(Alliance News) - Stock prices in London were flat to higher at midday on Monday as investors prepare for tighter UK lockdown restrictions, while in the US, the two presidential candidates hit the campaign trail with just three weeks to go until the election.
The FTSE 100 index was flat at 6,014.05 points. The mid-cap FTSE 250 index up 104.91 points, or 0.2%, at 18,179.33. The AIM All-Share index was up 0.3% at 992.92.
The Cboe UK 100 index was down 0.1% at 598.12 points. The Cboe 250 was up 0.6% at 15,441.61, and the Cboe Small Companies up 0.5% at 9,557.27.
In mainland Europe, the CAC 40 in Paris rose 0.4% and the DAX 30 in Frankfurt was up 0.2%.
"Stock markets have been surprisingly resilient over the last week or so, despite the increasingly diminishing short-term prospect of a US stimulus deal, against a backdrop of rising infection rates across Europe, and the rising likelihood of further restrictions," said CMC Markets analyst Michael Hewson.
In the FTSE 100, Rolls-Royce Holdings was the best performer, up 2.8% at 229.60 pence. Shares in the jet engine maker were continuing to recover from a 17-year low of 100.80p reached earlier this month, having set out plans to bolster its balance sheet. The stock remains down 66% so far in 2020, however.
"While some have suggested that part of the rebound may have been partly driven by bid speculation, this seems unlikely given the failure of KIO and Singapore's GIC in this regard, with the UK government's golden stake a big obstacle. It seems more likely that having removed the doubts over its short-term future, with the securing of extra funding, investors are taking a longer-term view that the company is now in better shape to reorientate its business model to deal with the challenges of the next ten years," commented CMC Markets analyst Michael Hewson.
At the other end of the large caps, Aveva was the worst performer, down 5.1%. The industrial software firm said it has performed "creditably" in the first half against a challenging backdrop, but revenue is expected to fall.
For the half-year ended September 30, Aveva expects to report revenue of around GBP333 million, down from GBP391.9 million in the first half of financial 2020.
Separately, the Cambridge, England-based company said its proposed acquisition of OSIsoft remains on track and that it is making progress on debt financing relating to the buyout.
GVC Holdings was down 1.8%. The gambling firm said it was awarded four sports-betting licences in Germany by the country's regulator. Some of the terms include a wagering limit of EUR1,000 per month that can be increased to EUR10,000. There also will be deposit limits until customer verification processes are complete and a maximum annual bonus per customer of EUR100.
GVC estimates that earnings before interest, tax, depreciation and amortisation will be reduced by up to GBP40 million on an annual basis. The company said this hit to earnings from the German licenses will be incremental to the GBP70 million negative impact of its new Tolerance Policy. GVC reported underlying Ebitda of GBP761.1 million for 2019.
International Consolidated Airlines Group was down 1.5%. The airline operator said Aer Lingus Chair & Chief Executive Sean Doyle will become the new CEO of British Airways, effective immediately, as Covid-19 causes job cuts at the airline.
The Anglo-Spanish airline holding company said Doyle will be replacing Alex Cruz, who will step down as CEO & chair of British Airways but will remain as non-executive chair of BA for the time being.
At Aer Lingus, Chief Corporate Affairs Officer Donal Moriarty will become interim CEO. A permanent appointment will be announced in due course, the company said.
British Airways has caught flak recently for its handling of up to 12,000 job cuts as Covid-19 continues to ground the air travel industry.
"Sean Doyle will have his work cut out to make immediate progress given that British Airways is facing the toughest challenge in its history as demand for international travel has plummeted and quarantine restrictions continue to constrain booking," Hargreaves Lansdown's Susannah Streeter commented.
The pound was quoted at USD1.3018 at midday on Monday, flat from USD1.3010 at the London equities close Friday, after the Bank of England wrote to UK banks to ask if they are ready for negative interest rates.
In September, at the BoE's last Monetary Policy Committee meeting, the UK central bank said it and the Prudential Regulation Authority would "begin structured engagement on the operational considerations" of negative interest rates.
UK interest rates currently sit at a record low of 0.1%.
Woods, chief executive officer of the PRA, wrote: "We recognise that a negative policy rate could have wider implications for your firm's business and your customers. The bank and PRA will consider the wider business implications, including on financial stability, safety and soundness of authorised firms and pass-through to the wider economy."
Civic leaders across north-west England were locked in negotiations with UK government ministers as Boris Johnson prepares to unveil sweeping new controls in an attempt to stem the surge of coronavirus infections, PA reports.
The prime minister will set out his three-tier strategy in a Commons statement, with areas in England labelled as medium, high or very high risk, which will inform the "appropriate interventions" needed in each area.
The euro was priced at USD1.1806, lower from USD1.1821. Against the yen, the dollar was quoted at JPY105.50, down from JPY105.68.
In commodities, Brent oil was trading at USD42.40 a barrel Monday midday, down from USD43.32 late Friday in London. Gold was USD1,923.88 an ounce, marginally lower from USD1,924.20.
US stock market futures were mostly higher on Monday, though trading volumes are expected to be light as the country celebrates the Columbus Day holiday. Stock markets remain open, but the government bond market is closed.
The Dow Jones Industrial Average was called down 0.1%, but the S&P 500 and the Nasdaq Composite were called up 0.3% and 1.2%, respectively.
Optimism that US lawmakers will eventually pass a new stimulus package lifted sentiment, with the White House ramping up its offer and President Donald Trump insisting Republicans want to get a deal done.
Trump will launch a campaign marathon on Monday, holding rallies in three key swing states over the next few days as his White House race against surging Democrat rival Joe Biden enters its critical final weeks.
Trump will hold a campaign rally on Monday in Florida, his first time hitting the campaign trail since testing positive for Covid-19, while Biden heads to Ohio.
"US bond markets are closed for Columbus Day, so some traders will expect to see a less America-centric tone to the day ahead. However, stimulus talks in Congress remain one of the key elements driving market sentiment as we move forward. With around three-weeks left until the election, Biden's lead in the polls could point towards a substantial fiscal package coming into play should the Dems take congress. However, for now it is clear that perhaps the most we can hope for is a trimmed-down, targeted package to address those areas where stimulus cannot wait," said IG Group's Josh Mahony.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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