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(Alliance News) - European equities steadied on Tuesday, with London's FTSE 100, which saw banking stocks shield it from deeper losses in Monday's session, underperform continental peers.
The likes of Barclays returned gains on Tuesday, though blue chip retailers and gambling stocks had a strong session in London.
New York equities, meanwhile, recovered from a largely tepid start to the day, with inflationary worries still front and centre amid a testimony to US lawmakers by Federal Reserve Chair Jerome Powell.
The FTSE 100 rose 46.12 points, or 0.6%, at 7,491.37. The mid-cap FTSE 250 index ended up a more modest 26.37 points, or 0.1%, at 23,028.18. The AIM All-Share index closed up 3.37 points, or 0.3%, at 1,173.64.
The Cboe UK 100 index closed up 0.4% at 743.13. The Cboe 250 ended marginally higher at 20,575.61 and the Cboe Small Companies rose 0.4% at 15,580.96.
In Paris, the CAC 40 stock index closed up 1.0%, while the DAX 40 in Frankfurt rose 1.1%.
"Stock markets are enjoying some reprieve after a rocky start to the week," Oanda analyst Craig Erlam commented.
"The January blues are alive and well and with markets now eyeing up the possibility of four rate hikes this year, we may be approaching peak fear just in time for earnings season. We've quickly pivoted from the transitory inflation narrative to aggressive tightening including a combination of accelerated tapering, multiple rate hikes, and impending balance sheet reduction. That's quite the shift."
US inflation data is released at 1330 GMT on Wednesday, Numbers are expected to show that consumer inflation accelerated to 7% yearly in December, from 6.8% in November.
Erlam added: "I'm not sure the inflation data tomorrow is going to put investors' minds at ease. A higher reading could spook investors once again just as equity markets appear to be stabilizing."
The Dow Jones Industrial Average was 0.1% lower, paring earlier losses, at the time of the London close. The S&P 500 was up 0.3% and the Nasdaq Composite rose 0.9%.
Raising interest rates and otherwise removing the extraordinary stimulus the Federal Reserve provided to the US economy during the Covid-19 pandemic will not harm the labour market, Powell told US lawmakers.
With inflation rising and employment recovering, "The economy no longer needs or wants the very highly accommodative policy" and returning it to normal "should not have negative effects" on employment, Powell said.
The pound was quoted at USD1.3617 late Tuesday, up from USD1.3567 at the London equities close Monday. The euro was priced at USD1.1363, higher against USD1.1327 late Monday. Against the Japanese yen, the dollar was trading at JPY115.37, up from JPY115.14.
In the FTSE 100, retailers rose on the prospect of a strong Christmas for the sector. Next climbed 4.6%, JD Sports added 2.8% and Sports Direct owner Frasers climbed 2.4%.
UK retail sales grew over the crucial festive trading period, numbers on Tuesday showed, despite being faced with rising Covid-19 cases amid the spread of the Omicron variant.
Retail sales rose 2.1% yearly in December, according to the latest British Retail Consortium-KPMG tracker. In December 2020, sales had risen 1.8%.
Barclays fell 0.3% and NatWest gave back 0.6%. Banking stocks had a strong session on Monday, which helped shield the FTSE 100 from deeper declines. London's large-cap index had fallen 0.5% on Monday, outperforming the CAC 40 in Paris which had dropped 1.4%.
On the up, however, were Ladbrokes owner Entain and SkyBet parent Flutter, rising 2.0% and 2.6%. Citi hailed the US opportunity for the London-listed gambling stocks, lifting to Buy from Sell and maintaining its Buy recommendation for Entain.
Games Workshop fell 11%, the worst mid-cap performer.
The Nottingham, England-based company reported pretax profit for the six months that ended November 28 of GBP88.2 million, down 3.7% from GBP91.6 million.
The fantasy wargames maker and retailer explained this was due to foreign exchange movements and increased costs, such as special payments to staff.
"Potentially more serious have been reports of fractures between Games Workshop and its devotees, linked to the launch of a subscription-based service and the aggressive protection of its intellectual property by pursuing YouTubers who have created Warhammer-inspired animations and stories," AJ Bell analyst Russ Mould commented.
"While it is understandable that Games Workshop is protective of its IP, it needs to tread carefully. The value of the company is inextricably linked to fans' devotion to the Warhammer brand."
Elsewhere in London, Senior rose 3.5% as it announced the signing of two new contracts with Japanese automotive manufacturer Honda and aerospace firm Boeing. It provided no financial details on the pacts, however.
On AIM, Shoe Zone jumped 23% after the discount footwear chain swung to a full-year profit despite stores only trading for 36 weeks.
For the year ended October 2, the Leicester-based retailer reported a pretax profit of GBP9.5 million, swinging sharply from a loss of GBP14.6 million in financial 2020. Revenue was down 2.8% to GBP119.1 million from GBP122.6 million the previous financial year.
Brent oil was quoted at USD83.44 a barrel late Tuesday, up sharply from USD81.26 at the London equities close on Monday. Gold stood at USD1,816.01 an ounce, up from USD1,795.34.
On Wednesday's economic calendar, China also releases inflation data overnight. Eurozone industrial production figures are released at 1000 GMT.
The local corporate calendar has a third quarter numbers from grocer Sainsbury's and Premier Inn owner Whitbread. Athleisure retailer JD Sports, sofa seller DFS Furniture and housebuilder Vistry Group release trading statements.
By Eric Cunha; ericcunha@alliancenews.com
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