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(Alliance News) - Stock prices in London closed higher on Tuesday, shaking off some early weakness in New York, boosted by hopes that China will deviate from its economically-bruising zero-Covid policy.
Investors are also hopeful of a pivot from the Federal Reserve, as the US central bank's policy-setting Federal Open Market Committee kicks off its two-day meeting on Tuesday.
The FTSE 100 index closed up 91.63 points, 1.3%, at 7,186.16. The FTSE 250 ended up 305.97 points, 1.7%, at 18,195.90, while the AIM All-Share added 8.41 points, 1.0%, at 814.54.
The Cboe UK 100 closed up 1.1% at 718.14, the Cboe UK 250 ended up 1.7% at 15,626.22, and the Cboe Small Companies ended down 0.1% at 12,320.76.
In European equities on Tuesday, the CAC 40 in Paris ended up 1.0%, while the DAX 40 in Frankfurt closed up 0.6%.
Stocks in New York were weaker, however. The Dow Jones Industrial Average was down 0.4%, the S&P 500 down 0.5% and the Nasdaq Composite 0.8% lower.
Sterling was quoted at USD1.1465 late Tuesday, lower than USD1.1500 at the London equities close on Monday. The euro traded at USD0.9873, down from USD0.9885 late Monday. Against the yen, the dollar was quoted at JPY148.07, down from JPY148.61, but off intraday lows.
The dollar got a late boost after the Institute for Supply Management's manufacturing purchasing managers' index topped expectations, coming in at 50.2 points and above an FXStreet cited forecast of 50.0 - the no-change mark.
IG analyst Joshua Mahony commented: "Despite talk of a Fed 'pivot', the fact remains that we could be a long way from any reversal from the 5% interest rates expected next year. Today's ISM manufacturing survey did remind markets of the relative outperformance compared with the sharp contraction in Europe. However, this week is likely to regain a somewhat sobering footing as the Federal Reserve casts light over exactly how likely it is that we will see any shift in policy once the tightening phase ends."
The Federal Reserve is widely expected to announce a fourth successive 75 basis point rate hike on Wednesday, though stock market investors are hopeful that the path thereafter will be less steeply upwards.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.
According to the CME FedWatch tool, a 75 basis point hike is almost a foregone conclusion. The tracker suggests there is an 88% chance for another three-quarter point rate rise on Wednesday.
This would take the federal funds rate range to 3.75%-4.00%, roughly a 15-year-high. While analysts believe another hike is likely when the Fed meets in December, there is speculation that the US central bank will finally let up and slow the pace of its rate rises.
Boosting risk appetite were unconfirmed posts on Chinese social media saying officials were putting together a committee to discuss how to move the country away from its economically damaging zero-Covid policy, AFP reported.
"While this might come across as wishful thinking for the most part, Chinese authorities will have to relent on this policy at some point, although it's unlikely to happen much before March next year. Nonetheless, you'd have to be naive to think that China wouldn't be wargaming some sort of plan, but even if they are, and are targeting the end of Q1 next year, that still means at least another two quarters of underperformance for the Chinese economy, with mixed results for the global economy," CMC Markets analyst Michael Hewson commented.
Shares in the mining and luxury retail sectors ended higher, amid their exposure to the ebbs and flows of the Chinese economy.
Anglo American and Glencore rose 5.8% and 4.9%. Burberry closed up 1.7%, while Paris-listed peer LVMH added 1.9%.
Ocado was by far and away the best FTSE 100 performer, surging 39%.
It announced its burgeoning warehouse technology business will expand into South Korea.
Ocado Solutions will parter with Lotte Shopping, the largest retail affiliate of the South Korean conglomerate Lotte Group.
Lotte Group is one of the largest business conglomerates in South Korea, with interests spanning retail, food, hotels and chemicals, with a total annual revenue of KRW75 trillion, about GBP45 billion.
Lotte Shopping is the group's largest retail affiliate, operating department stores, hypermarkets, supermarkets and e-commerce platforms in South Korea, with an annual revenue of KRW15.6 trillion, about GBP9.8 billion.
No financial details were provided, though Ocado said it expects the deal to create "significant long-term value".
BP rose 1.4%. The oil major said it continued "performing while transforming" in the third quarter of the year. It recorded USD57.81 billion in revenue during the quarter, up 52% from USD37.87 billion a year prior but 19% lower from USD67.87 billion in the second quarter.
It swung to a pretax profit of USD1.98 billion from a loss of USD495 million a year before. Third quarter profit was however significantly lower than GBP14.06 billion in the second quarter.
The company said it plans to execute another USD2.5 billion share buyback before the release of its fourth quarter results. Further, BP said it expects to be able to deliver share buybacks of USD4.0 billion every year and increase annual dividends per share of around 4% through 2025, based on its forecast with a price of around USD60 per barrel Brent.
Auction Technology closed up 9.5%. Barclays began coverage of the stock with an 'overweight' recommendation.
Elsewhere in London, Osirium Technologies soared 72%. The cloud-based cybersecurity company said bookings for the nine months to September 30 were up to GBP2.5 million, compared to GBP1.6 million a year before.
"Average contract values have also continued to grow during the period, as a result of a greater preparedness and need on behalf of customers to spend on cybersecurity for the long-term," the company said.
Fellow AIM listing Westminster tumbled 22%, however.
The provider of security services for sensitive places such as ports, airports and commercial buildings said it expects revenue to be around a third lower than market expectations for 2022 and loss before tax to be around half that of 2021, when Westminster's pretax loss was GBP1.9 million.
This is mostly due to "slippage" from a "multi-million-pound" technology project for the Middle East & North Africa region.
Gold was quoted at USD1,644.63 an ounce late Tuesday, higher than USD1,638.60 on Monday. Brent oil was trading at USD94.48 a barrel, higher than USD92.24.
Wednesday's local corporate calendar has a third-quarter update from Aston Martin Lagonda, pharmaceutical firm GSK and retailer Next. Packaging firm Smurfit Kappa and insurer Hiscox report trading statements.
The economic calendar has manufacturing PMIs from the EU and Germany, before the Fed interest rate decision at 2000 SAT.
By Eric Cunha; ericcunha@alliancenews.com
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