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(Alliance News) - Stock prices in London were marginally higher at midday on Tuesday, with little in the way immediate market drivers but growing interest in the leadership race at the US Federal Reserve.
The FTSE 100 index was up 9.13 points, or 0.1%, at 7,310.07. The FTSE 250 index was up 17.57 points, or 0.1%, at 23,557.49. The AIM All-Share index was up 3.03 points, or 0.2%, at 1,242.64.
The Cboe UK 100 index was up 0.1% at 724.70. The Cboe 250 was flat at 21,058.10 and the Cboe Small Companies up 0.6% at 15,745.29.
In mainland Europe, the CAC 40 stock index in Paris was up 0.3% and the DAX 40 in Frankfurt was up 0.2%.
US stock market futures were pointed flat to higher. The Dow Jones Industrial Average was called flat, the S&P 500 up 0.2% and the Nasdaq Composite was up 0.3%.
President Joe Biden soon will decide who will lead the Federal Reserve for the next four years, with Chair Jerome Powell's term set to expire in February.
Bloomberg, citing people familiar with the matter, reported that Fed Governor Lael Brainard was interviewed for the leadership position at the helm of the central bank when she visited the White House last week.
Brainard, the sole Democrat on the Federal Reserve Board of Governors, is seen as the most likely replacement if the Biden administration decides to move on from Powell, who was nominated by former Republican president Donald Trump.
Biden has been under intense pressure from the liberal wing of his Democratic party to put in place officials who will be tougher on banks, after Senator Elizabeth Warren labelled Powell a "dangerous man".
Meanwhile, Federal Reserve board member Randal Quarles announced he is resigning at the end of December, leaving another vacancy on the central bank for Biden to fill.
Analysts at ActivTrades commented: "European benchmarks traded in green territory, despite a mixed opening caused by speculation over the next chair of the US Federal Reserve. While Jerome Powell is likely to be reappointed by President Biden for a second term, Lael Brainard was also being interviewed for the job. This inevitably raised questions about the future of US monetary policy as a less dovish stance would be expected under Brainard, impacting rates as well as the time schedule and pace of the tapering.
"Meanwhile, market sentiment continues to be driven higher as global [virus] restrictions ease, even if inflation remains a concern, as investors await key speeches from Christine Lagarde, Powell and Governor [Andrew] Bailey today."
PayPal was down 4.7% in pre-market trade in New York despite the payments processor late Monday posting a third-quarter earnings hike and flagging a pact with Amazon.
California-based PayPal said revenue in the third quarter ended September 30 rose 13% annually to USD6.18 billion from USD5.46 billion. Pretax profit increased 1.8% to USD1.17 billion from USD1.14 billion a year earlier.
In addition, Chief Executive Dan Schulman noted PayPal, through its Venmo unit, will partner with Amazon.
In London, Associated British Foods was the best large-cap performer, up 6.7%, after the Primark clothing chain owner declared a special dividend on the back of a resilient annual performance.
For the 53 weeks that ended on September 18, revenue was GBP13.88 billion, down slightly from GBP13.94 billion in financial 2020, but pretax profit rose by 6% to GBP725 million from GBP686 million.
Its Retail unit, which houses the Primark fashion chain, delivered adjusted operating profit of GBP415 million, up 15% from GBP362 million in financial 2020. It said Primark's profit margin was 10.6% in the second half.
AB Foods declared a 20.5 pence final dividend, alongside a 13.8p special dividend, bringing total dividends for the year to 40.5p.
Rolls-Royce was up 4.5% after the jet engine maker said it has secured funding for its Small Modular Reactor unit to build low carbon nuclear power technology.
Rolls-Royce, BNF Resources UK and Exelon Generation will invest GBP195 million across three years, and this spending commitment will allow it to secure grant funding from the UK government of GBP210 million. The UK grant falls under the government's 'Ten Point Plan for a Green Industrial Revolution'.
BT Group was up 3.6% after Berenberg upgraded the telecommunications firm to Buy from Hold.
Conversely, DCC was the worst faller in the FTSE 100, down 3.7%. The Irish support services firm said it delivered a strong performance in the first half with all divisions delivering growth, despite the global volatility in commodity pricing, supply chains and inflation.
For the six months to September 30, revenue rose 27% to GBP7.52 billion from GBP5.93 billion last year and adjusted operating profit increased 11% to GBP195.8 million from GBP176.1 million. DCC declared an interim dividend of 55.85p, up 7.5% from 51.95p paid last year.
Looking ahead, DCC said it expect that the year ending March 31, 2022 to be another year of "strong operating profit growth and continued development activity" and in line with current market consensus expectations.
Persimmon was down 3.0% even as the housebuilder continued to perform well in 2021 thanks to healthy demand.
The York, England-based firm said private sales reservation rates per site are still ahead of 2019. For the period July 1 to this past Monday, average private new home sales reservation rate per site was 16% ahead of the same period in 2019.
Persimmon said demand for newly built homes continues to underpin positive pricing conditions in the UK housing market.
"Overall, it's a positive picture that Persimmon is painting. Cash generation should be strong in these market conditions, which bodes well for dividends. Like all home builders, Persimmon will be hoping that whatever course of action the Bank of England takes with interest rates, it does nothing to knock the housing market off balance. But with no news of any significant changes in Persimmon's own story, it's unsurprising to see the stock edging [lower]," said Steve Clayton, HL Select fund manager said.
In the FTSE 250, Watches of Switzerland was the standout performer, up 11%, after the luxury timepiece retailer lifted its sales and earnings guidance on the back of a strong post-pandemic recovery.
Watches said its strong performance in the first half, covering the 26 weeks to October 31, led to a 45% surge in revenue year-on-year to GBP586.2 million from GBP414.3 million. This was up 41% on the same period in 2019.
The Rolex authorised dealer said it has continued to generate strong growth and make further progress on its strategic objectives during the year, with investments yielding positive results.
Looking ahead, Watches of Switzerland upped its annual revenue outlook. For financial 2022, the retailer is guiding for revenue between GBP1.15 billion and GBP1.20 billion, up from previous forecasts of GBP1.05 billion to GBP1.10 billion and from GBP905.1 million in financial 2021.
The pound was quoted at USD1.3583 at midday on Tuesday, up from USD1.3558 at the London equities close Monday.
On the political front, UK Prime Minister Boris Johnson is under increasing pressure after a minister admitted the government made a "mistake" by attempting to change standards rules to prevent a Tory MP from being suspended.
Johnson skipped an emergency Commons debate on Parliament's standards system, leaving it to the Chancellor of the Duchy of Lancaster Steve Barclay to respond for the government as the prime minister chose to instead honour a "long-standing" commitment to visit a North East hospital.
Barclay told members of Parliament that, while there were concerns with the way allegations of wrongdoing by MPs are probed, it had been an error for ministers to proceed in the way they did last week as they sought to rip up the current rules.
The fiery debate also saw former chief whip Mark Harper call on Johnson to apologise for his handling of the sleaze row which has engulfed the Conservative Party over the past week, with more recently elected Tories expressing their dissatisfaction with Downing Street's attitude.
The euro was priced at USD1.1591, flat from USD1.1590 late Tuesday. Against the Japanese yen, the dollar was trading at JPY112.90, down from JPY113.18.
Brent oil was quoted at USD83.82 a barrel Tuesday at midday, up from USD83.60 late Monday. Gold stood at USD1,825.32 an ounce, marginally higher against USD1,823.51.
The economic calendar on Tuesday has US producer prices at 1330 GMT. Fed Chair Powell and Bank of England Governor Andrew Bailey will speak virtually at the Conference on Diversity and Inclusion in Economics, Finance & Central Banking later in the afternoon.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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