LONDON MARKET CLOSE: European stocks add to gains but US rally snapped

(Alliance News) - Blue-chip stock prices in Europe closed higher on Tuesday, adding more moderate gains to Monday's surge as equities continued to be in fashion at the start of March, following a tough end of February.

Share price gains in Europe came despite equities in New York opened Tuesday's session lower.

"While European stocks have rummaged around to find some more gains, Wall Street is on the back foot once more, although given the scale of the rebound yesterday that is perhaps not surprising," IG Markets analyst Chris Beauchamp noted.

The FTSE 100 index closed up 25.22 points, or 0.4%, at 6,613.75 on Tuesday.

London's blue-chip index benefitted from both a weaker pound and the risk-on mood for stocks, though the more domestically-focused mid-cap index did not fare as well.

The FTSE 250 ended down 43.55 points, or 0.2%, at 21,177.91 and the AIM All-Share fell 2.63 points, or 0.2%, at 1,189.54.

The Cboe UK 100 ended up 0.7% at 659.97, the Cboe UK 250 closed down 0.2%, at 18,791.70, and the Cboe Small Companies ended 0.4% higher at 13,337.40.

In Paris, the CAC 40 ended up 0.3%, while the DAX 30 in Frankfurt rose 0.2%.

Stocks in New York were lower at the time of the London equities close. The Dow Jones Industrial Average was down 0.3%, the S&P 500 down 0.5% and the Nasdaq Composite 1.0% lower.

European stocks had a soft start, with the FTSE spending some of the morning below the water line, before growing in confidence as the session wore on.

The pound was weaker ahead of the UK chancellor's budget on Wednesday. Sterling was quoted at USD1.3946 at the London equities close on Tuesday, down from USD1.3953 at the same time on Monday.

Further economic stimulus is expected from the UK government as the country continues to grapple with the coronavirus pandemic, with any bigger moves likely to come after England emerges from lockdown.

As a winter resurgence of Covid-19 starts to taper off and the UK prepares to gradually reopen the economy, Chancellor Rishi Sunak is expected to provide further support for the likely bumpy coming months.

He is likely to extend the furlough scheme, supplementary Universal Credit payments, stamp duty holiday and business rates holiday until lockdown is fully lifted in, hopefully, late June.

The budget will be delivered by Sunak on Wednesday at 1230 GMT.

OANDA analyst Sophie Griffiths noted the FTSE benefitted from a weaker pound and share price gains for insurers.

Legal & General climbed 0.6%, Admiral Group rose 2.3% and Prudential rose 2.1%. RBC raised Prudential to Outperform from Sector Perform.

Prudential reports on its annual results on Wednesday. Company-compiled consensus forecasts total IFRS operating profit at USD5.26 billion versus USD5.31 billion in 2019.

JD Sports fell 2.3%, the worst-performing large cap on Tuesday. Sky News on Monday reported the athleisure retailer is leading the race to buy an Arcadia Group warehouse in Daventry, Northamptonshire. The purchase will set JD Sports back between GBP60 million and GBP90 million, according to experts cited by Sky News.

Renishaw topped the mid-caps, closing up 19% and giving it a market capitalisation of GBP5.02 billion. It is launching a formal sale process, after the pair who started the engineering and scientific technology firm in 1973 decided it is time to pass on the business.

Executive Chair David McMurtry and Non-Executive Deputy Chair John Deer, the company's founders, have indicated they intend to sell their "very substantial" shareholdings in Renishaw. Together, the founders own around 53% of the group, and have expressed a preference for the disposal of their entire combined shareholding.

Elsewhere in London, French Connection fell 8.2% after the fashion retailer said Spotlight Brands and Gordon Brothers no longer plan to make an offer for the company.

In February, French Connection received a pair of takeover approaches, one being from boutique consulting agency Spotlight, in conjunction with Gordon Brothers, and Go Global Retail, working alongside HMJ International Services.

boohoo ended down 3.3% on AIM. The online retailer said it "has not received any correspondence from, nor is it aware" of any probe by US Customs & Border Protection.

Campaigners Liberty Shared on Monday said they filed a petition last month for the US border force to consider banning boohoo from importing into the country.

Liberty Shared said: "We have sought to show that because of a supply chain concentration in the city of Leicester in the UK, particularly the area of Leicester East, products sold by boohoo are potentially produced at least in part by forced labour."

boohoo on Tuesday said it is "confident in the actions it is taking" to ensure its products meet US border force entry criteria.

The US dollar was stronger against the pound but was mixed elsewhere. Against the Japanese yen, the dollar was trading at JPY106.73 at the London equities close, up from JPY106.62 at the same time on Monday.

The euro stood at USD1.2072 at the European equities close, improved from USD1.2055 on Monday.

The US Senate will start its debate this week on US President Joe Biden's massive economic stimulus plan, Democratic Majority Leader Chuck Schumer said Monday.

The House of Representatives, also under Democratic control, on Saturday approved the USD1.9 trillion package designed to jumpstart the US economy after the implosion caused by the Covid-19 pandemic, and which included a hike in the federal minimum wage. The version of the bill the Senate will debate will not include the latter section on increasing minimum wage due to congressional rules governing the budgetary process.

An ounce gold fetched USD1,727.95 at the London equities close on Tuesday, down from USD1,737.01 at the same time on Monday. Brent oil was quoted at USD63.64 a barrel, down from USD64.94.

The economic calendar on Wednesday has a raft of services PMIs, including Germany at 0855 GMT, the eurozone and 0900 GMT and the UK at 0930 GMT.

The local corporate calendar has annual results from cybersecurity firm Avast, insurer Hiscox, housebuilder Persimmon and gold miner Polymetal International.

By Eric Cunha; ericcunha@alliancenews.com

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