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(Alliance News) - Blue chip equities in London struggled on Tuesday afternoon, ending firmly in the red, as poor sentiment from a rough start to the day in New York filtered through to the European session.
The FTSE 100 had tread water for much of the day but fell into negative territory after US equities, fresh from record closing highs on Monday, opened firmly in the red on Tuesday.
Large cap benchmarks in Paris and Frankfurt failed to cling onto earlier gains, also suffering a slight afternoon slump and falling just short of new record closing highs.
The FTSE 100 index closed down 26.36 points, or 0.4%, at 7,274.04 on Tuesday. The FTSE 250 index ended down 172.78 points, or 0.7%, at 23,367.14. The AIM All-Share index closed up 1.73 points, or 0.1%, at 1,241.34.
The Cboe UK 100 index ended down 0.4% at 720.96. The Cboe 250 closed down 0.7% at 20,901.50 and the Cboe Small Companies lost 0.2% at 15,630.03.
In mainland Europe, the CAC 40 stock index in Paris ended down 0.1% and the DAX 40 in Frankfurt closed marginally lower. Both the CAC and DAX had been on track to hit new closing records.
"The lacklustre nature of European markets today appears to be driven by some profit taking in US markets, ahead of tomorrow's October CPI numbers. Today's latest US PPI numbers for October came in as expected, unchanged from the previous month, and perhaps holding out the hope that the recent surge in costs through supply chains may be coming to an end," CMC Markets analyst Michael Hewson commented.
Data on Tuesday showed annual US producer price growth remained at a record pace in October. Wednesday's consumer price index data is released at 1330 GMT, with numbers forecast to show an easing of the annual inflation rate to 5.3% in October from 5.4% in September, according to FXStreet cited consensus.
The dollar was largely on the up ahead of the release.
The pound was quoted at USD1.3530 late on Tuesday, down from USD1.3558 at the London equities close Monday and surrendering an intraday high of USD1.3604.
The euro was priced at USD1.1577, down from USD1.1590 late Tuesday. Against the Japanese yen, however, the dollar was trading at JPY112.94, down from JPY113.18.
In New York, the Dow Jones Industrial Average was down 0.6% at the London equities close. Both the Nasdaq Composite and the S&P 500 were 0.5% lower.
PayPal was the worst performing S&P 500 stock, down 12%, after its earnings disappointed. Visa was the worst performer on the Dow in a negative read-across, down 2.4%.
Hewson added: "Tesla shares are also lower again for the second day in a row, sliding to their lowest levels this month, as investors weigh how CEO Musk will go about selling his holdings."
Tesla's stock was 7.2% lower.
In London, Associated British Foods closed the best large-cap performer, up 7.8%, after the Primark clothing chain owner declared a special dividend on the back of a resilient annual performance.
For the 53 weeks that ended on September 18, revenue was GBP13.88 billion, down slightly from GBP13.94 billion in financial 2020, but pretax profit rose by 6% to GBP725 million from GBP686 million.
Its Retail unit, which houses the Primark fashion chain, delivered adjusted operating profit of GBP415 million, up 15% from GBP362 million in financial 2020. It said Primark's profit margin was 10.6% in the second half.
AB Foods declared a 20.5 pence final dividend, alongside a 13.8p special dividend, bringing total dividends for the year to 40.5p.
"Even though full-year revenue was slightly below market forecasts, there is a lot to like about Associated British Foods' results," AJ Bell analyst Russ Mould commented.
"It benefits from having diverse activities and the non-retail operations have developed a reputation for being solid and dependable businesses, providing a strong backbone for the group with Primark the more exciting component upfront. As always, the attention is centred upon Primark and the outlook for the brand is certainly improving. With lockdown and forced store closures now hopefully a thing of the past, Primark can concentrate once again on its expansion plans and the US is going to see a lot more stores in the years to come."
Also on the up was Rolls-Royce, climbing 3.6%. The jet engine maker said it has secured funding for its Small Modular Reactor unit to build low carbon nuclear power technology.
Rolls-Royce, BNF Resources UK and Exelon Generation will invest GBP195 million across three years, and this spending commitment will allow it to secure grant funding from the UK government of GBP210 million. The UK grant falls under the government's 'Ten Point Plan for a Green Industrial Revolution'.
Laboratory equipment specialist Oxford Instruments closed among the worst mid-cap performers, falling 4.0%, despite improved earnings.
For the six months ended September 30, the Abingdon, England-headquartered company, which makes products, systems and tools for research and industry, reported a pretax profit of GBP21.4 million, up 5.9% from GBP20.2 million a year earlier.
This was on revenue which grew 21% year-on-year to GBP170.1 million from GBP140.3 million.
"Order conversion to revenue has been impacted by prolonged customer-related admin processes and delays in obtaining export licenses. However, we note the group's cash conversion was 49% reflecting the increase in inventory to support order intake and mitigate supply chain disruption," analysts at Shore Capital Markets commented.
The FTSE 250's insurance sector also struggled. Hiscox fell 4.3%, Beazley lost 5.5%, while Direct Line gave back 3.5%.
The latter on Tuesday said it saw gross written premiums fall on a three-month and nine-month basis.
The Bromley, Kent-based motor and home insurer reported a total gross written premium in the third quarter of 2021 of GBP857.1 million, up 0.7% from GBP851.5 million last year.
In the nine months to September 30, total gross written premiums came in at GBP2.41 billion, down 0.8% from GBP2.43 billion a year prior.
Elsewhere, waste management firm Renewi was a notable performer, jumping 11%.
For six months to September 30, Renewi's revenue rose 11% to EUR915.6 million, from EUR821.4 million a year earlier. Pretax profit surged to EUR44.7 million from EUR4.4 million.
"We have successfully retained some of the structural cost savings made in response to the Covid-19 pandemic and these, combined with volume recovery and ongoing strong recyclate prices, have contributed to the significant increase in margins and profits. Following this strong first half, the board is further increasing its full year expectations," Chief Executive Otto de Bont said.
Brent oil was quoted at USD84.08 a barrel late Tuesday, up from USD83.60 late Monday. Gold stood at USD1,825.74 an ounce, up against USD1,823.51.
In addition to CPI data from the US, Wednesday's economic calendar also has inflation readings from China overnight.
The local corporate calendar has interim results from industrial software provider Aveva, retailer Marks & Spencer and cycling products firm Halfords. Broadcaster ITV, pub operator JD Wetherspoon and advertising firm S4 Capital release trading statements.
By Eric Cunha; ericcunha@alliancenews.com
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