(Alliance News) - European markets closed lower on Tuesday, succumbing to geopolitical worries and pre-central bank meeting trepidation, despite blue-chip equities in Frankfurt and Paris briefly sneaking into the green in afternoon dealings.
European equities grew in confidence as the session dragged on, though eventually closed lower, as markets face a wealth of headwinds. This week, stocks must negotiate a pair of central bank interest rate decisions, amid a backdrop of inflationary fears, and Russia's continued invasion of Ukraine.
Brent Crude prices, meanwhile, fell below the USD100 a barrel mark for the first time since the start of the month. Airline stocks got a boost, meanwhile, as the UK removed all remaining Covid travel curbs.
The FTSE 100 index ended down 17.77 points, or 0.3%, at 7,175.70 on Tuesday. The mid-cap FTSE 250 index ended down 213.59 points, or 1.0%, at 20,257.66. The AIM All-Share index ended down 12.21 points, or 1.2%, at 987.70.
The Cboe UK 100 index ended down 0.4% at 713.24. The Cboe 250 closed down 1.2% at 17,861.41, and the Cboe Small Companies lost 1.0% at 14,405.93.
In mainland Europe, the CAC 40 stock index in Paris closed down 0.2% and the DAX 40 in Frankfurt fell 0.1%.
"Stocks are coming off two positive sessions which probably contributed to the downside we saw earlier on, despite there being no real negative developments in Ukraine. In fact, commodity prices have continued to decline today, which could take the gale-force out of the coming headwinds for the global economy," Oanda analyst Craig Erlam commented.
The dollar was stronger ahead of the Federal Reserve's interest rate decision on Wednesday.
The pound fell to USD1.3049 late Tuesday, from USD1.3059 at the London equities close on Monday. The euro faded to USD1.0957 from USD1.0991. Against the yen, the dollar advanced to JPY118.26 from JPY117.98.
While trading in foreign exchange markets lacked substantial moves, oil prices fell markedly.
Brent oil fell back below USD100 a barrel for the first time since March 1, trading as low as USD97.42 on Tuesday.
At the London equities close, a barrel of Brent fetched USD101.36, down from USD105.30 late Monday.
ThinkMarkets analyst Fawad Razaqzada commented: "I think the biggest driver behind the sell-off in oil has been this: investor realisation that Europe is not going to wean off Russian oil supply immediately. Everything else is secondary, including the potential return of Iranian oil supply. Meanwhile, the OPEC has highlighted the risk to the oil demand outlook arising from the Ukraine war and surging inflation.
"Also weighing on oil prices is something that had sent prices into the negative last year: surging Covid cases and lockdowns. This time, in China, the biggest oil importer in the world. Here, Covid cases have spiked sharply, and very sharply in certain regions. Consequently, the government has put tens of millions of people in lockdown. The most important regions are the entire Jilin province and technology hub Shenzhen."
Stocks exposed to the Chinese economy fell on Tuesday. Miner Glencore fell 4.4%, Asia-focused insurer Prudential lost 4.2% and investor JPMorgan China Growth & Income shed 7.1%.
Gold miners Polymetal and Petropavlovsk were also notable fallers.
Index provider FTSE Russell late Monday said a number of Russia-linked companies will be deleted from the FTSE Russell indices due to insufficient liquidity.
The deletions will come into effect on Monday next week.
Polymetal tumbled 23% and Petropavlovsk plunged 27%.
Pearson extended gains on Tuesday, rising 8.7%, amid hopes of a private equity buyout. The publishing and education company on Friday confirmed Apollo Global Management has made two cash offers for the company.
Travel stocks were also on the up, with budget carrier easyJet among the best of the lot, rising 2.3%.
Companies and trade organisations in the air travel industry have welcomed the end of remaining UK Covid travel restrictions.
Heathrow Airport said it would be dropping the requirement for passengers to wear masks in its premises following the UK government's announcement that all measures, including passenger locator forms, will end on Friday.
Transport Secretary Grant Shapps said on Monday the changes will allow "greater freedom in time for Easter" and will mean "you can travel just like in the good old days".
Fading Brent prices have also boosted airline stocks. High oil prices mean chunkier jet fuel costs for poorly-hedged carriers.
TP ICAP fell 15% after the interdealer broker reported a plunge in profit in 2021, despite a slight rise in revenue, blaming "unusually quiet secondary markets", particularly in the first half of last year.
TP ICAP reported GBP24 million in pretax profit, down from GBP129 million in 2020, though revenue rose by 4.0% to GBP1.87 billion from GBP1.79 billion. Despite the fall in profit, the company boosted its annual dividend by more than 50% to 9.5 pence per share from 6.0p.
Gold was quoted at USD1,926.06 an ounce late Tuesday, lower than USD1,957.83 on Monday.
While the mood in Europe was cautious, New York equities made sizeable strides.
At the time of the closing bell in London, the Dow Jones Industrial Average was up 1.4%, the S&P 500 up 1.7% and the Nasdaq Composite 2.2% higher.
Oanda's Erlam commented: "While the Ukraine invasion remains the dominant driver of market sentiment, there will be some focus in the coming days on central banks as the Fed and BoE both prepare to raise interest rates. For the Fed, it will be the first of the tightening cycle, with further increases expected at most meetings this year. For the BoE, it will be the third consecutive hike and many more are expected."
The Fed announces its latest interest rate decision at 1800 GMT on Wednesday. Elsewhere, the economic calendar has US retail sales at 1230 GMT.
The UK corporate calendar has annual results from mixers maker Fevertree Drinks, gold miner Centamin and low-cost gym chain operator Gym Group.
By Eric Cunha; ericcunha@alliancenews.com
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