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(Alliance News) - Stock prices in London were mixed at midday on Tuesday as investors tentatively await the release of the latest US inflation figures and the start of earnings season across the Atlantic.
The FTSE 100 index was down 6.92 points, or 0.1%, at 6,882.20. The mid-cap FTSE 250 was up 37.81 points, or 0.2%, at 22,190.99. The AIM All-Share index was up 0.3% at 1,239.53.
The Cboe UK 100 index was down 0.2% at 685.80. The Cboe 250 was up 0.4% at 19,834.30. The Cboe Small Companies was up 0.4% at 14,296.75.
In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt both were up 0.3%.
US stock market futures were pointed to a mixed start ahead of consumer price index readings at 1330 BST.
The Dow Jones Industrial Average was called up 0.1%, S&P 500 flat and Nasdaq Composite down 0.1%.
There are growing fears that the reopening of the global economy will send prices surging this year and force central banks to tighten the ultra-loose monetary policies that have helped sustain a year-long equity rally. But the US Federal Reserve has repeatedly pledged not to change tack until inflation is elevated for some time and unemployment is under control.
According to consensus, cited by FXStreet, March CPI is expected to accelerate to 2.5% year-on-year from 1.7% in February.
In addition, market participants are gearing up for the start of earnings season in the US, with first-quarter results from Wall Street titans JPMorgan Chase and Goldman Sachs on Wednesday, followed by Bank of America and Citigroup on Thursday.
"The banking sector put aside a lot of money last year in anticipation of credit losses, and there is a chance that some of these reserves haven't been needed. The market will be hoping that these reserves are released, potentially funding share buybacks or greater dividends in the future," said AJ Bell's Russ Mould.
In pre-market trade in New York, JPMorgan Chase was flat, Goldman Sachs was up 0.1%, Bank of America up 0.2% and Citi up 0.3%.
Analysts at OFX said: "Despite the huge focus domestically on the UK's further unlocking of restrictions yesterday the markets main focus is on the US economy and especially its inflation outlook as America's vaccination programme builds momentum and new stimulus measures come into effect. Rising Treasury yields over the past couple of months have signalled that the markets expect a strong economic bounce back in the States however the Federal Reserve is keeping its cards close to its chest with regards to when it may start to tighten monetary policy and reduce the amount of cash its pumping into the system.
"With this in mind this afternoon's CPI data is a key area of focus. Should it show prices rising faster than expected then it may force the Feds hand into finally admitting that it needs to withdraw some of its support sooner than currently expected to control price rises."
In the FTSE 100, Just Eat Takeaway.com was the best performer, up 3.5%. The food delivery services provider saw an improved performance in the first quarter of its current financial year, driven by strong growth in the UK and by its investment programme.
Just Eat said total orders in the first quarter grew by 79% year-on-year to 200.0 million, while delivery orders surged to 69.4 million from 23.3 million.
Delivery orders in the UK multiplied to 22.9 million in the first quarter of 2021 from 2.9 million a year earlier. New partnerships were signed with household brands such as Leon, Tortilla and Chipotle, as well as coffee chains Starbucks and Costa, adding to Just Eat's growing restaurant supply. In London, Just Eat Takeaway said it achieved triple-digit order growth.
Rival Deliveroo Holdings, which delivers its maiden update as a listed company on Thursday, was up 4.7% in a positive read-across.
JD Sports Fashion was up 3.0% after the athletic apparel retailer said it delivered a resilient performance despite its high-street stores being closed for a majority of the year under lockdown restrictions.
For the financial year ended January 30, revenue was GBP6.17 billion, up 0.9% from GBP6.11 billion in financial 2020. JD posted pretax profit of GBP324.0 million, down 7.0% from GBP348.5 million.
On a headline basis, meaning before exceptional items, pretax profit was GBP421.3 million, down 4.0% from GBP438.8 million the year before. In January, JD Sports had said it expected to report headline pretax profit of at least GBP400 million.
JD declared a final and full-year dividend of 1.44 pence, up from 0.28p.
Weir Group was up 2.0% after Credit Suisse raised the engineer to Outperform from Neutral.
In the FTSE 250, Babcock International was the standout performer, up 32%. The defence contractor said it will not pay a dividend for financial 2021 or 2022 - but nor will it come to the market for more money - as it embarks on a thorough restructuring of the business.
Babcock said its financial 2021 results will include GBP1.7 billion in impairments and charges following a contract profitability and balance sheet review.
The company said it conducted the review as it moves to simplify the business and reduce layers in a restructuring.
Babcock said that, as part of its focus on building a strong balance sheet, the board will not be recommending a dividend for financial 2021 or 2022.
The company added that the aims to "return Babcock to strength without the need for an equity issue".
Among actions it intends to take instead, Babcock said it expects to raise GBP400 million from disposals over the next 12 months. Additionally, its restructuring plan is expected to save GBP40 million per year from a one-off expense of GBP40 million.
In addition, JPMorgan upgraded Babcock to Overweight from Neutral.
The pound was quoted at USD1.3735 at midday on Tuesday, lower from USD1.3746 at the London equities close on Monday, following the release of UK economic data.
The UK economy registered growth in February as the country adapted to life in lockdown conditions, according to the latest figures from the Office for National Statistics.
The UK economy grew 0.4% month-on-month in February, rebounding from 2.2% contraction in January, as UK government restrictions affecting economic activity remained broadly unchanged. The latest reading missed the the market forecast, cited by FXStreet, for 0.6% growth.
UK Prime Minister Boris Johnson, at the start of 2021, imposed the toughest national lockdown in England since March of 2020, shutting schools, non-essential shops and restaurants.
On Monday, however, lockdown measures were eased in England, with pub gardens, gyms, hairdressers and non-essential stores among the businesses allowed to reopen.
"The key data points will come when we get second quarter data through, as that will show more of the true rebound from lockdown - this week pubs and restaurants are noticeably busy once again as they are allowed to reopen, but the true picture will become clearer as we move through the year," said Derrick Dunne, chief executive at Beaufort Investments.
The euro was priced at USD1.1891 at midday Tuesday, lower from USD1.1911. Against the yen, the dollar was trading at JPY109.45, little changed from JPY109.40.
Brent oil was quoted at USD64.02 a barrel Tuesday at midday, higher from USD63.58 at the London equities close on Monday. Gold was trading at USD1,725.55 an ounce, down from USD1,734.45.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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