LONDON MARKET CLOSE: Markets Stumble Ahead Of Trump-Biden Debate

(Alliance News) - Equities in London failed to sustain their strong start to the week, with the FTSE 100 dipping 30 points on Tuesday as markets await the first debate between US presidential contenders Joe Biden and Donald Trump.

The FTSE 100 index closed down 30.43 points, or 0.5%, at 5,897.50. The FTSE 250 ended down 196.61 points, or 1.1%, at 17,173.66, though the AIM All-Share closed up 1.14 points, or 0.1%, at 956.65.

The Cboe UK 100 ended down 0.8% at 586.98, the Cboe UK 250 closed down 1.4% at 14,542.37, and the Cboe Small Companies ended down 0.1% at 9,138.73.

In European equities on Tuesday, the CAC 40 in Paris shed 0.3% while the DAX 30 in Frankfurt ended 0.4% lower.

Stock markets failed to build on their strong start to the week, said Oanda's Craig Erlam.

He noted: "We're closing in on month and quarter end, which will likely have an impact on trading - the usual portfolio rebalancing that gets mentioned around this time - but more broadly speaking, we could just be seeing investors taking to the sidelines ahead of this evening's debate."

President Donald Trump and challenger Joe Biden will meet in Cleveland on Tuesday for the first of three televised debates that could shake up an already volatile race for the White House.

Covid-19 restrictions will give the debate moderated by Fox News star Chris Wallace a streamlined look with a smaller audience. Naturally, there won't be the once standard – even if occasionally forced – show of goodwill in shaking hands as the rivals go on stage.

What the 90-minute clash will have is a chance for Americans finally to see Trump, 74, and Biden, 77, go head to head.

Significantly behind in the polls, Trump is in fighting mode, embarking on an endurance-testing schedule of rallies in key battlegrounds several times a week.

Wall Street was in the red ahead of the debate, while the dollar was mostly lower.

In New York, the Dow Jones was down 0.5%, the S&P 500 index down 0.3%, and the Nasdaq Composite flat.

The euro stood at USD1.1741 at the European equities close Tuesday, up against USD1.1653 at the same time on Monday. Against the yen, the dollar was trading at JPY105.61, firm compared to JPY105.58 late Monday.

The pound was quoted at USD1.2859 at the London equities close Tuesday, up slightly compared to USD1.2855 at the close on Monday.

"The pound has erased some of its early losses, with hopes of a Brexit deal improving after the UK sent a host of new trade deal drafts in a bid to break the deadlock. With the final scheduled round of talks commencing today, the hope is that both sides will find enough compromise to enable a final 'tunnel' phase to take us into the EU summit in mid-October," said IG's Joshua Mahony.

The ninth round of formal negotiations resumed on Tuesday, with fisheries and the level playing field among the items on the agenda as time runs out on the transition period.

Brexit trade negotiations have made slow progress thus far, with the main sticking points including trading relations between Britain and Northern Ireland, along with areas such as fishing rights, state subsidies and the rights of citizens.

At talks in Brussels on Monday, European Commission vice president Maros Sefcovic reiterated calls for ministers to scrap provisions in the legislation which could see the UK unilaterally tear up elements of the Brexit divorce deal. However the Cabinet Office Minister Michael Gove, who co-chairs the committee with Sefcovic, said the government intended to continue with passage of the Bill, which is due to go through its report stage in the Commons on Tuesday.

UK Prime Minister Boris Johnson has indicated that he would be prepared to walk away from the negotiations if there is no agreement by the time of the next EU summit on October 15.

In London, travel stocks fell amid further lockdown restrictions in England.

Tougher restrictions banning people from mixing with other households in any setting will be introduced tonight in large parts of north-east England due to a continued sharp rise in coronavirus cases.

Existing measures – for Northumberland, Newcastle, North and South Tyneside, Gateshead, Sunderland and County Durham – are being tightened at the request of local councils because the virus is still spreading, UK Health Secretary Matt Hancock said.

The UK government said that, as of 0900 BST on Monday, there had been a further 4,044 lab-confirmed cases of coronavirus in the UK, taking the overall number to 439,013. A further 13 people had died within 28 days of testing positive for Covid-19 as of Monday.

British Airways parent International Consolidated Airlines dipped 3.6%, while Premier Inn hotel chain owner Whitbread declined 3.0% and mid-cap easyJet fell 3.1%.

Ferguson topped London's blue-chip index, ending up 6.0%, on news it will resume dividend payments despite the plumbing and heating products supplier's annual earnings being held back by the coronavirus outbreak.

Ferguson said it delivered a strong performance in financial 2020, which in light of the coronavirus outbreak, highlighted the "resilience of its business model".

For the financial year ended July 31, revenue slipped 0.9% to USD21.82 billion from USD22.01 billion in financial 2019. The revenue figure, however, was higher than the company-compiled consensus forecast of USD21.76 billion. Pretax profit was down 4.8% to USD1.26 billion from USD1.32 billion.

Ferguson proposed a final dividend for the year of 208.2 cents which it said "effectively reinstates" the previously withdrawn interim dividend, and was in line with last year's payout. However, its USD500 million share buyback program remains suspended.

B&M European Value Retail - which only joined the FTSE 100 last week - raised its earnings guidance as the discount retailer's knock-down prices and spacious stores were a hit among customers during the Covid-19 pandemic.

The stock closed up 4.0%.

B&M said its revenue in the six months to September 26, surged by just over 25% year-on-year, with its UK stores alone posting growth of 30%. In the second quarter alone, like-for-like growth in UK stores was 19%.

The discount retailer raised its earnings guidance, with interim earnings before interest, tax, depreciation and amortisation expected to come in at GBP285 million, up from July's previously guided range of GBP250 million to GBP270 million. B&M also expects 40 to 45 gross store openings before the end of the financial year, most of those scheduled in the fourth quarter.

Baker Greggs slipped 8.1% in the FTSE 250. The sausage roll maker said it bounced back from a "slower August" but warned of a job losses to cut costs as the UK government's furlough scheme draws to a close.

In September, like-for-like sales in company-managed shops improved to 76% of the level seen in 2019. Greggs explained it saw "higher levels of activity" compared to a "slower August". Since it re-merged from the Covid-19 lockdown in July, like-for-like sales in company-managed shops have on average sat at 71% of 2019 levels.

Greggs explained: "With the job retention scheme planned to end in October we are taking steps to ensure that our employment costs reflect the estimated level of demand from November onwards. With business activity levels remaining below normal for the foreseeable future we must change the way we work to be as productive and flexible as we can in order to protect as many jobs as possible for the long term."

Brent oil was quoted at USD41.08 a barrel at the London equities close Tuesday, down from USD42.10 late Monday. Gold was quoted at USD1,892.11 an ounce at the London equities close Tuesday against USD1,871.99 at the close on Monday.

Tuesday's UK corporate calendar has a trading statement from contract caterer Compass and a financial outlook from energy firm SSE. Online clothing retailer Boohoo reports interim results.

The economic calendar for Wednesday has Japanese industrial production at 0050 BST and PMIs from China at 0200 BST. Later there is UK GDP at 0700 BST and German retail sales due at the same time, followed by German unemployment at 0955 BST.

US ADP employment is due at 1315 BST and GDP at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

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