(Alliance News) - Stock prices opened lower on Tuesday as investors brace for the prospect of central bank tapering, while the London Stock Exchange got a prominent new listing.
The FTSE 100 index was down 13.18 points, or 0.2%, at 7,049.24. The mid-cap FTSE 250 index was down 144.47 points, or 0.6%, at 23,464.16. The AIM All-Share index was down 4.44 points, or 0.4%, at 1,263.79.
The Cboe UK 100 index was down 0.1% at 701.40. The Cboe 250 was down 0.5% at 21,518.30. The Cboe Small Companies was 0.1% higher at 15,879.80.
In mainland Europe, the CAC 40 stock index in Paris was down 0.7% and the DAX 40 index in Frankfurt was down 0.8%.
"Bets on central banks tightening monetary policy more swiftly than previously thought are fuelling the selling in rates as investors also focus in on the wrangling in Washington over the US debt ceiling. Whether we are talking reflation or stagflation, the 'flation part of the equation is clear and yields need to rise as a corollary. If the Fed is buying USD120 billion a month in debt today, but buying less tomorrow, it makes sense that rates will inevitably rise," said Markets.com analyst Neil Wilson.
In the FTSE 100, Smiths Group was the best performer, up 4.0%, after the engineer reported annual results that beat consensus forecasts and raised its dividend.
For the financial year ended July 31, revenue was down 5.5% to GBP2.41 billion from GBP2.55 billion the year before. Revenue slightly pipped the market consensus estimate of GBP2.40 billion.
Annual operating profit, adjusted for strategic restructuring programme costs and write-downs, was GBP372 million, up 14% from GBP327 million. The figure beat the consensus forecast for operating profit of GBP357 million.
Pretax profit almost doubled to GBP240 million from GBP133 million, as operating costs were reduced to GBP2.08 billion from GBP2.31 billion year-on-year.
London-based Smiths declared a final payout of 26 pence, taking a total dividend to 37.7p, up 7.7% from 35.0p paid a year ago.
In addition, Smiths signed a binding agreement with California-based medical technology firm ICU Medical to sell its Smiths Medical business for USD2.7 billion, supplanting a previous USD2.3 billion agreement with private equity firm TA Associates in August. Completion is expected in the first half of 2022. Following the sale, Smiths Group plans to return 55% of the proceeds to shareholders through a share buyback, it has said.
Shares in oil majors BP, Royal Dutch Shell 'A' and Shell 'B' were up 1.8%. 2.2% and 2.3% respectively, tracking spot oil prices higher.
The price of Brent crude oil jumped above USD80 for the first time in almost three years on expectations for surging demand and concerns about supplies as the world slowly emerges from the virus pandemic.
Brent oil was quoted at USD80.20 a barrel on Tuesday morning in London, up sharply from USD79.48 late Monday as investors eye the OPEC+ meeting on Monday.
Analysts at Danske Bank explained: "Brent oil is trading above USD80 a barrel this morning as the lack of natural gas is spreading across the globe triggering use of oil as an alternative for power generation. This 'natural gas demand effect' comes simultaneously with the economic recovery, and rising airline traffic is boosting demand and depleting global crude oil inventories.
"The outlook comes ahead of the OPEC+ meeting next week. There is a growing concern that the cartel will be reluctant or even unable to rise production enough to stop oil from going higher, as demand peaks during the winter season on the Northern hemisphere."
Ferguson was up 0.5% after the plumbing and heating products supplier lifted its payout and announced plans for a new USD1.0 billion buyback.
For the financial year that ended July 31, revenue was USD22.79 billion, up 14% from USD19.94 billion in financial 2020, and pretax profit was USD1.89 billion, up 46% from USD1.29 billion.
Ferguson lifted its total dividend by 15% to 239.4 cents per share, from 208.2 cents a year earlier. Further, it announced plans for a USD1.0 billion buyback, after "taking into account the group's prospects and strong financial position".
At the other end of the large-caps, Sage Group was the worst performer, down 4.9%, after Goldman Sachs downgraded the accounting software provider to Sell from Neutral.
Elsewhere, shares in Petershill Partners were trading at 350 pence, unchanged from its initial public offering price as the company spun off from Goldman Sachs. It went public in London at a GBP4.0 billion valuation.
The Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite finished up 0.5%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney ended down 1.5%.
The pound was quoted at USD1.3680 early Tuesday, lower from USD1.3706 at the London equities close Monday.
The euro was priced at USD1.1687, down from USD1.1698. Against the yen, the dollar was trading at JPY111.30, up from JPY110.98.
Gold stood at USD1,742.65 an ounce, lower from USD1,752.17 late Monday.
Tuesday's economic calendar has US consumer confidence at 1500 BST. Fed Chair Jerome Powell appears before the US Congress at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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