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(Alliance News) - Markets were in a better mood on Tuesday after a turbulent start to the week, driven by worries over a new virus strain, with London stock indices posting cautious gains by midday.
The FTSE 100 index was up 6.76 points, or 0.1%, at 6,423.08 midday Tuesday. The mid-cap FTSE 250 index was up 150.12 points, or 0.8%, at 19,842.23. The AIM All-Share index was up 0.6% at 1,095.82.
The Cboe UK 100 index was up 0.2% at 609.89. The Cboe 250 was up 0.7% at 22,721.04, and the Cboe Small Companies up 0.7% at 14,980.27.
In mainland Europe, the CAC 40 in Paris was up 1.0% while the DAX 30 in Frankfurt was rallying 1.1% in the afternoon.
"After yesterday's carnage on the markets with approximately 2% declines seen across Europe, investors are in a better mood as we draw closer to Christmas," said Russ Mould, investment director at AJ Bell.
"Yesterday's declines were driven by investors getting a cold shower from Covid-related setbacks...The prospect of another nationwide lockdown seems inevitable going into 2021 and so earnings expectations for many industry sectors may have to be downgraded," said Mould. "However, it's comforting to see that the markets haven't crashed for a second day in a row. That would suggest investors aren't panicking."
Crisis talks with France will continue in an effort to resume trade flows across the Channel amid warnings that the border must be running again by Wednesday to avoid disruption to food supplies.
More than 1,500 lorries are backed up in Kent, unable to make the crossing to France, with drivers having spent a second night sleeping in their cabs. Home Secretary Priti Patel said the government is "speaking constantly" with France to achieve a resolution "in both our interests" to get freight moving again.
More than 40 countries have banned flights from the UK due to a mutant variant of coronavirus spreading through the country, but it is the French decision to also ban hauliers which has caused the greatest concern.
Meanwhile, scientific advisers continued to press the case for tougher UK restrictions in response to the VUI 202012/1 variant, which is 70% more infectious than previous strains.
There was some optimism on the Brexit front, however. The EU is mulling a fresh proposal on fishing rights from UK Prime Minister Boris Johnson as he bids to secure a last minute trade deal, Bloomberg reported late Monday.
According to people familiar with the negotiations, Bloomberg said, the UK on Monday offered to give further ground if the EU backed down in other areas. The latest suggestion from Britain would see the EU reduce the value of fish it catches in UK water by around a third, with the UK last week pushing for a 60% cut.
The European Commission is talking with national governments before responding, the people said. EU chief negotiator Michael Barnier will update EU ambassadors at 3pm GMT before addressing members of the European Parliament at 5pm.
Meanwhile, data showed the UK economy is estimated to have grown a record 16% in the third quarter of 2020 from the second quarter.
The third-quarter reading has been revised from sequential growth of 15.5% reported initially. While a record figure, UK gross domestic product is still 8.6% below where it was at the end of 2019, revised from an initial estimate of 9.7% - and follows a 19% slump in the second quarter of the year and 3.0% fall in the first quarter.
Sterling was quoted at USD1.3418 on Tuesday, up nearly a US cent from USD1.3321 at the London equities close on Monday.
The euro traded at USD1.2234 on Tuesday, firming on USD1.2217 late Monday. Against the yen, the dollar was quoted at JPY103.39, down slightly from JPY103.50 late Monday in London.
Gold was quoted at USD1,872.80 an ounce early Tuesday, easing from USD1,875.05 on Monday. Brent oil was trading at USD50.46 a barrel, firm on USD50.32.
In the US, stocks are called for a mixed start. The Dow Jones is pointed down 0.2%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.3%. The economic events calendar on Tuesday has US GDP figures at 1330 GMT.
In London, British Airways parent International Consolidated Airlines rose 4.8% to be the top blue-chip performer on Tuesday, rebounding after an 8.0% fall on Monday.
UK lenders were higher on Brexit deal optimism. Barclays rose 3.2%, Lloyds Banking up 3.0% and NatWest up 2.6%.
In the FTSE 250, easyJet rose 3.9% after agreeing with Airbus to defer the delivery of aircraft that had been scheduled for the 2022 to 2024 financial years.
A total of 22 aircraft will be moved to the 2027 to 2028 financial years, and there will also be the movement of 15 delivery dates within the 2022 to 2024 to match forecast seasonal requirements more closely.
In addition, easyJet had the option until the end of 2020 not to take up to 7 aircraft scheduled for delivery between the 2022 and 2026 financial year. The group has agreed with Airbus to reallocate the aircraft to which the option applies, to 7 aircraft due for delivery in 2025 and 2026. As a result, easyJet said it will take no deliveries in the 2021 financial year, 8 in 2022, 7 in 2023 and 18 in 2024.
However there has been no change made to the total number of firm Airbus A320 NEO family aircraft outstanding orders.
"This latest amendment to our longstanding agreement with Airbus reflects easyJet's significant fleet flexibility as well as the benefit of highly attractive aircraft pricing. In this period of uncertainty, this flexibility is even more valuable, as it will enable us to quickly flex our fleet size in response to customer demand," said Chief Executive Officer Johan Lundgren.
easyJet's contractual commitments to Airbus has been a source of conflict with founder Stelios Haji-Ioannou, who tried to have the board and senior executive team ousted over the issue back in May.
DFS Furniture rallied 7.4% as it guided to a full-year profit towards the top half of market expectations.
The furniture retailer said gross sales were 19% ahead of a year before during the first 24 weeks of its 2021 financial year. DFS also said its gross sales via its online channels were 76% ahead of 2019's figures.
The company said its performance "reflects the benefit of a shift in spending to home categories, and also market share gains that led to a particularly strong order intake in the first quarter of its 2020 financial year." The company also reported a "resilient" second quarter, despite extensive showroom closures in November due to the national lockdown restrictions.
As a result of this, DFS Furniture said it expects its full-year profit before tax and brand amortisation to be in the upper half of the current market forecast range of between GBP81.2 million and GBP118.0 million. In the financial year that ended June 28, DFS Furniture posted a pretax loss of GBP81.2 million.
By Lucy Heming; lucyheming@alliancenews.com
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