The FTSE 100 moved tentatively to the downside as investors digested results of the US midterm elections and enthusiasm around oil and China subsided.

US election results were still coming in at lunchtime on Wednesday with the chances of a big win for Republicans looking unlikely. If Biden loses either the House or Senate, it will make it extremely difficult to push his agenda through and render him powerless.

“The red wave promised overnight turned out to be more of a pinkish swell with the result of crucial midterm elections still in the balance as trading began in the UK on Wednesday morning,” said AJ Bell investment director Russ Mould.

“Amid the uncertainty the FTSE 100 was modestly lower. A continuing slide in oil prices, as initial excitement about a reopening of the Chinese economy has waned, helping to put energy stocks under continued pressure.”

Shell and BP were down 1.5% and 0.2% respectively dragging on the index.

Mould went on to highlight it is not what is happening today, but what might happen tomorrow with US inflation, as the biggest driver of markets on Wednesday.

“What might have greater impact on markets than the latest political ructions across the Atlantic are the inflation figures due out in the US tomorrow as traders play their usual game of trying to guess when the Fed might finally pivot away from rate rises,” said Mould.

The economic conditions and cost of living crisis has claimed a notable scalp in Made.com who today entered administration, only for Next to step in and buy the assets and IP for £3.4m.

As Warren Buffet said, “it’s only when the tide goes out that you learn who has been swimming naked.”

This is unfortunately true of Made.com. The company were racking up losses as orders fell and payables mounted. An attempt to find a buyer for the business failed and the company was forced to suspend shares and call in the administrators.

Next had been widely expected to buy Made.com and have executed a deft swoop on the assets.

“The deal shows that there was nothing wrong with the proposition as such, just the way the business was run,” said AJ Bell investment director Russ Mould.

“As Made.com CEO Nicola Thompson observed in a candid statement that the company could not survive in a world where there wasn’t stable demand, low inflation, and a cost-efficient global supply chain.”

“Next has the scale, experience and retail savvy to adapt to changing economic circumstances and it has done so successfully in the past, suggesting it can turn Made.com into a successful and lucrative brand.”

Aviva share slipped on Wednesday despite reporting a very respectable set of results for the first nine months of 2022.

New business across Aviva insurance business was robust with UK&I Life new business rising 46% and gross premium in General Insurance up 10%.

However, the investment and wealth business did see some weakness due to a challenging environment for their platform business.

The investment business may see further challenges going forward which could be the driver behind Aviva share’s 2% dip in early trade on Wednesday.

Any downside in Aviva shares might perhaps get the attention of income investors given Aviva said they didn’t see any need to alter their 32.5p dividend guidance for 2023. With Aviva shares at 424p, the delivery of the 32.5p would mean Aviva has a 7.6% yield.

“Trading is positive and our performance is consistently strong. We have had a good nine months due to our market leading positions, our customer focus and the clear benefits of Aviva’s diversified business across insurance, wealth and retirement,” said Amanda Blanc, Group Chief Executive Officer.

“Our customers have continued to save for their future and protect what is valuable to them. Flows in our Wealth business were encouraging and general insurance volumes continue to grow, especially in commercial lines. Profitability also remains robust across both life and general insurance.”

ITV’s two clearly defined business have had differing fortunes so far in 2022 while group revenue climbed in the nine months to 30th September.

A theme has been building among businesses reliant on advertising and ITV provided further evidence advertising spend was suffering as economic conditions became ever uncertain.

However, while ITV’s ad revenue has declined so far in 2022, total advertising was only 2% weaker at £1.3bn in the nine month period, making ITV share’s 6% drop today seem a bit of an overreaction.

ITV’s group total external revenue rose 6% to £2.5bn helped by strong performance in the ITV Studios business.

ITV’s advertising business is described as resilient by both the company and analysts, and ITV’s content business is becoming the jewel in ITV’s crown.

Non-advertising revenue in the period has exceeded advertising revenue for the second year in a row and raised questions about whether the ITV Studios business is better suited as a stand alone business. This may be reason for today’s fall in ITV’s shares.

“ITV has put in a resilient showing over the first nine months of the year. The shining light comes from the Studios business, where the group’s content-creation powerhouse is growing ahead of the wider sector,” said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.

“This industry is facing structural tailwinds, and these are unlikely to dissipate anytime soon. There are questions swirling about a potential breakup of ITV into its two separate parts, but doing this would leave the more troubling area of the business highly exposed.

The FTSE 100 underperformed Europe on Tuesday ahead of the results of US midterm elections that could render Biden’s administration powerless.

The vote is in effect a referendum on the current government and a signal on how the US population could vote in the next election.

Although the election in itself isn’t a risk event for markets, the implications for business in the next two years are important. A major loss for Biden could also bring Trump a step closer back to the White House.

“The FTSE 100 started Tuesday on the back foot as the latest in a seemingly regular dose of political turmoil looms on the horizon in the form of US midterm elections,” said AJ Bell investment director Russ Mould.

“The Republicans are widely expected to make sweeping gains and should they control both houses of Congress then Democratic president Joe Biden would essentially be in office but not in power given the divisive nature of politics across the pond.”

“This could be a mixed blessing for markets as gridlock in Washington would at least prevent any legislation being introduced which could damage businesses.”

Corporate Results

While global markets focus on the midterms, a number of FTSE 100 companies updated investors today with mixed reactions.

AB Foods and Coca-Cola HBC provided reasonably positive updates and enjoyed positive reactions in shares while Persimmon shares were hit by poor sales figures.

AB Foods’ operating profit rebounded with the return a shoppers to Primark and recorded revenue similar to pre-pandemic levels.

Coca-Cola shares were higher after the group released a broadly upbeat statement with higher organic sales in all business segments, excluding Ukraine and Russia.

Persimmon warned investors mortgage rates were impacting sales and brought their bumper dividend payments into the spotlight. Although they didn’t make any announcement on dividends, changes to their capital allocation strategy are set to curtail available cash for distributions. Persimmon was down 6.5% at the time of writing and the FTSE 100’s worst performer on the day.