London midday: Stocks dip after disappointing updates from Shell, Flutter

(Sharecast News) - London stocks had edged into the red by midday on Wednesday after disappointing updates from Shell and Flutter Entertainment, and amid worries about inflation.

The FTSE 100 was down 0.2% at 8,258.90, reversing earlier small gains.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Inflation concerns have stoked fresh wariness on the markets, with worries that a pressure cooker of prices increases is heating up again.

"The Institute for Supply Management's monthly survey of the US Services sector showed prices jumped to the highest level since last January. Job vacancies also rose, by more than expected, reaching a six-month high. Although S&P futures indicate a small rebound, nervousness is set to remain, and all eyes will be on Friday's closely watched jobs number.

"It's expected to be robust, indicating persistent strength of the US economy. Although such a show of strength might be seen as good news, it's leading to concerns that the Fed will go even slower on interest rate cuts.

"Already the Fed had warned there is likely to be only two reductions this year, down from four forecast in September, but speculation is brewing that there this could be reduced to just one if price pressures persist. The unpredictability of the incoming Trump administration and the potential impact of his tariff plan on inflation is also adding to concerns. Amid expectations of a higher for longer rate environment, Treasury yields have risen to around 4.67% the highest level in eight months."

There are no major UK data points due, but in the US the ADP report for December is scheduled for release at 1315 GMT while the FOMC's December minutes will be out at 1900 GMT.

In equity markets, oil major Shell fell as it said that results for the fourth quarter were significantly lower than the preceding three months, revealing $700m of well-write offs and a $1.3bn hit to cashflow.

The company also cut its liquefied natural gas production guidance for the three months to 30 December to 6.8-7.2m metric tons, from earlier estimates of 6.9-7.5m tons.

Flutter Entertainment was also under the cosh as the online betting firm downgraded its US guidance, citing unfavourable sports results.

It noted that the 2024/2025 NFL season to date has been the most customer-friendly since the launch of online sports betting, with the highest rate of favourites winning in nearly 20 years.

As a result, the company now expects 2024 US revenue to be around $370m lower than its previous guidance midpoint at approximately $5.78bn. It had previously guided to between $6.05bn and $6.25bn.

After incremental one-off cost mitigation, adjusted EBITDA for the year is set to be around $205m lower than the previous guidance midpoint at approximately $505m, versus $670m to $750m.

Ashmore tumbled after Jefferies downgraded the shares to 'hold' from 'buy' and it cut the price target to 170p from 220p as it said it was moving to the sidelines until a macro catalyst emerges.

The bank said macroeconomic and geopolitical uncertainty has continued to weigh on emerging market (EM) flows, and it now expects the fund flow inflection for Ashmore to take longer to materialise.