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(Alliance News) - Stock prices in London were ever-so-slightly in the green on Tuesday, helped by gains for oil stocks, a weaker pound, and a positive trading update from retailers Next and Morrisons.
However, the mood in Frankfurt and Paris was more sour, as governments across the Europe - the UK included - ratcheted up restrictions in a bid to contain a resurgent Covid-19.
The FTSE 100 index was up just 2.47 points, at 6,574.35 midday on Tuesday. A weaker pound is a helpful tailwind for the blue-chip stock measure. A stronger pound reduces the value of overseas earnings of the index's constituents.
The mid-cap FTSE 250 index was up 142.54 points, or 0.7%, at 20,680.43. The AIM All-Share index rose 0.2% to 1,163.25.
The Cboe UK 100 index was down 0.1% to 654.45. The Cboe 250 was up 1.0% at 18,025.91, and the Cboe Small Companies up 0.2% at 11,710.43.
On the continent, the CAC 40 stock index in Paris and Frankfurt's DAX 30 both were down 0.2%.
"Following a strong start to the new year for markets, pandemic woes dampened the mood overnight. UK Prime Minister Boris Johnson announced a full lockdown in England last night, and more European countries are likely to extend their current restrictions or implement even stricter ones," Axi analyst Milan Cutkovic explained.
"Investors will have to accept that Europe could find itself in lockdown until spring - with perhaps some temporary easing of restrictions in-between."
The pound was quoted at USD1.3592 at midday, improved slightly from USD1.3587 at the London equities close on Monday, though sterling dropped to intraday low of USD1.3554 on Tuesday.
"British American Tobacco and Diageo are higher today thanks to the weaker pound as that should boost their international sales," noted CMC Markets analyst David Madden.
Dunhill-owner BAT climbed 1.2% and Guinness-maker Diageo was up 0.3%.
Next topped London's large-cap index midday Tuesday, on the back of a fourth, albeit smaller, profit guidance raise for its year ending January. The retailer was up 5.7%.
"After accounting for the benefit of better sales in November and December and anticipated losses from store closures in January, full year profit before tax is forecast to be GBP370 million before two additional non-recurring items," Next said.
Promisingly for Next, full price sales in the nine weeks to December 26 were down just 1.1% from the prior year, measuring up favourably to the retailer's central guidance of an 8% decline.
However, Next did warn that profit it made in November and December "has been almost entirely offset by" lockdowns and additional costs it has incurred clearing retail stock.
"Once again Next's policy of providing cautious forecasts for a quarter has reaped dividends," said IG Markets Chief Market Analyst Chris Beauchamp.
"That this is a long-standing practice appears not to bother investors, and given the doubling (and more) of the shares since March who can blame them. Another upgrade to full-year forecasts doesn't hurt either, and overall Next has cemented its position as the 'must-have' retail stock in a UK-centric portfolio."
Elsewhere in the FTSE 100, AVEVA climbed 5.4% after UBS raised the IT firm to Buy from Neutral.
Royal Dutch Shell's 'A' shares rose 2.6% and its 'B' shares 2.3%. BP was up 2.0%.
"A recovery in oil prices is propping up BP and Royal Dutch Shell this morning but these stocks could be in for high volatility today seeing as OPEC+ are due to make their announcement with respect to output later on, as yesterday's meeting ended without an agreement," CMC's Madden added.
Twenty-three countries in total are trying to reach a compromise between whose who favour keeping in place current cuts to production levels because of market uncertainty created by the coronavirus pandemic, and those who favour releasing an extra 500,000 barrels per day onto the market next month.
The two heavyweights among the producers gathering on Tuesday, Saudi Arabia and Russia, are on opposing sides of the debate, with Riyadh urging caution and Moscow keen to boost production.
Brent oil rose to USD51.90 a barrel from USD51.04 at the London Stock Exchange close on Monday.
The spot gold price also was higher on Tuesday. The precious metal was quoted at USD1,948.37 an ounce, up from USD1,940.70 at the London equities close on Monday.
Back in London, electricity and water utilities were in the red. National Grid, United Utilities and Severn Trent lost 1.7%, 1.3% and 1.0%.
"Utilities were out of favour, suggesting that investors still have an appetite for riskier sectors despite the negative backdrop," AJ Bell Investment Director Russ Mould noted.
Ryanair slipped 1.9% as it reported another sharp fall in traffic.
Traffic in December was 83% lower as the aviation industry continued to be hit by Covid-19 travel restrictions around the globe.
The company operated roughly 22% of its usual December schedule with a 73% load factor. On a rolling annual basis, traffic was roughly two-thirds lower.
So far in 2021, the Irish carrier shares have fallen 8.4%.
On Tuesday last week, the Dublin-based firm said it "must take steps" to ensure that it will remain majority EU owned and controlled following the end of the Brexit transition period. The Irish carrier said it will treat all shares held by non-EU nationals, including UK nationals, as restricted shares. This means the holders of the shares will not be entitled to attend, speak or vote at any general meeting.
The euro stood rose to USD1.2284 at midday in London on Tuesday from USD1.2275 at the European equities close Monday. Against the yen, the dollar was trading at JPY102.82, down from JPY103.10.
US stock market futures were higher ahead of a pivotal day in US politics. The Dow Jones Industrial Average is called up 0.2%, the S&P 500 and Nasdaq Composite are all called 0.3% higher.
Attention will be on the Georgia Senate runoffs that will determine US Senate control and could decisively impact the start of Joe Biden's White House tenure. Two Senate seats are up for grabs. If US President-Elect Biden's Democrats win both, the upper house of the US Congress would be split 50-50 but with Vice President Kamala Harris having a tie-break vote.
"Over in the US the Dow Jones is heading for a 0.2% increase after the bell, as it attempts to claw back a fraction of Monday's 380 point slump. The index has dual concerns at the start of the New Year: like in many countries, a rapid rise in covid-19 cases; and related, the runoff Senate elections in Georgia, the results of which will dictate the next few years for the Biden administration," said Spreadex analyst Connor Campbell
By Eric Cunha; ericcunha@alliancenews.com
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