(Alliance News) - Stock prices in London opened mildly higher on Tuesday following sharp losses on Monday, while Compass missed out on the tentative rally after issuing a profit warning.
World governments and central banks are trying to calm fears with massive stimulus pledges and interest rate cuts, as more countries go into lockdown to prevent the rapid spread of the new coronavirus.
The FTSE 100 index was up 38.96 points, or 0.8%, at 5,190.04. The large-cap index closed down 215.03 points, or 4.0%, at 5,151.08 Monday, falling below the 5,000-mark for the first time since 2011.
The mid-cap FTSE 250 index was up 7.51 points, or 0.1%, at 14,365.49. The AIM All-Share index was up 2.68 points, or 0.4%, at 666.08.
The Cboe UK 100 index was up 3.5% at 8,966.20. The Cboe 250 was up 1.8% at 12,711.34, and the Cboe Small Companies was flat at 8,707.36.
On the continent, the CAC 40 in Paris was up 3.4%, while the DAX 30 in Frankfurt was up 3.7%.
"These are troubling times for markets and brief periods of reprieve should be welcomed but treated with caution. This will pass eventually but not when governments around the world are implementing draconian measures and crossing their fingers," commented OANDA analyst Craig Erlam.
In the FTSE 100, Just Eat Takeaway was up 5.8% after HSBC raised the online takeaway platform to Buy from Hold.
Ferguson was up 4.5% after the plumbing and heating products supplier said it saw strong operational delivery in the first half of its financial year.
For the half year ended January 31, revenue rose 1.1% to USD10.97 from USD10.85 billion a year before, while pretax profit fell 5.7% to USD640 million from USD679 million. Ongoing revenue rose 4.3% to USD9.89 billion from USD9.49 billion, while trading profit rose 9.5% to USD782 million from USD714 million. The company attributed the performance to continued market share gains in the US.
In the US, Ferguson posted revenue growth of 5.0% and underlying trading profit growth of 5.7%. Ferguson raised its interim dividend by 7% to 67.5 US cents from 63.1 cents.
The company makes most of its revenue in the US and said the demerger process for its Wolseley UK business is on track and expects to complete the transaction within the current calendar year.
At the other end of the large cap index, Compass Group was comfortably the worst performer, down 17%. The contract caterer said the acceleration of containment measures from governments and clients in Continental Europe and North America has put a dent in its financial expectations for the half year.
Compass said the vast majority of Sports & Leisure and Education business in these regions have been closed, as such the company's business and industry volumes are being hurt severely. Compass's current expectations are that interim 2020 organic revenue growth should be between zero and 2%.
The company is implementing "significant mitigation plans" to manage costs, and at this stage expects the drop-through impact of lost revenue to be between 25% to 30% across the business.
As a result, Compass's interim operating profit for financial 2020 will be in a range between GBP125 million to GBP225 million - lower than expected. In financial 2019, interim operating profit came in at GBP951 million.
In the FTSE 250, Dixons Carphone was the best performer, up 13% after the mobile phone and electrical goods retailer said it will close all of its UK standalone Carphone Warehouse stores - 531 shops representing 8% of its total UK selling space.
The company said mobile phones are to be sold through Carphone Warehouse sections in electrical goods retailer Currys.
It expects 2,900 redundancies as the businesses are combined. It said the 70 Carphone Warehouse stores in the Republic of Ireland aren't affect, nor are international operations.
Dixons Carphone added that it has not yet seen a "material impact" from Covid-19 but is preparing for one. It said it still expects adjusted pretax profit of GBP210 million in its current financial year.
The pound was quoted at USD1.2232 Tuesday morning, lower than USD1.2271 at the London close Monday.
In response to the pandemic, UK Chancellor of the Exchequer Rishi Sunak will set out a new package of support for businesses hit by the outbreak less than a week after announcing GBP12 billion of emergency funding in the government budget.
The euro stood at USD1.1171, up from USD1.1149. Against the yen, the dollar was trading at JPY106.47, higher compared to JPY105.85.
Brent oil was quoted at USD30.80 a barrel Tuesday morning, up sharply from USD29.99 late Monday. Gold was quoted at USD1,485.03 an ounce, down from USD1,508.34.
The Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong ended up 1.1%.
Still to come in the economic calendar, UK unemployment and average earnings are released at 0930 GMT. US retail sales are at 1230 GMT and industrial production at 1315 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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