LONDON MARKET CLOSE: Europe nudges higher as catch-up playing US jumps

(Alliance News) - Blue-chip stocks in Europe made steady gains on Tuesday, while equities in the US soared as traders there returned to desks, with risk sentiment continuing to improve following a tough few days for markets last week.

The FTSE 100 index in London closed up 30.24 points, or 0.4%, at 7,152.05.

The more domestically-focused FTSE 250 fell, however, as travel and leisure shares came under pressure from strike action. The mid-cap index ended down 61.77 points, or 0.3%, at 18,949.05.

The AIM All-Share closed up 1.23 points, or 0.1%, at 898.40.

The Cboe UK 100 ended up 0.4% at 712.55, the Cboe UK 250 closed down 0.3% at 16,659.78, and the Cboe Small Companies ended up 0.3% at 13,726.06.

In European equities on Tuesday, the CAC 40 stock index in Paris closed up 0.8%, while the DAX 40 in Frankfurt finished 0.2% higher. The CAC made stronger strides on Tuesday, having underperformed on Monday.

"European stocks are making small gains again on Tuesday, benefiting from the relatively calm start to the week," Oanda analyst Craig Erlam commented.

"These small recoveries in stock markets shouldn't provide any comfort. Everyone is hunting for the bottom but there's a huge cloud of uncertainty over the outlook and the data isn't yet showing any encouraging signs. Recession is increasingly becoming the base case and so equities are vulnerable to further losses."

US stocks made more confident marches than European counterparts, playing catch up after being closed on Monday.

At the time of the European close, the Dow Jones Industrial Average was 1.9% higher, the S&P 500 was up 2.6% and Nasdaq Composite was 3.1% higher.

"European markets had made gains yesterday while the US was on holiday but there is always lingering doubt that such moves can survive the return of Wall Street traders. Those fears have been nullified with the strong form displayed across the American indices this afternoon," IG analyst Chris Beauchamp commented.

Among those leading the way in New York were oil majors, with Chevron up 4.0% and Exxon rising 6.6%, tracking crude prices higher.

Brent oil was quoted at USD114.71 a barrel at the time of the closing bell in London on Tuesday, up from USD113.70 late on Monday.

Gold stood at USD1,839.99 an ounce, up against USD1,838.66.

The pound was quoted at USD1.2276 late on Tuesday, up from USD1.2246 at the London equities close Monday. The euro was priced at USD1.05658, higher against USD1.0528 Against the yen, the dollar was trading at JPY136.18 in London, up from JPY135.03.

In London, DS Smith closed among the better FTSE 100 performers. The packaging company raised its dividend after strong annual results. Shares rose 3.7%.

For the financial year that ended April 30, pretax profit increased 64% to GBP378 million from GBP231 million the year before, on revenue of GBP7.24 billion, up 21% from GBP5.98 billion.

DS Smith declared a total dividend of 15.0 pence, up 24% from 12.1p paid out in financial 2021.

Looking ahead, DS Smith said it has seen good early momentum at the start of its current financial year, despite a more-challenging backdrop.

Miners closed higher. Antofagasta, up 2.9%, Rio Tinto, rising 2.2% and Glencore, adding 2.0%, were among the best of the lot.

Record ended up 7.0% after currency manager lifted its annual dividend following a double-digit rise in profit and revenue.

For the year ended March 31, Record reported a pretax profit of GBP10.9 million, up 78% from GBP6.2 million the year before, on revenue which grew 38% annually to GBP35.1 million, driven by growth in the group's managed assets, particularly in Record's higher revenue margin products, as well as a 37% increase in management fees.

Record declared a final ordinary dividend of 1.8 pence per share, bringing the total payout to 3.6p, up 47% from 2.3p the year before. In addition, Record more than doubled its special dividend to 0.92 pence from 0.45p the year prior.

Despite Tuesday's risk-off mood, the effects of strike disruption was evident in travel, leisure and retail shares.

easyJet lost 6.6% as some of its Spanish cabin crew will go on strike next month. The USO union in Spain said 450 crew members at the El Prat, Malaga and Palma de Mallorca airports will strike for nine days in July.

easyJet and USO have been in talks since February over pay, though the duo are in "deadlock" now.

"The company has no interest in negotiating the improvement of the working conditions of the crew in Spain, so that we have the same working conditions as those who operate in other European bases such as France and Germany," USO said.

Closer to home, strike action across UK railways kicked off on Tuesday, after last-ditch talks to avert industrial action failed.

Thousands of members of the Rail, Maritime & Transport union at Network Rail and 13 train operators will walk out on Tuesday, Thursday and Saturday.

WH Smith, which aside from its high street offering also operates stores in rail stations, fell 3.1% on Tuesday. Train fare selling platform Trainline lost 2.2% and Restaurant Group, the owner of Wagamama, shed 4.9%.

"A mass walkout of rail workers in the UK, which is set to cause chaos across the transport network, is indicative of the problems mounting up for the UK economy as the cost-of-living crisis escalates," Hargreaves Lansdown analyst Susannah Streeter commented.

"It's easy to see why workers are desperate to see wage rises to help make ends meet, but this comes with the risk of adding to the inflationary spiral at a time when policymakers are focused on dampening demand in the economy. If public sector pay rises to anywhere close to the rate of inflation, this could end up being a counterweight to the Bank of England's efforts to try and drag down inflation. The huge strike is a precursor to another worrying snapshot expected of red-hot consumer prices."

Wednesday's economic calendar has the latest batch of UK inflation data from the Office for National Statistics at 0700 BST. The ONS also releases its latest house price index at 0930 BST. Across the Atlantic, Fed Chair Jerome Powell speaks before the US Banking Committee.

The local corporate calendar on Wednesday has annual results from housebuilder Berkeley, and half-year numbers from enterprise software firm Micro Focus International.

By Eric Cunha; ericcunha@alliancenews.com

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