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(Alliance News) - The FTSE 100 index was knocking on the door of positive territory at midday on Tuesday, perking up from a risk-off start to the session after a string of stronger-than-expected economic readings.
The FTSE 100 was down just 3.47 points at 7,252.11 midday Tuesday. The mid-cap FTSE 250 index was down 104.56 points, or 0.5%, at 7,252.11. The AIM All-Share index was down 11.58 points, or 1.0%, at 1,208.65.
The Cboe UK 100 index was down 0.2% at 716.62. The Cboe 250 was down 0.4% at 20,779.37, and the Cboe Small Companies was down 0.4% at 15,270.88.
AJ Bell's Russ Mould said: "The air has been coming out of the market like a slowly deflating balloon over the last week or so but it has accelerated this morning, not helped by a sell-off in US technology stocks overnight.
"This was linked to fears of more rapid tapering of financial stimulus and hikes to interest rates after Jerome Powell was re-nominated for another term as chair of the US Federal Reserve."
Wall Street futures were pointed to open lower, adding to poor session on Monday. The Dow Jones was called down 0.1% and the S&P 500 down 0.2%, while the tech-heavy Nasdaq Composite was seen 0.4% lower. The Dow closed marginally higher on Monday, but the S&P and Nasdaq ended down 0.3% and 1.3%, respectively.
Chris Beauchamp, chief market analyst at IG, said: "It is of course Thanksgiving week, and we are heading towards month-end too, which means that the usual rather unpredictable moves have been brought forward a few days, while volumes continue their steady decline into the somnolence of Thursday and Friday."
The New York market is shut on Thursday for the Thanksgiving Day holiday and open for a half day on Friday.
In mainland Europe, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was off 0.9% midday Tuesday. European investors were still gloomy despite flash purchasing managers' index readings for major European economies surprising to the upside in November.
"Global PMIs have provided a reason for optimism, but even here it doesn't pay to read too much into them, since next month's will include the more gloomy outlook for Europe occasioned by the Austrian lockdown and tightening restrictions in other nations," IG's Beauchamp said.
Eurozone business activity growth is accelerating, according to provisional survey results from IHS Markit.
October's reading was a six-month low, but November saw a rise for the first time in four months. November's growth was coupled with an increase in inflationary pressure, with IHS Markit saying costs and average selling prices charged for goods and services both rose at record rates.
The flash composite PMI improved to 55.8 points in November from 54.2 in October. Any figure above 50.0 denotes growth. The flash services PMI rose to 56.6 points from 54.6, while the manufacturing PMI inched higher to 53.8 from 53.3.
Berenberg Senior Economist Kallum Pickering said: "While monthly data can be volatile, the news is a bright spot in the current climate of heightened risks. The November results point to a strong underlying momentum in the European economy."
Looking ahead, though, Pickering said rising inflation and the risk of more widespread Covid-19 restrictions will restrain the pace of economic momentum across Europe during the final quarter of the year.
In the UK, private sector growth is slowing slightly in November. The flash composite purchasing managers' output index inched lower to 57.7 points from October's final reading of 57.8.
IHS Markit said UK firms experienced "another month of rapid input cost inflation".
The flash services business activity index dropped to 58.6 points from 59.1 in October. The manufacturing index improved to 52.9 from 51.3.
Capital Economics Economist Bethany Beckett said the UK "held up fairly well despite continued supply disruptions and shortages".
Sterling was quoted at USD1.3367, lower than USD1.3412 at the London equities close on Monday.
The euro traded at USD1.1249 midday Tuesday, down on USD1.1263 late Monday. Against the yen, the dollar was trading at JPY114.88 versus JPY114.74, slipping back after surpassing JPY115 for the first time since 2017.
In London, CRH was crowning the FTSE 100, up 3.5%. The building materials firm reported an 11% annual rise in sales in the nine months that ended September 30 to USD22.8 billion.
Earnings before interest, tax, depreciation and amortisation was USD3.9 billion, up 15%, with an Ebitda margin of 17.1%, up 50 basis points. The Dublin-based company said it expects to book full-year Ebitda in excess of USD5.25 billion, well ahead of 2020.
Compass reversed its early loss, to sit up 3.1% around midday. The contract caterer booked record new business wins and client retention in financial 2021 but still saw revenue drop in the year as a whole.
In the 12 months that ended September 30, revenue was down 10% to GBP17.91 billion from GBP19.94 billion the year before. Compass, which was badly hurt by pandemic-related restrictions on activity, noted its underlying revenue recovered to 88% of 2019 revenue by the fourth quarter. Full-year underlying revenue was 77% of financial 2019's.
Pretax profit doubled to GBP464 million from GBP210 million. Operating profit jumped 85% to GBP545 million from GBP294 million.
Compass reinstated its dividend, declaring an annual payout of 14 pence per share. Looking ahead, Compass expects financial 2022 organic revenue growth of between 20% and 25%.
Among London midcaps, Telecom Plus was up 11%. It reported a fall in interim profit amid higher costs, but remained upbeat about the second half with recent trading setting new records.
Pretax profit in the six months to September 30 came in at GBP19.9 million, slipping 7.4% from GBP21.5 million a year ago.
A 6.3% rise in revenue to GBP371.3 million, from GBP349.4 million, was largely mitigated by a 7.3% increase in cost of sales to GBP286.3 million, while administrative expenses grew to GBP40.6 million, up 12% from GBP36.3 million.
Pets at Home gained 6.5%. It attributed buoyant growth in the first half of its financial year to a sustained increase in the number of new pets, as the boom in cat and dog ownership outlasts lockdowns.
The pet products seller nearly doubled pretax profit to GBP70.6 million in the 28 weeks to October 7 from GBP38.9 million a year before.
Revenue improved by 18% to GBP677.6 million from GBP574.4 million. Total customer revenue, which includes joint ventures, rose 20% to GBP867.6 million from GBP724.7 million. Retail like-for-like revenue growth was 22% and 29% on a two-year basis. Vet Group like-for-like revenue growth was 26%.
An interim dividend of 4.3p per share was declared, an increase of 72% annually from from 2.5p.
At the other end of the FTSE 250, AO World slumped 15%.
Logistics problems and a more competitive German market put pressure on AO's interim performance and led it to sink to a loss.
The online electricals retailer posted a pretax loss of GBP10.4 million in the six months to end-September, swinging from a profit of GBP17.7 million a year ago.
The poor performance came on the back of a hefty rise in costs and expenses. Cost of sales rose 5.9% to GBP621.8 million from GBP587.3 million, while administrative expenses jumped 33% to GBP150.1 million from GBP113.2 million. This capped a 6.0% rise in revenue to GBP759.6 million from GBP716.6 million.
Looking ahead, AO said: "As we now look to the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage. In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties."
Gold was quoted at USD1,794.80 an ounce midday Tuesday, lower than USD1,818.94 on Monday. Brent oil was trading at USD79.02 a barrel, down from USD79.86 late Monday.
By Paul McGowan; paulmcgowan@alliancenews.com
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