cup have been strong, and we are seeing increased demand for staycations benefiting our excellent rooms business."

On the AIM index, shares in Beeks Financial Cloud climbed 9.4%.

The Renfrew, Scotland-based cloud computing and connectivity provider wins three contracts across its Analytics, Proximity Cloud and Private Cloud offerings, worth around GBP1.7 million in total.

Revenue recognition from the Analytics and Proximity Cloud contracts is expected to start this month, support the firm's performance in the current financial year. Revenue from the remaining contract will be recognised in the next financial year.

"These contract wins demonstrate continued demand across our product portfolio and reflect the breadth of opportunities we are seeing across infrastructure, connectivity, analytics and AI-powered insight," said Chief Executive Officer Gordon McArthur.

Gold was lower at USD4,185.39 an ounce early on Wednesday from USD4,270.69 late Tuesday.

Still to come on Wednesday's economic calendar is an interest rate decision in Canada, plus inflation data in the US.

By Michael Hennessey, Alliance News reporter

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