LONDON MARKET CLOSE: Stocks mixed; pound slips amid easing uncertainty

(Alliance News) - Stocks in London ended mixed on Tuesday amid a lack of economic catalysts, while the pound was lower as uncertainty over the lifting of UK lockdown restrictions continued.

The FTSE 100 index closed up 17.87 points, or 0.3%, at 7,095.09. The FTSE 250 ended down 12.56 points, or 0.1%, at 22,895.50. The AIM All-Share closed marginally higher at 1,257.87.

The Cboe UK 100 ended up 0.3% at 707.90, the Cboe UK 250 closed flat at 20,661.40, and the Cboe Small Companies ended flat at 15,202.20.

In Paris the CAC 40 ended up 0.1%, while the DAX 30 in Frankfurt ended down 0.2%.

"It's been a solid day of gains for the FTSE 100 today, however it is struggling to push much beyond the 7,120 level and the highs last week, while the FTSE 250 is slowly edging higher, on a day where markets appear to be drifting higher on inertia more than anything else," said CMC Markets analyst Michael Hewson.

In the FTSE 100, miner Thungela Resources ended the best performers, up 30% at 144.04 pence, recovering losses from its uninspiring debut on Monday when the stock ended 3.1% lower.

London and Johannesburg-listed Thungela, which was spun-off from miner Anglo American, was subject to an attack from a short seller saying that the company is "worthless" due to being riddled with environmental liabilities.

However, on Friday, Thungela will be incorporated in South Africa and have a primary listing on the Johannesburg Stock Exchange, with an additional listing on the Standard segment of the London Stock Exchange. Therefore, it will not be eligible for inclusion in the FTSE 100 and FTSE UK Series.

Anglo American closed 1.0% higher.

Intermediate Capital Group closed up 5.9% after the asset manager reported a surge in annual profit, as its two units posted record performances, allowing it to up its shareholder payout by 10%.

At the end of March, ICG held USD56.15 billion in third party assets under management, up 19% from USD47.25 billion at the same point the year before. Fee earning assets grew 18% year-on-year to GBP46.73 billion from GBP39.57 billion.

Pretax profit multiplied to GBP507.7 million from GBP110.8 million, with its Fund Management Co's profit up by 10% to GBP202.3 million, while the Investment Co swung to a profit of GBP305.4 million from a GBP72.3 million loss the year before

ICG raised its annual dividend by 10% to 56.0 pence from 50.8p.

Aviva ended up 2.7%. Activist Swedish investment firm Cevian Capital said it has built a 5.0% stake in blue chip insurer, believing the firm's shares can grow to over GBP8 and its dividend can reach 45 pence. Aviva proposed a final dividend of 14 pence for 2020, giving a total of 21 pence for the year, adding it expects to grow the payout by "low to mid-single digits over time". Aviva paid out 15.5p for 2019.

British American Tobacco closed up 0.5% after the Rothmans and Lucky Strike cigarette maker shrugged off Covid-19 worries and regulation fears to raise its guidance.

BAT now expects constant currency revenue growth of above 5% for 2021, ahead of prior guidance of 3% to 5%. For 2020, BAT reported GBP26.67 billion in constant currency revenue.

The group reiterated its expectations of achieving GBP5 billion in revenue for its New Categories segment by 2025, held up a strong performance in 2021's first half.

At the other end of the large-caps, International Consolidated Airlines closed down 1.9% after Goldman Sachs downgraded the British Airways parent to Neutral from Buy.

M&G closed down 1.3% after Bank of America cut the investment manager to Neutral from Buy.

In the FTSE 250, Paragon Banking ended the standout performer, up 11%, after the specialist lender reported a record half-year profit and announced a share buyback programme.

The company made net interest income of GBP147.5 million in the six months ended March 31, up 4.3% year-on-year from GBP141.4 million. Pretax profit jumped 68% to GBP96.4 million from GBP57.1 million.

Paragon reinstated its interim dividend of 7.2p per share, half the level of its 14.4p-per-share final dividend for the 2020 financial year. It will also buy back GBP40.0 million of shares.

Sterling continued its decline against the dollar as apprehension over the final stage of the UK government's final lifting of restrictions persists.

The pound was quoted at USD1.4147 at the London equities close Tuesday, down from USD1.4172 at the close Monday.

UK Health Secretary Matt Hancock announced that those aged 25 to 29 in England - around three million people - will be invited to book their jabs from Tuesday, as the NHS hailed reaching the "home straight" of the biggest vaccination programme in its history.

Hancock told members of Parliament on Monday that it was too early to say whether England's remaining coronavirus restrictions will be lifted on June 21, as case rates rose in more areas of the UK than at any point since early January.

Reports have suggested the final step in the UK government's roadmap could be delayed by two weeks, with The Times saying ministers were given a "downbeat" briefing on the latest data on Monday by Chief Medical Officer Chris Whitty and Chief Scientific Adviser Patrick Vallance.

Downing Street said data emerging over the coming week will be "crucial" in deciding whether England's legal coronavirus restrictions can end as hoped on June 21.

Analysts at OFX commented: "The markets were still stuck on their half-term holidays yesterday, languishing in the sun as very little activity sparked any action. The largest update in the UK came from Health Secretary Matt Hancock, who whilst speaking in Parliament confirmed the effectiveness of the vaccination programme, also stating that it is still too early to confirm if the June 21 will remain 'Freedom Day'.

"To reiterate, whilst no formal announcement will be made before next Monday, the modus operandi of the government is to leak things to the press in the week beforehand. Market participants should therefore be conscious of this and any delay, or indication of a delay could see the pound sell off against the US dollar or euro."

The euro stood at USD1.2181 at the European equities close, down from USD1.2197 late Monday. Against the yen, the dollar was trading at JPY109.47, up from JPY109.23 late Monday.

Stocks in New York were mostly lower at the London equities close as investors digested data showing a lower US trade deficit ahead of a key inflation report later in the week.

The DJIA was down 0.2%, the S&P 500 index down 0.1%, but the Nasdaq Composite was up 0.1%.

Equities have been choppy in recent weeks as investors have assessed the upside of the reopening economy against worries over inflation and supply chain troubles.

The US trade deficit narrowed in April as exports rose and imports decreased, figures from the Bureau of Economic Analysis showed.

The goods and services deficit was USD68.9 billion in April, down from USD75.0 billion in March. March's trade gap, originally reported at USD74.4 billion, marked an all-time high level.

Exports grew 1.1% month-on-month in April to USD205.0 billion while imports dipped 1.4% to USD273.9 billion. April's trade balance figure narrowly beat forecasts, cited by FXStreet, of USD69 billion.

Brent oil was quoted at USD71.52 a barrel at the equities close, up from USD71.43 at the close Monday.

Gold was quoted at USD1,892.50 an ounce at the London equities close, marginally lower against USD1,893.07 late Monday.

The economic events calendar on Wednesday has China inflation readings overnight and Germany trade data at 0700 BST. The Bank of Canada's interest rate decision is at 1500 BST.

The UK corporate calendar on Wednesday has interim results from Upper Crust, Camden Food Co and Millie's Cookies owner SSP Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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