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(Alliance News) - Stocks in London were continuing to fall at midday on Thursday as investors looked to the US Federal Reserve to calm bond market nerves, while London was given a boost as Deliveroo picked the city for its multibillion-pound market listing.
The 10-year US Treasury note yield was holding above 1.47%, having encroached upon 1.5% earlier.
The FTSE 100 index was down 77.36 points, or 1.2%, at 6,598.01. The mid-cap FTSE 250 index was down 168.81 points, or 0.8%, at 21,272.51. The AIM All-Share index was down 1.4% at 1,171.88.
The Cboe UK 100 index was down 1.0% at 657.50. The Cboe 250 was down 0.7% at 18,952.85, and the Cboe Small Companies up 0.3% at 13,445.82.
In mainland Europe, the CAC 40 in Paris was down 0.3% while the DAX 30 in Frankfurt was down 0.6%.
US stock market futures were pointing to a lower open amid the rise in US treasury yields, as investors look ahead to a speech from Federal Reserve Chair Jerome Powell at 1705 GMT on a virtual Wall Street Journal Jobs Summit.
Powell's remarks will be closely monitored for clues to a possible change in Fed language ahead of the March 16-17 policy meeting.
The Dow Jones Industrial Average is called down 0.5%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.9%.
"Traders will be keeping a keen eye out for Jerome Powell's appearance at a Wall Street Journal hosted event today, with traders hopeful that the governor will use the opportunity to highlight how they aim to lessen the recent rise in treasury yields. Rising yields increase the cost of borrowing, damaging economic prospects and lessening demand for equities. The volatility seen in stock markets of late does serve to highlight the potential detrimental impact if yields are allowed to rise rapidly over the near-term," said IG Group's Josh Mahony.
Stephen Innes, chief global markets strategist at axi, commented: "There is almost no chance he will push back on long-end yields. The Fed's message has been consistent all week: it is not too concerned by the back up in yields."
Innes added: "Much more likely is that he'll remind everyone how long the recovery is likely to take, how difficult inflation is to create on a sustained basis, and that the Fed will look through 2021 upside inflation."
In the FTSE 100, Aviva was the best performer, up 2.5%, after the insurer said it will sell its remaining Italian life and general insurance businesses for EUR873 million in cash and promised to return the proceeds of its programme of streamlining the company to shareholders.
Aviva will sell its general insurance business in Italy to Germany's Allianz for EUR330 million and life insurance business to French insurance firm CNP Assurances for EUR543 million.
Upon her appointment, Chief Executive Officer Amanda Blanc set out to streamline the business by focusing on markets in the UK, Ireland and Canada.
For 2020, Aviva posted adjusted operating profit of GBP3.16 billion, down 0.6% from GBP3.18 billion in 2019. The insurer declared a 2020 total dividend of 21 pence, up 35% from 15.5p per share in the prior year.
Melrose Industries was up 2.1% after the industrial turnaround specialist resumed payouts with a proposed final dividend for the year.
Revenue for 2020 fell to GBP8.77 million from GBP10.97 billion in 2019, with the firm swinging to a pretax loss of GBP535 million from a GBP106 million profit the year before.
Despite the swing to loss, Melrose noted that trading was at the top end of management expectations throughout the second half of 2020.
Melrose proposed a final dividend of 0.75p per share of 2020 given the "excellent" cash generation achieved in the year - adjusted free cash generation was GBP628 million, up 6% on 2019, prior to GBP172 million of restructuring costs - and said it is pleased the firm has returned to paying a dividend.
Reckitt Banckiser was up 1.5% after Societe Generale raised the household goods firm to Buy from Sell.
CRH was up 0.5%. The Irish building materials firm said it delivered a robust performance in a challenging environment caused by Covid-19 related disruption in key construction markets of North America and Europe.
For 2020, revenue was USD27.6 billion, down 1.8% from USD28.1 billion in 2019 and profit before tax from continuing operations was USD1.66 billion, down 24% from a restated USD2.18 billion.
CRH raised its annual dividend 25% to 115.0 cents with 93.0 cent final payout and said it plans to resume its share buyback programme with USD0.3 billion by end of June.
At the other end of the large caps, Rio Tinto and BHP were the worst performers, off 8.5% and 6.7% respectively. Shares in the Anglo-Australian miners went ex-dividend, meaning new buyers no longer qualify for the latest payout.
Scottish Mortgage Investment Trust, which backs high-profile US tech stocks Tesla and Amazon, was down 6.6% amid a fall in the tech-heavy Nasdaq Composite index, which closed 2.7% lower on Wednesday. Tesla and Amazon were down 2.0% and 0.4% respectively in pre-market trade in New York on Thursday.
InterContinental Hotels Group was 2.5% lower after JPMorgan downgraded the Holiday Inn and Crowne Plaza chains owner to Underweight from Neutral.
Elsewhere, takeaway meals app Deliveroo has chosen London for its highly anticipated stock market listing, a major boost for the capital's financial sector which has been roiled by Brexit.
Deliveroo, in line with other home-delivery companies, has seen demand soar in the past year owing to lockdowns during the coronavirus pandemic. No date has been set for the initial public offering, which is expected to value Deliveroo at up to GBP7.5 billion.
UK Chancellor of the Exchequer Rishi Sunak welcomed the announcement, which comes after London's financial sector recently lost its European share trading crown to Amsterdam following Britain's exit from the EU.
In the wake of Wednesday's budget statement, Sunak said the UK government was "looking at reforms to encourage even more high growth, dynamic businesses to list in the UK".
On the economic front, UK construction activity saw a solid return to growth in February amid optimism over economic recovery and a swift vaccination rollout, the latest figures from IHS Makit showed.
The IHS Markit-CIPS purchasing managers' index print increased to 53.3 points in February from 49.2 points in January, breaching the 50.0 mark that separates expansion from contraction.
The dollar was higher against counterparts as investors sought the greenback's safe-haven allure. The pound was quoted at USD1.3942 at midday Thursday, down from USD1.3988 at the London equities close Wednesday.
The euro was priced at USD1.2050, lower from USD1.2077. Against the yen, the dollar was quoted at JPY107.17, up from JPY106.87.
Brent oil was trading at USD63.70 a barrel Thursday midday, down from USD64.16 late Wednesday, ahead of the virtual OPEC meeting in the afternoon.
Members of the OPEC group of oil producers and allies are expected to raise output in response to a rebound in demand and prices.
While the so-called OPEC+ group is often at loggerheads over how much oil to pump to the market, a sudden plunge in prices triggered by the coronavirus pandemic led members to agree on a dramatic cut in output to underpin prices.
Now that vaccination campaigns are underway and demand from China, the world's largest oil importer, has bounced back to pre-pandemic levels, the success of the meeting on Thursday will hinge on whether heavyweights Russia and Saudi Arabia can agree on a way forward.
"Optimism is growing that the group of oil producers could roll over output cuts at today's meeting rather than easing back on production cuts as was initially expected. Expectations earlier in the week had been for OPEC+ to ease production cuts by anything between 500,000 barrels per day to 1.5 million barrel per day," said analysts at Oanda Markets.
Gold was quoted at USD1,714.37 an ounce at midday, down from USD1,722.45 late Wednesday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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