LONDON MARKET CLOSE: Mood Starts To Improve But FTSE Continues Slide

(Alliance News) - While risk-on sentiment started to return on Tuesday following two consecutive sessions of dire losses, the FTSE 100 lagged behind global counterparts due to some small gains for the pound and share price falls for the likes of BP, Royal Dutch Shell and Rolls-Royce.The FTSE 100 index closed down 52.16 points, or 0.7%, at 7,171.69. While the large-cap index finished firmly in the red, the decline was not nearly as steep as the 2.5% fall recorded on Monday.The FTSE 250 ended down 25.22 points, or 0.1%, at 18,846.20, and the AIM All-Share closed down 11.14 points, or 1.2%, at 896.11.The Cboe UK 100 ended down 0.7% at 12,161.36, the Cboe UK 250 closed flat at 16,822.72, and the Cboe Small Companies ended down 0.2% at 10,958.03.In European equities on Tuesday, the CAC 40 in Paris ended down 0.1%, while the DAX 30 in Frankfurt ended down 0.8%."Even though the FTSE 100 and DAX are in the red, the fear factor has greatly reduced in the wake of the People's Bank of China fixing the yuan at CNY6.9683. The fact the PBoC slighted strengthened the currency in reaction to the US accusing them of currency manipulation has been seen as a sign that Beijing are easing up on their stance a little," said David Madden at CMC Markets."Traders are treading lightly, but things could have been a lot worse when you look at the early losses suffered overnight in Asia before the PBoC made their move," he commented.On Monday, the Chinese yuan slipped below the key level of CNY7 to the dollar, which lead to the US Treasury Department labelling China a currency manipulator. The US has not put China on the currency blacklist since 1994, and the designation could pave the way for more sanctions against China.However, these latest trade war fears eased a touch on Tuesday as Kudlow said the US remains open to negotiations with China in the hopes of reaching a trade deal, and will host a delegation from Beijing in Washington next month.Stocks in New York were in the green at the London equities close, with the DJIA up 0.1%, the S&P 500 index up 0.3%, and the Nasdaq Composite 0.5% higherDespite the solid gains in New York, the FTSE 100 lagged behind as the pound eked out some minor gains and some blue-chip heavyweights recorded share price declines.The pound was quoted at USD1.2156 at the London equities close Tuesday, having even risen above the USD1.22 mark earlier in the session, compared to USD1.2143 at the close on Monday."The pound was finding some support from suggestions that Jeremy Corbyn is planning an early vote of no confidence against Boris Johnson after the summer recess. With opposition growing in Parliament over Bojo's do or die Brexit mantra on October 31 there could well be enough support for a new leader at the helm," said Fiona Cincotta at City Index.Meanwhile, the euro stood at USD1.1195 at the European equities close Tuesday, against USD1.1188 at the same time on Monday.Also hindering the FTSE 100 were a number of blue-chip stocks, with engine maker Rolls-Royce Holdings ending as the session's worst performer, down 6.4%.This was as the firm upped its estimate for costs related to the Trent 1000 engine, though posted a solid set of interim results.Revenue for the six months to June climbed 5% to GBP7.88 billion, with the pretax loss shrinking to GBP791 million from GBP1.23 billion year-on-year. Organic revenue growth was 7%.Away from the numbers, Rolls-Royce said customer disruption related to its Trent 1000 engines is "regretfully" still ongoing, although progress is being made.The firm now expects the 2019 impact of the Trent 1000 issues to be GBP450 million to GBP500 million, from GBP450 million previously. In-service cost estimates have been increased by around GBP100 million across the next three years.Packaging firm Smurfit Kappa declined 1.7% after its Italian subsidiary got slapped with a EUR124 million by the Italian Competition Authority for "anti-competitive practices".In early 2017, the Italian regulator started an antitrust investigation for alleged market manipulation and price fixing in the corrugated packaging market in 2015 and 2016. Around 50 companies were under investigation, including Smurfit Kappa's subsidiary, and peer DS Smith's subsidiary DS Smith Packaging Italia.The ICA has levied the EUR124 million fine on Smurfit Kappa Italia, which will be counted as an exceptional cost in 2019. Smurfit said it will "vigorously appeal" the decision. InterContinental Hotels Group closed down 1.8% after reporting a sharp rise in profit in the first half but warned of a "slower growth environment" and modest RevPAR growth.In the six months to June 30, the hotel owner and operator's pretax profit jumped 25% to USD375 million from USD301 million the year before. The company's total revenue was up 8.1% to USD2.28 billion from USD2.11 billion the year before.The Holiday Inn owner said group comparable revenue per available room, or RevPAR, in the first half increased 0.1%. In the Americas as a whole it also increased by 0.1%. It was flat in the US, however, which was attributed to occupancy demand falling in the second quarter due to the higher comparative demand created by hurricanes in the first half of last year.Oil majors also closed in the red, with BP down 1.3% while both Royal Dutch Shell's 'A' and 'B' shares dipped 1.3% and 1.4% respectively, as Brent was unable to shake off trade war worries.Brent oil was quoted at USD59.78 a barrel at the London equities close Tuesday, down from USD60.54 late Monday."Concerns still remain in relation to the health of the global economy. A protracted trade dispute between the world's two largest economies is looming over global growth, and in turn the energy market," explained CMC's Madden. Gold continued to rise amid the lingering trade uncertainty, quoted at USD1,472.50 an ounce at the London equities close Tuesday against USD1,459.80 at the close on Monday.Turning back to equities, the FTSE 250 ended the session in the red amid a significant drag from Sirius Minerals. The stock shed 28% on Tuesday as it pulled a note offer. Sirius announced the debt offering in July to secure funding for its Woodsmith polyhalite mine in Yorkshire, and it was part of the second stage of financing for construction and development of the project.However, on Tuesday, the fertilizer development firm said it has suspended the USD500 million secured notes offering due to "current market conditions".Rotork claimed the top spot in the mid-cap index, rising 7.0%, as it foresaw further margin progression in 2019."Whilst macroeconomic uncertainty remains, with recent order intake and the momentum of our Growth Acceleration Programme, we now expect to deliver flat sales on an organic constant currency basis in 2019, with full-year adjusted operating margins showing clear progress year-on-year," said Chief Executive Officer Kevin Hostetler.In 2018, organic constant currency revenue was up 11% and adjusted operating margins stood at 21.0%. On AIM, boohoo shares finished up 3.9% after the fast fashion retailer said it has sealed the GBP18 million acquisition of Karen Millen and Coast online.Coast's online operations are already owned by Karen Millen, as are UK concessions. However, standalone Coast stores and mainland Europe concessions are not owned by Karen Millen.boohoo is paying GBP18.2 million for the two assets, from existing cash. In its year to February, Karen Millen and Coast's combined online sales totalled GBP28.4 million.The UK corporate calendar on Wednesday, there are interim results from miner Glencore, financial services firm Legal & General, asset manager Standard Life Aberdeen and bookmaker Flutter Entertainments, formerly known as Paddy Power Betfair.In the economic calendar on Wednesday, there is German industrial production at 0700 BST followed by UK Nationwide house prices at 00830 BST.London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com