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(Alliance News) - European markets rallied into November on Tuesday, with London's FTSE 100 index lifted by a strong performance from mining stocks.
The FTSE 100 index opened up 103.79 points, 1.5%, at 7,198.32. The FTSE 250 was up 258.82 points, 1.5%, at 18,148.75, and the AIM All-Share rose 7.10 points, 0.9%, at 813.23.
The Cboe UK 100 opened up 1.3% at 719.48, the Cboe UK 250 added 1.3% at 15,564.86, and the Cboe Small Companies opened down 0.4 of a point at 12,335.17.
In European equities on Tuesday, the CAC 40 in Paris opened up 1.6%, while the DAX 40 in Frankfurt was up 1.0%.
The dollar pulled back early Tuesday in London, as the two-day meeting of the US Federal Open Market Committee starts on Tuesday.
Sterling was quoted at USD1.1531, higher than USD1.1500 at the London equities close on Monday. The euro traded at USD0.9933 early Tuesday, up from USD0.9885 late Monday. Against the yen, the dollar was quoted at JPY147.76, down versus JPY148.61.
While a 75 basis hike point is widely expected to be announced on Wednesday, analysts will be watching closely for any hints as to the central bank's thinking about future rate hikes.
"While a 75 basis point hike looks locked in tomorrow, the messaging is what investors are interested in. Despite inflation remaining at eye-watering levels, there's a growing belief that the central bank will signal a desire to ease off the brake over the following few meetings starting with a 50bps hike in December," said Oanda's Craig Erlam.
"A dovish signal could be an exciting moment for equity investors, one they've craved all year, but that doesn't mean it'll be plain sailing from here. There's still the economic drop-off and potential global recession to contend with, not to mention a highly uncertain winter in Europe."
To follow on Thursday will be the interest rate decision by the Bank of England.
Where the central bank decides to set rates will be key in determining the trajectory of the UK housing market, which is already showing signs of struggling in the aftermath of the fated mini-budget.
According to Nationwide's UK house price index, house prices edged down 0.9% in October from September, marking the first monthly decline since July of 2021. Annual house price growth also slowed sharply to 7.2% in October, from 9.5% in September
"Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation, said Nationwide's chief economist Robert Gardner, adding: "The market looks set to slow in the coming quarters.
"Inflation will remain high for some time yet and (the base rate) is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures."
On the London Stock Exchange, Ocado shares surged 20%. The stock is still down more than 60% in the year so far, however.
The online grocer announced a partnership between Ocado Solutions and Lotte Shopping, the largest retail affiliate of the South Korean conglomerate Lotte Group.
The pair will develop a network of customer fulfilment centres in South Korea, with six planned by 2028. Ocado plans to roll out its in-store fulfilment solution in 2024, with the first CFC to go live in 2025.
No financial details were provided, but Ocado said: "Ocado Group expects this deal to create significant long term value to the business. The impact of this transaction should be negligible on earnings in the current financial year as no cash fees will be recognised in revenue until operations commence."
interactive investor's Victoria Scholar commented: "This is a smart opportunistic move from Ocado that will allow the business to gain a foothold in an important growing economy.
"The tech business will be able to generate fees from Lotte during the development phase and fees linked to sales as well, which will likely be revenue accretive. The tie-up will also help Lotte to expand its delivery business with Ocado's robotic warehouse technology."
BP shed 0.5%.
The oil major continued "performing while transforming" in the third quarter of the year. It recorded USD57.81 billion in revenue during the quarter, up from USD37.87 billion a year prior.
It swung to a pretax profit of USD1.98 billion from a loss of USD495 million a year before. BP also swung to a replacement cost profit of USD23 million from a loss of USD2.93 billion a year before. Underlying RC profit rose to USD8.15 billion from USD3.32 billion.
"While underlying replacement cost profit slipped to USD8.15 billion from the bumper previous quarter of USD8.5 billion, the figure is well in excess of the expected USD6.1 billion," noted interactive investor's Richard Hunter.
BP announced a dividend of 6.006 cents per share to be paid in December. It expects to deliver an annual increase in dividend per share of 4% though 2025 and conduct GBP4.0 billion per year in share buybacks, assuming at least USD60 a barrel Brent.
Brent oil was trading at USD94.40 a barrel early Tuesday, higher than USD92.24 late Monday.
BP said it expects oil prices to remain elevated in the fourth quarter, due to OPEC+ cutting supply, however it expects global gas prices to be more volatile.
"Of course, the oil price has been a major factor in enabling this largesse. Despite a recent dip relating to demand concerns in the event of a global recession, the OPEC+ production cut decision has worked in its favour and the price of oil remains up by 21% in the year to date," ii's Hunter added.
Gold was quoted at USD1,648.37 an ounce, higher than USD1,638.60 .
FTSE 100 miners saw a strong start, with Anglo American up 4.0%, Glencore up 3.8%, Rio Tinto up 3.6% and Antofagasta up 3.6%.
In the FTSE 250 index, Ferrexpo added 4.6%. The iron ore exporter said it has partially resumed operations in Ukraine, as repair work progresses following a Russian missile strike in October.
At the other end of the midcaps was hybrid workspace firm IWG, down 3.0%. It said it expects adjusted earnings before interest, tax, depreciation and amortisation to be towards the lower end of market estimates of GBP304 million to GBP380 million.
IWG reported revenue growth of 25% in the third quarter compared to the previous year, as global demand for hybrid working solutions remains strong.
"Investors appear to be shrugging off its 25% revenue growth year-on-year," said ii's Scholar.
"Commercial property has struggled drastically while many households have been looking for bigger flats and houses to accommodate a home office outside of big cities like London. Like many businesses IWG has also been struggling with the macroeconomic headwinds including a slowing UK economic outlook plus rising inflation, which is sharply increasing costs."
On AIM, Orisirium Technology jumped 84%. The cloud-based cybersecurity company said bookings for the nine months to September 30 were up to GBP2.5 million, compared to GBP1.6 million a year before.
"We have maintained our focus on attracting new customers alongside expanding with existing customers, as evidenced by our significant, multi-year contract renewals with customers in the financial services and IT sectors previously announced in Q3," said CEO David Guyatt.
In Asia, the Shanghai Composite closed up 2.6%, and the Hang Seng index in Hong Kong gained 5.1%. The Japanese Nikkei 225 index closed up 0.3% in Tokyo. The S&P/ASX 200 stock index in Sydney closed up 1.7%.
Still to come in Tuesday's economic events calendar, there is a slew of manufacturing PMI readings, including from the UK at 0930 GMT and the US at 1345 GMT.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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