(Alliance News) -Â A promising start in London to Tuesday's session turned downbeat by midday as US futures slid into the red ahead of Wall Street's reopening from the Labor Day holiday.
The FTSE 100 index was down 18.38 points, or 0.3%, at 5,919.02 on Tuesday. The mid-cap FTSE 250 index was down 162.17 points, or 0.9%, at 17,480.03, and the AIM All-Share index was down 0.5% at 953.39.
The Cboe UK 100 index was down 0.2% at 589.55 points. The Cboe 250 was down 0.9% at 14,927.43, and the Cboe Small Companies down 0.2% at 9,445.37.
"As was all too predictable, yesterday's gains for European markets are being frittered away ahead of the reopening of US markets following the Labor Day holiday. Such big gains for European markets on days when US volume is out of the picture are always rather suspect, and now we look to Wall Street to set the tone," said Chris Beauchamp, chief market analyst at IG.
US stocks are on course for a mostly lower start, as the New York Stock Exchange and Nasdaq reopen from Monday's Labor Day holiday. Futures, which earlier in the day were looking bright, turned negative as the European session progressed. The Dow Jones Industrial Average was pointed flat, while the S&P 500 was indicated down 0.6% and the tech-rich Nasdaq Composite a heavy 2.4% down.
Even the pound, continuing to tumble on Brexit worries, was unable to keep the internationally-exposed FTSE 100 in the green.
Sterling was quoted at USD1.3029 midday Tuesday, continuing its slide from USD1.3170 at the London equities close on Monday and USD1.3230 late Friday.
The UK's chief negotiator called for "more realism" from the EU on the eve of crunch negotiations to broker a post-Brexit trade deal.
UK Prime Minister Boris Johnson's negotiator, David Frost, said "we must make progress this week" if an agreement is to be reached by the end of a post-Brexit transition period in December.
He was speaking ahead of a meeting with his EU counterpart Michel Barnier for the eighth round of talks beginning in London on Tuesday.
Downing Street has sought to increase pressure on Brussels, with Johnson setting a five-week deadline for trade talks to succeed in time for the transition's end on December 31. But talks were set for a collision course over new Brexit legislation that has dismayed senior EU figures, who are concerned it could override key elements of the Withdrawal Agreement.
"Having been on a high for the past couple of sessions, FTSE 100 housebuilders are at the bottom of the pile once again, with Brexit and the renewed lockdowns of the UK economy the primary driver of bearish sentiment," said IG's Beauchamp.
Persimmon was down 4.4%, while Barratt Developments fell 3.3% and Taylor Wimpey slipped 3.1%.
The biggest faller in the FTSE 100 at midday was GVC Holdings, down 4.7% after Barclays cut the sports betting firm to Equal Weight from Overweight.
The top blue-chip performer was DS Smith, up 6.7% after the packaging firm said it continued to perform in line with expectations over the past four months, giving it the confidence to plan to pay an interim dividend.
The London-headquartered packaging business told its annual general meeting that it has progressed well since the beginning of May, with performance continuing in line with expectations, despite the economic challenges that resulted from Covid-19.
Given the performance over the last quarter, and an improved clarity in the outlook, combined with a strong financial position, the company said it intends to declare an interim dividend for the half year to the end of October.
JD Sports Fashion, vying for the top spot in the FTSE 100 on Tuesday, gained 6.6%. The retailer said it has been "generally encouraged" with its performance post-lockdown.
Revenue for the half-year ended August 1 came in at GBP2.54 billion, down 6.6% from GBP2.72 billion a year ago. Pretax profit dropped by two thirds to GBP41.5 million from GBP129.9 million.
JD Sports said the reduction in profitability was due to additional costs associated with the shift in revenue to online channels, particularly during the period of temporary store closures.
The company is "generally encouraged" with its performance post-lockdown, though it noted that retail footfall remains comparatively weak. JD Sports also reinstated guidance for the full-year.
Among the mid-caps, Royal Mail rose 18%. The postal operator said revenue rose in the five months to August, thanks to a sharp increase in parcel volumes and prompting upgraded guidance for the current financial year.
The London-based letter and package carrier said revenue in the UK business was GBP139 million higher for the five months ended August 30 compared to a year before.
UK parcel volumes were up 34%, representing an additional 177 million parcels, and parcel revenue increased by 33% year-on-year compared to the same five month period a year before. Addressed letter volumes in the UK, excluding for elections, were 28% lower, a drop of 1.1 billion.
The company updated its annual guidance for its financial year ending March 2021. It has two scenarios, 1 and 2, with scenario 2 assuming a deeper recession with a UK gross domestic product decline of 15%. Scenario 1 is more optimistic and assumes a 10% UK GDP decline amid easing Covid-19 restrictions.
Scenario 1 has been updated and now assumes that Royal Mail's UK revenue will rise by between GBP75 million and GBP150 million year-on-year, rather than falling by GBP200 million to GBP250 million as previously predicted.
Travis Perkins fell 8.3% after swinging to an interim loss.
For the six months to the end of June, Travis Perkins reported a pretax loss of GBP126.5 million, swinging sharply from a profit of GBP15.8 million for the same period a year before, on revenue that fell by 20% to GBP2.78 billion from GBP3.48 billion.
On a like-for-like basis, revenue declined by 19%.
Looking ahead, Travis Perkins said the long-term fundamentals of its end markets remain robust; however uncertainties remain within the near-term UK economy. Like-for-like sales trends in July and August have come very close to prior year levels, supported by the UK renovation, maintenance and improvement market and strong trading in consumer do-it-yourself markets.
In mainland Europe, the CAC 40 in Paris was down 1.3% while the DAX 30 in Frankfurt was down 0.9% early Tuesday afternoon.
The euro traded at USD1.1787, down against USD1.1824 late Monday.
Against the yen, the dollar was slightly higher, quoted at JPY106.31 versus JPY106.28.
Gold was quoted at USD1,914.64 an ounce midday Tuesday, down on USD1,929.44 on Monday. Brent oil was trading at USD41.13 a barrel, slipping from USD42.10 late Monday.
By Lucy Heming;Â lucyheming@alliancenews.com
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