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(Alliance News) - Stocks in London ended a see-saw Tuesday in the red, despite a strong rise from housebuilders.
Markets opened in the red, were able to reverse losses by midday, but saw a slide in the afternoon.
"After mounting something of a recovery a lunchtime the Western markets lurched back into the red as Tuesday's session went on," SpreadEx's Connor Campbell said.
He continued: "Things had been going so well that the S&P 500 had hit a fresh all-time intraday high. And then, all of a sudden, investors got scared, with global indices quickly tumbling following that peak."
The FTSE 100 index closed down 50.82 points, or 0.8%, at 6,076.62. The mid-cap FTSE 250 index lost 148.86 points, or 0.8%, to finish at 17,623.02. The AIM All-Share index closed marginally higher at 960.05.
The Cboe UK 100 index closed down 1.1% at 604.30. The Cboe 250 ended down 1.0% at 15,030.04, and the Cboe Small Companies lost 0.5% at 9,609.83.
In mainland Europe, the CAC 40 index in Paris lost 0.7%, while the DAX 30 in Frankfurt gave back 0.3%.
Stocks in New York were mixed the London equities close on Tuesday. The DJIA was down 0.1%, the S&P 500 index was 0.1% higher, and the Nasdaq Composite was up 0.4%.
Campbell continued: "The dollar, and the global markets, appears to be struggling in the face of the latest US-China spat, i.e. the most recent round of restrictions placed on Huawei. There also the issue of the Congress Covid-19 fiscal relief plan - or, rather, the lack of one, the Democrats and Republicans still unable to come to an agreement."
The pound was quoted at USD1.3225 at on Tuesday evening, up from USD1.3096 at Monday's equities close in London.
The euro was priced at USD1.1924, up sharply from USD1.1867. Against the yen, the greenback was quoted at JPY105.45 in London, down from JPY106.00.
Oanda's Edward Moya commented: "After rising to a 27-month high, the euro has come back down to earth as the overly crowded trade has exhausted itself. Treasury yields are falling again as expectations grow that the Fed policy review framework will signal a relaxed view on inflation, taking some of the air out of the steepening of the curve and dragging the dollar along with it.
"The dollar fundamentals still warrant further weakness, but this trade has become a bit overcrowded and is ripe some short-term dollar momentum."
In London, Persimmon closed the best blue-chip performer, adding 8.0% after the housebuilder reported green shoots of recovery for the second half, despite reporting a drop in profit.
For the six months to the end of June, pretax profit dropped by 43% to GBP292.4 million from GBP509.3 million a year before, as revenue declined by 32% to GBP1.19 billion from GBP1.75 billion.
This was due to completions falling by 35% year-on-year to 4,900 homes from 7,584 a year before, even as the average selling price increased to GBP225,066 from GBP216,942.
The group said its owned and consented land bank as at June 30, fell to 89,232 plots from 95,086 plots the prior year; however its forward sales position increased to GBP2.48 billion from GBP2.05 billion.
Persimmon declared a "modest" interim dividend of 40 pence per share, down 80% from 235p the prior year.
Looking ahead, the housebuilder said its short-term outlook is robust and expects to deliver 45% of its anticipated new home legal completions for the second half. It added that it has had an "excellent start" to the second half with a 49% year-on-year increase in average weekly private sales rates per site since the start of July.
"The recovery in the UK housing market since lockdown eased has been remarkable. A mixture of pent-up demand and, for those with the means, an aspiration to add to living space or find a place with room for a home office after the experience of being stuck indoors for weeks on end will have supported the rebound," noted AJ Bell's Russ Mould.
Peers Barratt Developments, Taylor Wimpey and Berkeley Group gained 2.5%, 0.2% and 1.0%, respectively.
At the other end of London large-cap index, BHP Group lost 2.6%. The Anglo-Australian miner lowered its annual dividend, as earnings declined on lower prices and provisions for the closure and rehabilitation of mines, as a result of Covid-19.
For the year to the end of June, pretax profit dropped by 10% to USD13.51 billion from USD15.05 billion the year before, as revenue declined by 4.3% to USD42.39 billion from USD44.29 billion. BHP's revenue performance came in short of company-compiled expectations, which stood at USD43.07 billion.
Profit from operations decreased by 11% to USD14.42 billion from USD16.11 billion the prior year, while underlying earnings before interest, tax, depreciation and amortisation slipped by 5% to USD22.07 billion from USD23.16 billion.
Underlying Ebitda was just ahead of consensus expectations, which had the figure at USD22.01 billion. BHP said its performance was hurt by lower prices, particularly in coal, copper and petroleum, lower volumes including a decline in copper grades and petroleum fields, and a rise in the closure and rehabilitation provisions for closed mines.
BHP declared an annual dividend of 120 US cents, down 10% from 130 cents the year before. Analysts had expected BHP to declare an annual dividend of 123 cents.
"BHP's dividend cut, despite prices for its main metals holding up, was unalloyed bad news for shareholders. Its profits were dragged lower by plunging oil and coal prices. With dividend cover already so low, a cut was hard to avoid and will save BHP around GBP800 million in 2020 alone," commented Link Group's Kit Atkinson.
Rightmove gave back 2.7%.
Analysts maintain their negative stances on Rightmove saying risks to the property portal will become more pronounced once measures to support the UK housing market are removed.
Berenberg highlighted that after the share price rally, Rightmove's current valuation fails to reflect the difficulties that its estate and letting agents are experiencing and the effects this could have on Rightmove's near-and medium-term growth.
In the FTSE 250, Marks & Spencer lost 4.9% after the high street stalwart said total sales in its hard-hit clothing and home arm plunged 30% in the eight weeks since shops reopened, with store sales tumbling 48%, while online sales rose 39%.
M&S said sales were improving but that it was "clear that there has been a material shift in trade".
In addition, M&S announced that around 7,000 jobs are being axed as part of an effort to streamline the business, as the retail sector grapples with the coronavirus crisis.
"Sharpening the workforce and throwing weight behind the online business makes sense, the question now is whether M&S's digital dawn is simply breaking too late," commented Hargreaves Lansdown analysts.
Capita shed 20%.
The outsourcer endured a tough first half of 2020, as the impact of Covid-19, coupled with contract losses last year, weighed the company down.
Capita swung to a pretax loss in the six months ended June 30 of GBP28.5 million from a profit of GBP31.2 million a year prior. Revenue for the half was down to GBP1.68 billion from GBP1.85 billion year on year.
Covid-19's hit to revenue was mainly due to a decrease in transactional business and where client end-markets were severely affected, Capita said. Other hits to revenue came from the impact of contracts lost in the second half of 2019.
Capita said it expects the impact of Covid-19 to delay its move into generating a sustainable free cash flow, which was the company's goal for this year.
In commodities, the price of gold rose back above the USD2,000 mark, as the dollar weakened. The precious metal was quoted at USD2,000.40 an ounce Tuesday, up sharply from USD1,984.00 an ounce at Monday's equities close in London.
Oanda's Moya said: "Gold prices seem to have gotten its mojo back after both fresh tensions between Washington and Beijing spurred safe-haven demand and acting Council of Economic Advisers Chair Goodspeed said President Trump would pursue a narrower stimulus bill.
"As US stocks hit fresh record highs, a laundry list of uncertainties to the outlook for the rest of year should help gold continue the climb to uncharted territory. [US] Presidential election uncertainty is not just with the outcome for the Oval Office and the Senate, but on when will we get the final results. The current stimulus stalemate persists, but a deal will get done before the end of next month because that is when federal funding runs out. "
Brent oil was trading at USD45.34 a barrel on Tuesday evening, up slightly from USD45.04 at the London equities close Monday.
On the political front, UK investors will be keeping a close eye on the resumption of Brexit negotiations on Tuesday, as Michel Barnier, the EU's chief negotiator meets UK counterpart David Frost for the seventh round of talks.
The main areas of discussion include fisheries' rights and the UK financial sector's access to the European Union markets, as the two sides try to secure a deal before the end of the year.
In the economics calendar Wednesday, there is a Japan imports and exports print overnight. In the morning, there is a UK producer price index reading at 0700 BST, with a consumer price index print at 0730 BST. At 1000 BST, there is a eurozone consumer price index reading and US MBA mortgage applications at 1200 BST. In the evening, minutes from the US Federal Reserve's latest Open Market Committee meeting will be published.
The UK corporate calendar silver and gold miner Hochschild Mining, energy investor Riverstone Energy, Irish mineral sand miner Kenmare Resources and construction firm Costain Group will also publish half-year results.
By Paul McGowan; paulmcgowan@alliancenews.com
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