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(Alliance News) - Stocks in London ended slightly higher on Tuesday with investors anticipating more developments on US President Joe Biden's ambitious stimulus push, while travel stocks fell in the wake of more stringent restrictions.
The FTSE 100 index ended up 8.03 points, or 0.1%, at 6,531.56. The mid-cap FTSE 250 index closed up 26.39 points, or 0.1%, to 21,112.94. The AIM All-Share index finished flat at 1,210.35.
The Cboe UK 100 index closed flat at 649.22. The Cboe 250 closed up 0.2% at 18,579.95 and the Cboe Small Companies closed up 0.2% at 12,687.02.
In Paris the CAC 40 ended 0.1%, while the DAX 30 in Frankfurt ended 0.3%.
"Volatility is low as there wasn't much in the way of major macroeconomic news to trigger excitement in one direction or another. In recent sessions, the sentiment has been dictated by the prospect of the Biden administration signing off on the USD1.9 trillion stimulus package without backing from Republicans. The story is still relevant but it has lost some of its sway over the markets," said CMC Markets analyst David Madden.
In the FTSE 100, Taylor Wimpey ended the best performer, up 2.6%, after Jefferies upgraded the housebuilder to Buy from Hold.
At the other end of the large caps, Ocado Group closed 1.7% lower after the online grocer offered a cautious outlook for the current financial year and earmarked GBP700 million in total capital expenditure, alongside its annual results.
For its financial year ended November 29, 2020, Ocado's annual revenue jumped by a third to GBP2.33 billion from GBP1.76 billion, helped by virus-boosted demand for online grocery purchases. This was slightly short of the GBP2.35 billion expected by the market, according to the company-compiled consensus.
The company's statutory pretax loss narrowed to GBP44.0 million from GBP214.5 million as it benefited from a GBP104.6 million gain from exceptional items, swung from a GBP94.1 million hit in financial 2019.
"The rate of investment, and profitability, is a disappointment. Solutions burns through cash at a heady rate. And the centres are long term investments, so it takes years to know if they pay off. Recently added to the shopping list is two robotics companies. These should boost Ocado's already impressive automated systems, but a bit like the CFCs themselves, we don't know yet if the expensive additions will be worth the price tag," noted analysts at Hargreaves Lansdown.
British Airways parent International Consolidated Airlines closed down 3.3% after UK Health Secretary Matt Hancock said arriving travellers put in quarantine hotels in England will be charged GBP1,750 for their stay, as part of tighter travel restrictions.
Passengers face fines of up to GBP10,000 for failing to quarantine and those who lie on their passenger locator forms face up to 10 years in jail. Anyone who attempts to conceal that they have been in one of those destinations in the 10 days before arrival faces a prison sentence of up to 10 years, Hancock said.
Midcap budget airline easyJet closed 4.6% lower, Irish carrier Ryanair Holdings ended down 3.4%, while Jet2 closed off 3.7%.
"Matt Hancock has finally provided the finer details on international arrivals, with those coming from so-called 'red zone' nations facing a potential GBP10,000 fine and 10-year prison sentence if found flouting the rules. However, the hurdles for any travellers from those less at risk nations will also be higher, with arrivals required to take tests both two and eight-days after their flight. With travellers now needing a total of three tests either side of their arrival into the UK, airlines will worry that this could decimate what little demand there currently is to go abroad," said IG Group's Josh Mahony.
The pound was quoted at USD1.3790 at the London equities close, up sharply from USD1.3740 at the close Monday, as the UK's rapid Covid-19 vaccination programme continued and the threat of negative interest rates being implemented by the Bank of England faded.
UK Prime Minister Boris Johnson has set a target for all the people in the over-70 age group to be offered a Covid-19 vaccine by February 15. So far, 12 million people across the UK have received a Covid-19 inoculation.
"Since last Thursday, the British pound has been performing better than the market since the Bank of England eased expectations of negative rates anytime soon. These comments put GBPUSD back on an upward path. The weakening US currency is mostly behind the rise in GBPUSD and the general demand for risky assets from Friday," analysts at FXPro told Alliance News.
The euro stood at USD1.2100 at the European equities close, up from USD1.2050 late Monday, on hopes that Italy's political crisis was coming to an end.
Ex-central banker Mario Draghi opened a final round of talks on Monday on forming a new Italian government, as the virus-hit country enters its third week of political paralysis. The former president of the European Central Bank is under pressure to secure the parliamentary support he needs to be sworn in as prime minister before the end of the week.
However, the surprising eagerness of Matteo Salvini's far-right and eurosceptic League party to back the ultra-Europhile Draghi is complicating coalition building.
On a positive note, Italy's borrowing costs dropped to a historic low Tuesday in a further sign of market confidence in prime minister designate Draghi.
The yield on Italy's benchmark 10-year bonds fell under 0.5% during morning trading, the lowest level ever recorded for the eurozone's third-largest economy.
ThinkMarkets analyst Fawad Razaqzada said: "The euro has found additional support from rising bond yields in Germany, with the 10-year bunds rising to their best levels since September 2020, as well as falling yields in Italy - both signs of investor optimism. The yield spread between Italian and German bonds has narrowed, which is exactly what investors want to see. In Italy, Mario Draghi, the former ECB head, has secured support to become the country's next Prime Minister from two key parties, 5-Star Movement and the right-wing League.
"With politicians ready to put aside bitter rivalries for the good of the country, this has raised hopes for the prospect of government of national unity to take the country out of its current political crisis. Investors have warmed to the development by bidding up Italian stocks in recent days, as well as buying government bonds."
Against the yen, the dollar was trading at JPY104.62, down from JPY105.17 late Monday.
Stocks in New York were mostly lower at the London equities close having ended at fresh records on Monday.
The DJIA was down 0.4%, the S&P 500 index 0.2% lower, but the Nasdaq Composite was up 0.3%.
Among individual companies, Electronic Arts gained 0.7% after the video game developer late Monday announced a USD2.1 billion deal by smartphone-focused game studio Glu Mobile.
Elsewhere, Bitcoin briefly pushed to a record-high of USD48,215.82 after winning a huge boost Monday from news that Elon Musk's Tesla had invested USD1.5 billion in the asset.
The world's oldest and most prominent cryptocurrency later eased back to a level around USD46,000.
Brent oil was quoted at USD60.70 a barrel at the London close, up sharply from USD60.32 at the close Monday. The North Sea benchmark touched USD61.27 a barrel overnight - its highest level in 13 months.
"Oil's fundamentals are looking strong again on both (the) supply and demand side," said Edward Moya, analyst at Oanda. "Despite demand being down about five million barrels year-over-year, optimism is high that vaccine rollouts will have key parts of the global economy return to normal."
Gold was quoted at USD1,837.66 an ounce at the London equities close, little changed against USD1,836.80 late Monday.
The economic events calendar on Wednesday has inflation readings from China overnight and from Germany and the US at 0700 GMT and 1330 GMT respectively.
The UK corporate calendar on Wednesday has interim results from homewares retailer Dunelm Group, housebuilder Redrow and from emerging markets-focused asset manager Ashmore Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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