LONDON MARKET CLOSE: FTSE 100 Shrugs Off Down Day For Miners And BP

(Alliance News) - The week's rally continued in London on Tuesday, with investors shrugging off a difficult day for miners and oil giant BP, as fears of the retail-Reddit volatility seen last week have dwindled.

The FTSE 100 index closed up 50.23 points or 0.8%, at 6,516.65. The FTSE 250 ended up 297.59 points, or 1.5%, at 20,690.21. The AIM All-Share closed up 17.99 points, or 1.5%, at 1,188.96.

The Cboe UK 100 ended up 0.8% at 648.08, the Cboe UK 250 closed up 1.6% at 18,246.36, and the Cboe Small Companies ended up 0.8% at 12,207.29.

In Paris, the CAC 40 ended 1.9% higher, while the DAX 30 in Frankfurt added 1.3%.

IG Senior Market Analyst Joshua Mahony said: "Global markets are showing signs of returning to confidence after a period of heightened fear over the potential for a market collapse. The recent Reddit-led targeting of stocks and commodities appears to be fading with GameStop, AMC Entertainment, and silver all on the slide.

"The volatility index has also provided reason for optimism, with today's sharp decline in the so called 'fear gauge' marking a distinct move away from the highly elevated levels seen since last Tuesdays near three-month high."

On the London Stock Exchange, miners were pulling back from yesterday's strong gains - as the price of silver slipped from its Reddit-infused boost.

Fresnillo gave back 4.8%, Anglo American 2.5%, Glencore 1.2% and Rio Tinto 1.0%.

Silver was priced at USD26.77 an ounce Tuesday's close in London, down from USD28.59 at the close Monday. The precious metal breached the USD30 mark on Monday to hit its highest level in eight years as users on Reddit forum r/WallStreetBets intensified calls for a short-squeeze on the commodity, shifting their focus from video game retailer GameStop.

Gold was quoted at USD1,837.20 an ounce at the London equities close, sharply lower against USD1,860.90 late Monday.

BP lost 4.5% after the oil major swung to an annual loss following a tumultuous year in which the global oil and gas industry faced severe challenges.

For 2020, BP swung to a replacement cost loss of USD18.10 billion from an RC profit of USD3.52 billion in 2019 on revenue of USD183.50 billion, down 35% from USD282.62 billion.

BP declared a fourth quarter dividend of 5.25 US cents, in line with the second and third quarter payouts, but halved from 10.25 cents in the fourth quarter 2019. This brings the full-year payment to 31.50 cents, down 23% from 41.00 cents in 2019.

Brent oil was quoted at USD57.58 a barrel at the London close, up sharply from USD55.82 at the close Monday.

Oanda analyst Jeffrey Halley said: "Oil prices powered higher, lifted in part by the positive sentiment returning to equity markets, but mostly because of frigid weather sweeping the US, pushing up the demand for heating."

The North Sea benchmark was trading around USD68 a barrel at the start of 2020, but collapsed to a low of USD15.97 in April due to the Russia-Saudi Arabia oil price war.

Gain Capital's head of market research, Matt Weller, added: "In that vein, one of today's biggest developments was the leak of an internal OPEC document. Per a copy obtained by Reuters, the oil cartel found compliance with last month's production cuts was 99%, leading OPEC to forecast that the oil market will be in a 2 million barrels per day deficit by May. In other words, the intentional reduction in supply of oil is working as expected, with the market expected to be balanced in the coming months.

"While the group did cut its forecast for demand by 300,000 barrels per day, the positive news on the supply front was the far more significant development for traders."

At the other end of the blue chip index, hotel operators Whitbread and InterContinental Hotels were the benchmark's best performers, both adding 5.8%, as the UK presses ahead with its mass vaccination rollout.

IG's Mahony said: "Travel stocks have received a welcome boost today, with traders feeling increasingly confident that the current pace of vaccinations will enable some form of summer after-all. However, while the likes of IAG and Wizz Air have been amongst the chief gainers, it is worthwhile noting that the constant mutations being seen globally raise questions over just how international any holidays will be.

"Instead, there is a good chance that we will see the government continue to back a 'Great British summer', which should help support hotel and domestic coach/rail stocks. Meanwhile, the current vaccination optimism should be taken with a pinch of salt, as a growth in more pervasive strains such as that from South Africa raise risk of an outbreak that dents the effectiveness of the current inoculation drive."

IAG gained 5.1% and Wizz Air advanced 4.3%.

In the US, Wall Street was firmly in the green at the London equities close, as fears about the social media-led retail investor battle with Wall Street hedge funds that undermined sentiment last week appeared to be abating. The DJIA was 1.9% higher, the S&P 500 index up 1.6% and the Nasdaq Composite was up 1.4%.

On the US stimulus front, President Joe Biden met Monday with Republican lawmakers to discuss their stimulus counter-proposal as he looks for a bipartisan deal.

The USD600 billion plan backed by Republicans is worth less than a third of one put forward by the White House, and includes smaller handouts and no provision for state and local governments - two issues that Democrats are likely to reject.

After the closing bell in New York, tech giants Amazon and Alphabet will report quarterly earnings.

The pound was quoted at USD1.3644 at the London equities close, down from USD1.3666 at the close Monday.

The euro stood at USD1.2029 at the European equities close, up from USD1.2076 late Monday. Against the yen, the dollar was trading at JPY105.05, up from JPY104.95 late Monday.

In the economics calendar on Wednesday, service PMIs from around the globe will show economies have started 2021. The Jibun Bank services PMI for Japan and Caixin services PMI for China are due overnight. This is followed by the French, German, eurozone and UK service PMI readings at 0850 GMT, 0855 GMT, 0900 GMT and 0930 GMT, respectively. In the afternoon, the US service PMI print is at 1445 GMT.

Elsewhere, the eurozone consumer and producer price index is due at 1000 GMT.

The UK corporate calendar, blue chip pharma giant GlaxoSmithKline issues full-year results, while miner Glencore will issue full-year production results. Vodafone will also issue a trading statement.

By Paul McGowan; paulmcgowan@alliancenews.com

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