(Alliance News) - Stocks in London ended higher on Tuesday as investors balanced hopes of a swift vaccine rollout against the imposition of a third national lockdown.
In a televised address on Monday, UK Prime Minister Boris Johnson announced stringent new controls - including closing schools to most pupils - in an attempt to prevent the National Health Service being overwhelmed by a surge in new infections.
At the same time, Johnson raised the prospect that the vaccination programme being rolled out across the country could enable restrictions to be progressively eased from mid-February.
However, the tough new restrictions may have to remain in place until March, senior UK Cabinet minister Michael Gove warned, as England enters its third national lockdown - with stringent restrictions akin to those seen last spring.
The FTSE 100 index closed up 40.37 points, or 0.6%, at 6,612.25. The mid-cap FTSE 250 ended up 179.48 points, or 0.9%, at 20,717.37. The AIM All-Share closed up 5.99 points, or 0.5%, at 1,167.36.
The Cboe UK 100 ended up 0.3% at 656.88, the Cboe UK 250 closed up 1.0% at 18,019.61 and the Cboe Small Companies ended up 0.4% at 11,756.14.
In Paris the CAC 40 and the DAX 30 in Frankfurt ended 0.7% and 0.6% lower respectively.
"The FTSE 100 has managed to claw back early losses, with fears over the potential economic repercussions of the impending nationwide lockdown being tempered by expectations of a rapid vaccine rollout. With AstraZeneca expected to provide an impressive two-million doses per week, markets have a clear March target for restrictions to be reduced in a meaningful manner," said IG Group's Josh Mahony.
"While a nationwide lockdown highlights the economic suffering that will take hold over the course of the first quarter, many businesses are largely unchanged from the already dire situation in Tier 4. With some of yesterdays hardest-hit stocks pushing higher for the FTSE 100, it is evident that traders see any short-term weakness as an opportunity to buy-the-dip," Mahony added.
In the FTSE 100, Next ended the best performer, up 8.0% after the fashion retailer said it expects to report a lower profit for its recently ended financial year due to anticipated losses from closed stores, despite a rise in online sales.
Next's pretax profit for its financial year finishing at the end of January is set to be GBP370 million, which would be down 38% from GBP593.9 million the prior year.
The clothing and homewares retailer said the GBP370 million forecast is slightly higher than its GBP365 million guidance issued back in its October trading statement, which was increased from its GBP300 million guidance issued a month earlier.
Looking ahead, Next said its upside scenario for the 2022 financial year is pretax profit of GBP735 million, with its downside forecasting profit of GBP600 million.
Shares in oil majors BP, Royal Dutch Shell 'A' and Shell 'B' ended up 7.1%, 6.9% and 6.3% respectively, tracking spot oil prices higher.
Brent oil was quoted at USD53.01 a barrel at the equities close, up sharply from USD51.04 at the same time Monday, on hopes a compromise on oil policy among the world's biggest producers could be agreed.
"Crude prices jumped after reports that the Russians and Saudis reached a compromise that appears to have steady production in February. The Saudis will take one for the team and make a voluntary oil production cut in February. Both Russia and Kazakhstan were pushing for an output increase and may have gotten a total hike of 75,000 barrels in February and March," said Oanda Markets analyst Edward Moya.
Aveva Group closed up 7.1%. UBS upgraded the stock to Buy from Neutral, saying the industrial software company's impending acquisition of OSIsoft can facilitate further earnings growth.
At the other end of the large caps, WM Morrison Supermarkets closed down 0.7%. The grocer said its like-for-like sales surged over the festive period, helped by a "renewed focus on traditional Christmas fare" and despite the UK being under Covid-19 restrictions.
The Bradford, England-based grocer said like-for-like sales, excluding fuel, over Christmas and the New Year were 9.3% higher annually. The company noted that champagne sales were up 64% compared to last year, whole salmon up 40%, and free from mince pies up 14%.
Looking forward, Morrisons said it still expect its financial 2021 pretax profit before exceptional items to be in line with its expectations, in the range of GBP420 million and GBP440 million prior to the rates payment of GBP230 million. For the 52 weeks ended February 2, 2020, Morrisons reported pretax profit of GBP408 million.
UK Chancellor of the Exchequer Rishi Sunak unveiled a fresh GBP4.6 billion support package for businesses across the UK dealt a further crippling blow by enforced closures.
The chancellor was forced to defend himself and Johnson against allegations that they have consistently been behind the curve on decision-making, telling reporters: "The prime minister has acted decisively in the face of new information."
Sunak also said he would "take stock" of government support packages in March's Budget, when pressed on whether he would extend the furlough scheme to prevent a wave of business closures and redundancies.
The pound was quoted at USD1.3611 at the London equities close, up from USD1.3587 at the close Monday.
The euro stood at USD1.2280 at the European equities close, marginally higher from USD1.2275 late Monday. Against the yen, the dollar was trading at JPY102.75, down from JPY103.10 late Monday.
Stocks in New York were mostly higher at the London equities close, as investors monitored worsening coronavirus trends around the US and elections in Georgia that will determine control of the Senate.
The DJIA was down 0.4%, but the S&P 500 index was up 0.2% and the Nasdaq Composite up 0.4%.
Stocks fell on Monday, in part due to concerns that Democratic victories in the Senate elections would give President-elect Joe Biden's Democratic party control over Congress, and boost the odds of tax hikes and other sweeping measures.
The Republican and Democratic parties have made Georgia their political ground zero, with thousands of volunteers leaving no door unknocked and current and future presidents and vice presidents barnstorming the state for every last vote.
If Democrats flip both seats they win back the Senate, effectively handing Biden all levers of political power in Washington and helping him enact his ambitious legislative agenda.
Oanda Markets analyst Craig Erlam said: "Given the ambitious agenda of the incoming administration, there's a lot hanging on the vote, the outcome of which will become clear over the coming days. From a markets perspective, the nervousness we're seeing may reflect the perceived improved chances of the Democrats in the two seats, with a clean sweep meaning higher taxes and more regulation.
"Of course, it could also mean another substantial spending package which has little chance of getting through a Republican controlled Senate. Should the Democrats pull off the, once considered, unlikely double win, stock markets may come under some pressure initially, with the dollar seeing some reprieve."
Gold was quoted at USD1,947.54 an ounce at the London equities close, higher against USD1,940.70 late Monday.
The economic events calendar on Wednesday has services PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively. There is also US ADP Employment Change figures at 1315 GMT.
The UK corporate calendar on Wednesday has a trading statement from bakery chain Greggs.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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