(Alliance News) - Stock prices in Europe edged lower midday Tuesday, with London's FTSE 100 in negative territory amid a share price fall for Ocado and despite continued gains by oil majors.
Optimism over the passage of a big US stimulus package bolstered global markets on Monday, but European equities lost some momentum on Tuesday and the FTSE 100 additionally was hurt by a stronger pound.
"The February rally has finally run into some tougher ground, with European markets on the slide after a week of gains that has, for the most part, put the global equity market back on an upward path," IG Markets analyst Chris Beauchamp said.
The large-cap FTSE 100 index was down 4.33 points, or 0.1%, at 6,519.20.
The mid-cap FTSE 250 index rose 91.87 points, or 0.4%, to 21,178.42. The AIM All-Share index was down 1.85 points, or 0.2%, at 1,212.45.
The Cboe UK 100 index was down 1.3% at 647.94. The Cboe 250 was up 0.5% at 18,638.20 and the Cboe Small Companies up 0.2% at 12,688.82.
In mainland Europe, the CAC 40 in Paris was up 0.7% while the DAX 30 in Frankfurt was 0.3% higher.
"The FTSE 100 was tripped up by a familiar foe on Tuesday," AJ Bell Investment Director Russ Mould commented.
Sterling was quoted at USD1.3777, up from USD1.3740 at the London market close on Monday. It reached an intraday high of USD1.3788, nearly topping the USD1.3790 mark for the first time since April 2018.
A weaker greenback puts pressure on dollar-earning stocks in the FTSE 100.
Mould added: "This was more a story of dollar weakness as investors eye the big stimulus package coming down the road in the US and the currency movement had a negative impact on the relative value of the overseas earnings which dominate the FTSE."
The euro was quoted at USD1.2102, improved from USD1.2050 at the European equities close Monday.
Against the Japanese yen, the dollar fetched JPY104.69, down from JPY105.17 at the London market close on Monday.
US President Joe Biden's USD1.9 trillion rescue bill is working its way through Congress, where the Democrats have a majority in both houses. The president's rescue plan would provide stimulus checks, expanded unemployment benefits, and aid to small businesses.
BDSwiss Head of Investment Research Marshall Gittler commented: "Congressional Democrats in the US yesterday released the first draft text for key pieces of legislation for the Biden administration's Covid-19 relief bill. They'll start committee votes on elements of it later today. They will use a process that enables them to pass it with a simple majority and therefore they won't need to water it down to meet the objections of the opposition Republicans. That means more stimulus is likely."
US futures were lower on Tuesday morning in New York. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all are called down 0.2%.
The US earnings season continues with social networking site Twitter posting fourth-quarter after the closing bell in New York on Tuesday.
A barrel of Brent oil was quoted at USD60.54 midday Tuesday, up from USD60.32 at the London equities close on Monday, and continuing above the USD60 mark.
In London, oil majors were again among the better performers. BP shares were up 0.9% and Royal Dutch Shell A shares and B shares climbed 1.7% and 1.5%, respectively.
Peer Total was one of the best performers in the CAC stock index in Paris, up 1.0%. The company said it swung to net loss in 2020 of USD7.24 billion compared to a USD11.27 billion profit a year prior.
Back in London, Ocado fell 2.6%. The online grocer posted an annual revenue surge but offered a conservative outlook and set out hefty spending plans.
Ocado posted GBP2.33 billion in revenue for the financial year that ended November 29, up 33% from GBP1.76 billion. Its statutory pretax loss narrowed to GBP44.0 million from GBP214.5 million, with the FTSE 100 company benefiting from a GBP104.6 million gain from exceptional items, swinging from a GBP94.1 million hit in financial 2019.
Ocado said annual revenue growth is "highly dependent on length of Covid-19 restrictions".
"It appears investors have potentially been put off by Ocado's planned GBP700 million in capital expenditure, and a subdued outlook for UK retail growth in the coming 12 months," Spreadex analyst Connor Campbell said.
The company's capex in financial 2020 more than doubled to GBP525.6 million from GBP260.7 million. Ocado also expects to book "significantly more legal costs than in 2020".
In October, Norway's Autostore said it sued Ocado and filed complaints in the US - to both the US International Trade Commission and US District Court for the Eastern District of Virginia - and in the UK to the High Court of England and Wales.
Ocado said on Tuesday: "Having analysed the claims we remain of the view that we do not infringe any valid Autostore rights. Their claim in East Virginia has been stayed and we have filed defences in all other forums, and have brought our own proceedings against Autostore in the USA for infringement of certain Ocado patents and violation of US antitrust laws."
Elsewhere in London, Equiniti rose 37% after Sky News late Monday reported that Siris, a technology-focused private equity investor, has made an approach to takeover the financial administration outsourcer.
Sky said Siris has tabled a 170 pence-per-share bid for Equiniti. Siris's bid is understood to have been made in cash, valuing Equiniti at about GBP600 million, Sky said.
An Equiniti spokesperson at Tulchan Group declined to comment on the Sky story when contacted by Alliance News.
Online retailer ASOS rose 2.4% on AIM, after Bank of America lifted the stock to Buy from Underperform.
Mid-cap pub operators JD Wetherspoon and All Bar One chain owner Mitchells & Butlers rose 2.2% and 1.8%. The duo had fallen 2.6% and 2.7%, respectively, on Monday.
UK government advisers will set out who they think should be next in line for the Covid-19 jab in the coming weeks, one expert has said. The Joint Committee on Vaccination & Immunisation is currently in discussions over who they believe should be next in line after the initial priority groups.
Plans will be set out by the end of February or early March, said JCVI member Adam Finn.
Meanwhile, Finn encouraged people to get vaccinated when offered after questions have been raised about the efficacy of the vaccine against new variants of the virus, such as the South Africa variant.
Finn said that the vaccines are effective against strains of the virus which are dominant in the UK.
Gold was trading at USD1,844.13 an ounce midday Tuesday, improved from USD1,836.80 at the London market close on Monday.
By Eric Cunha; ericcunha@alliancenews.com
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