LONDON MARKET CLOSE: FTSE 100 Overcomes Early Losses To End Higher

(Alliance News) - Despite spending the majority of Tuesday's session in the red, the FTSE 100 managed to clamber into positive territory by the end of the trading day.

This was as shares in JD Sports Fashion rose by more than 9% following an impressive first half, and Barclays ended higher despite warning on PPI charges.

The FTSE 100 index closed up 32.14 points, or 0.4%, at 7,267.95 on Tuesday. The blue-chip index had dipped just below the 7,200 mark in morning trade.

The FTSE 250 ended up 60.41 points, or 0.3%, at 19,738.86, and the AIM All-Share closed down 2.22 points, or 0.3%, at 875.40.

The Cboe UK 100 ended up 0.5% at 12,323.89, the Cboe UK 250 closed up 0.4% at 17,608.79, and the Cboe Small Companies ended up 0.1% at 10,855.97.

"Like the FTSE, sterling managed to shake off its initial sluggishness, mainly thanks to the UK jobs report. Though there were warning signs that the labour market is cooling, the headline figures were pretty stellar," commented Connor Campbell at Spreadex.

UK average weekly earnings in the period from May to July grew 4.0% on an annual basis including bonuses, the highest since 2008. The unemployment rate was 3.8% in the three months to July, lower than 4.0% recorded a year earlier and 3.9% recorded in the three months to June.

The pound was quoted at USD1.2350 at the London equities close Tuesday, soft compared to USD1.2369 at the close on Monday.

However, sterling recovered during Tuesday's session after trading below USD1.2310 earlier in the morning.

"How the pound behaves across the next 5-weeks – ie the period of Parliament's prorogation – is going to be interesting. Will it become reliant on data, as evidence somewhat by the last 2 sessions? Or will it become even more susceptible to rumour and innuendo coming out of Westminster and Brussels, even if MPs aren't in a position to do anything until October 14th?" Campbell questioned.

UK Prime Minister Boris Johnson last night suffered another humiliating Commons defeat after his second bid for a snap general election was rejected by MPs. MPs voted 293 to 46, short of the 434 needed – marking the new PM's sixth Commons defeat.

Parliament was then suspended for five weeks following a ceremony interrupted by protests from opposition MPs, bringing to a close the longest parliamentary session in the history of the UK.

Following the defeat, Johnson said the government would "press on with negotiating a deal while preparing to leave without one" ahead of the European Council summit on October 17.

In European equities on Tuesday, the CAC 40 in Paris ended flat, while the DAX 30 in Frankfurt ended up 0.4%.

The euro stood at USD1.1045 at the European equities close Tuesday, soft against USD1.1059 at the same time on Monday.

Stocks in New York were lower at the London equities close, with the Dow Jones down 0.3%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 0.7%.

On Wall Street, shares in iPhone maker Apple were trading 0.4% lower ahead an event in the Steve Jobs Theater this afternoon, with many anticipating the firm will unveil a host of new products - including an iPhone 11.

"The new smartphone is unlikely to be a game changer seeing as iPhone sales are already slipping, and the consumer climate around the world has deteriorated a little. Later this year, iPhones will have 5G, and until then, some consumers might swerve the iPhone 11," said David Madden at CMC Markets.

In London, JD Sports International ended at the top of the FTSE 100, up 9.3% after a sharp surge in interim revenue.

Profit before tax in the six months to August 3 rose by 6.6% to GBP129.9 million from GBP121.9 million, though the company said on a proforma basis, using last year's accounting method, profit climbed by 13% to GBP137.5 million.

The FTSE 100-listed athleisure retailer delivered a 47% year-on-year jump in revenue to GBP2.72 billion from GBP1.85 billion, largely driven by higher sales in its Sports Fashion unit.

Barclays ended up 5.1% despite Monday afternoon saying it will increase its payment protection insurance provisions by up to GBP1.60 billion after seeing a spike in claims in the run up to the August deadline.

In its third quarter figures, Barclays said its PPI redress provision could rise by between GBP1.2 billion to GBP1.6 billion, though it said the processing of claims is still ongoing.

Fiona Cincotta said Barclays's share price rise was due to its confirmation that it will reach its common tier equity 1 capital ratio target for the year-end of 13% despite the surge in PPI complaints.

"Basically, this has boosted confidence surrounding Barclays dividend for the coming year," explained Cincotta.

Also helping London's blue-chip index rise were oil majors, with BP shares gaining 1.7% and Royal Dutch Shell also closing higher, with 'A' shares up 2.3% and 'B' shares up 2.4%.

This was as Brent oil rose to be quoted at USD63.51 a barrel at the London equities close Tuesday from USD62.90 late Monday.

"WTI and Brent crude have rallied again as there is the belief that OPEC and non-OPEC members will maintain their curbed production scheme. Prince Abdulaziz bin Salman, the new Saudi energy minister, recently claimed the current output might remain in place for the foreseeable future, and that continues to help the oil market," explained CMC's Madden.

In other commodities, gold was soft, quoted at USD1,496.83 an ounce at the London equities close Tuesday against USD1,500.81 at the close on Monday.

In the FTSE 250, Galliford Try shares closed up 7.3% while shares in Bovis Homes moved in the other direction, finishing 3.8% lower, as the two companies resumed talks to merge housebuilding businesses.

In a joint statement, Bovis Homes and Galliford Try clarified that the talks solely related to a merger of Bovis with Galliford Try's housebuilding units and not with Galliford Try itself. Bovis said Galliford Try would be a "well-capitalised, standalone construction-focused group" owned entirely by Galliford Try shareholders.

Back in May, Galliford rejected a GBP1.05 billion bid by Bovis for Galliford's Linden Homes and Partnerships & Regeneration businesses.

Under potential transaction terms, Bovis would issue shares worth GBP675 million to Galliford Try shareholders, pay GBP300 million in cash, and takeover Galliford Try's 10-year debt private placement of GBP100 million.

Sanne slipped 7.3% after the company said it expects to meet its full-year revenue forecasts despite its corporate and private client units performing below expectations in the first half.

For the six months to June 30, the company reported a revenue rise of 19% to GBP78.7 million from GBP65.9 million. Pretax profit fell by 50% to GBP5.4 million from GBP10.9 million due to a 56% rise in non-underlying costs to GBP13.3 million from GBP8.5 million.

In the corporate calendar on Wednesday, there are annual results from housebuilder Galliford Try and interim results from shopping centre owner Capital & Regional.

In the economic calendar on Wednesday, there are US producer prices at 1300 BST.

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