(Alliance News) - European equities had a more lively day on Tuesday, notching solid gains after struggling for direction at the start of the week, despite the threat of rising Covid-19 cases as the Delta variant continues to spread.
London's blue-chip benchmark had notched minor gains on Monday, though peers in Frankfurt and Paris ended marginally lower during a subdued day, though Tuesday was a much more emphatic day for European equities.
Strong gains for the gambling sector, pushed along by a beefy interim earnings hike at Paddy Power owner Flutter Entertainment, added some momentum to Tuesday's session in London.
The FTSE 100 index closed up 28.74 points, or 0.4%, at 7,161.04. The FTSE 250 index ended up 118.61 points, or 0.5%, at 23,572.05.
The mid-cap FTSE 250 index ended at a record high, while the blue-chip FTSE 100 had its best monthly close for over a month.
The AIM All-Share index ended up 4.27 points, 0.3% at 1,265.38.
The Cboe UK 100 index ended up 0.4% at 713.45. The Cboe 250 closed up 0.6% at 21,364.03, and the Cboe Small Companies rose 0.3% to 15,457.17.
In mainland Europe, the CAC 40 in Paris ended up 0.1% and DAX 30 in Frankfurt rose 0.2%.
CMC Markets analyst Michael Hewson noted there was "cautious optimism" on Tuesday, outweighing "concern about rising Delta variant rates in Asia".
China's coronavirus cases hit a seven-month high on Tuesday, after a cluster at a test site helped drive up numbers as the Delta variant challenges Beijing's grip on the pandemic. State media has described the current outbreak – which has sparked local lockdowns, mass testing and travel restrictions – as the most severe since the virus emerged in the central city of Wuhan.
Meanwhile, in Australia, Sydney posted a new record of infections on Tuesday as the city struggles to control an outbreak that is sending other regions into lockdown.
Crude prices rose on Tuesday, after being hit by virus and environmental worries on Monday. Brent oil was quoted at USD70.92 at the London equity market close on Tuesday, up sharply from USD68.80 late Monday.
OANDA analyst Craig Erlam commented: "Crude's surge towards multi-year highs has been built on recovery optimism as economies reopen on the back of successful vaccine rollouts. The delta strain has thrown a spanner in the works, with the US and China seeing surges and the latter re-imposing restrictions."
In London, Flutter Entertainment rose 8.3%, after the gambling firm said it enjoyed a very strong first half with revenue growth driven by increased average monthly players.
For the six months to June 30, revenue was up 99% at GBP3.05 billion from GBP1.54 billion in the prior year and pretax profit more than tripled to GBP77 million from GBP24 million. Adjusted earnings before interest, tax, depreciation and amortisation - excluding the US business - doubled to GBP684 million from GBP339 million.
Looking ahead, Flutter expects second half adjusted Ebitda of between GBP1.27 billion to GBP1.37 billion.
"Flutter's US business continues to perform very strongly – benefiting both from the opening up of sports betting in new states and from the successful fantasy sports franchise FanDuel – though the latter is unlikely to be profitable for some time yet," AJ Bell analyst Danni Hewson commented.
"The US betting market is competitive and Flutter cannot afford to rest on its laurels, the company to its credit has committed to investing in new products and further innovation. With MGM Resorts rumoured to be reviving its interest in Ladbrokes-owner Entain, after a failed bid at the start of 2021, there is a chance it could switch its attention to Flutter."
Entain, which also owns the Coral and bwin brands, closed 2.0% higher. Mid-cap 888 Holdings rose 2.7%.
London's record-setting FTSE 250 index also got a boost from Babcock International, which rose 7.0% after a vote of confidence from JPMorgan, and Watches of Switzerland, with the Rolex seller climbing 3.3% on the back of strong revenue.
JPMorgan took heart from a turnaround plan at Babcock, backing the aerospace, defence and nuclear engineering company to re-emerge as a stronger outfit after a tough period recently.
JPMorgan lifted its price target for the stock to 400.0 pence from 350.0p.
Luxury timepiece retailer Watches of Switzerland said an "extremely strong" first quarter has underpinned its existing full year guidance.
Watches of Switzerland, which is one of a handful of official dealers for Rolex in the UK, booked revenue growth of 96%, rising to GBP297.5 million for the three months ended August 1. Revenue for the same period last year was GBP151.6 million.
Purplebricks was a notable faller on the AIM market, losing 6.8%. It unveiled plans to move to a fully employed model for its field sales agents, as part of a new strategy, which could add up to GBP9 million in costs in the current financial year.
The change will come into effect immediately and see the end of self-employed local property agents. The online estate agent will now have ownership over the recruitment, training and management of local property staff, which it said will lead to a higher level of customer service and greater opportunity to increase ancillary revenues. Greater security and benefits to incentivise staff were also given as factors for the move.
In New York, stocks were mixed. The Dow Jones Industrial Average was up 0.4%, the S&P 500 up 0.1%, but the Nasdaq Composite was down 0.5%.
"The healthy US economy is likely to get a further boost from infrastructure spending after the bipartisan infrastructure package cleared a major procedural hurdle Sunday and the Democrats yesterday released the text of their proposed budget resolution, the second of the two major infrastructure packages," BDSwiss analyst Marshall Gittler commented.
The 10-year budget blueprint pushes Congress towards the next step in President Joe Biden's ambitious vision for his first term in office, following on the heels of the USD1.2 trillion infrastructure plan.
The pound was quoted at USD1.3847 at the London equities close on Tuesday, down from USD1.3856 late Monday. Against the Japanese yen, the dollar was trading at JPY110.52, up from JPY110.24.
The euro was priced at USD1.1724 late Tuesday, lower from USD1.1748 at the same time on Monday. The single currency fell to an intraday low of USD1.1709, its lowest level since the end of April.
"It's been a rough week or two for the world's most widely-traded currency pair. Including today's (unfinished) price action, EUR/USD is working on its eighth consecutive bearish day," Forex.com analyst Matt Weller commented.
The ZEW indicator of economic sentiment for Germany declined to 40.4 points in August, from 63.3 points in July. It was the lowest level since November and well below market expectations, cited by FXStreet, of 56.7 points.
Wednesday's economic calendar has consumer inflation figures from Germany at 0700 BST and the US at 1330 BST.
The local corporate calendar has first-half results from long-term savings and retirement firm Phoenix Group, insurer Admiral, cybersecurity firm Avast and food delivery company Deliveroo.
Gold was trading at USD1,726.99 an ounce at the London equity market close on Tuesday, marginally lower against USD1,730.32 on Monday.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
