LONDON MARKET MIDDAY: Stocks Mixed As HSBC Keeps FTSE 100 Positive

Tue, 27th Oct 2020 12:09

(Alliance News) - Stock prices in London were mixed on Tuesday with the FTSE 100 managing to turn positive by midday, having opened lower, while investor focus shifted to the upcoming US election.

The FTSE 100 index was up 10.89 points, or 0.2%, at 5,802.20. The FTSE 250 was down 64.93 points, or 0.4%, at 17,788.67. The AIM All-Share was flat at 976.13.

The Cboe UK 100 was up 0.2% at 576.78. The Cboe 250 was down 0.5% at 15,027.56. The Cboe Small Companies up 0.1% at 9,703.09.

In Paris the CAC 40 was down 0.3%, while the DAX 30 in Frankfurt was down 0.1%.

"A small overnight recovery for stock futures has been rapidly given back as the session got underway, and so far there is no sign of any broader reversal developing across equity markets. Once again London's losses have been contained, this time helped by a bounce for HSBC shares," said IG Group's Chris Beauchamp.

On the London Stock Exchange, HSBC Holdings was the best blue-chip performer, up 6.9%. The Asia-focused bank said it will seek to pay a "conservative" dividend for 2020 after reporting third-quarter results which beat market forecasts.

In the three months to September 30, pretax profit dropped 37% year-on-year to USD3.07 billion from USD4.84 billion. However, the figure beat the company-supplied consensus estimate of USD2.07 billion. Revenue fell 11% to USD11.93 billion from USD13.36 billion.

Earlier this year, HSBC had cancelled its dividend for the first time in 74 years following pressure from the Bank of England.

"A decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation. We will seek to pay a conservative dividend if circumstances allow," said Chief Executive Noel Quinn.

HSBC's performance bodes well for the rest of the UK banking sector, with Standard Chartered, Lloyds Banking Group and NatWest reporting on Wednesday, Thursday and Friday respectively. Barclays reported on Friday last week, also showing improvement in the third-quarter on lower credit impairments.

StanChart was up 1.6%, NatWest up 0.9% and Barclays up 0.8%. Lloyds was down 0.1%.

Whitbread was up 1.2% after the Premier Inn chain owner said its half-year performance was in-line with expectations and reflected the closure of the vast majority of its businesses during the lockdown period in the UK from the end of March.

For the six months to August 27, Whitbread swung to a pretax loss of GBP724.7 million from a profit of GBP219.9 million a year before, while revenue fell 77% to GBP250.8 million from GBP1.08 billion. Whitbread declared no interim dividend, having paid out 32.7 pence last year.

The hospitality firm said it has rapidly reopened its estate, with 97% of UK hotels reopened by the end of July, and has subsequently grown its market share. Since reopening, UK accommodation sales performance has been ahead of the market, benefiting from the fast reopening and the strength of the Premier Inn brand, it asserted.

Whitbread said UK occupancy levels have steadily improved on a weekly basis, averaging 51% in August, while UK restaurant performance was boosted by the positive impact of the Eat Out to Help Out scheme. August UK total sales improved to 39%. Occupancy improved again in September, rising to 58%.

BP was up 1.0% after the oil company reported a sharp year-on-year drop in third-quarter earnings but an improvement on the previous second quarter in the absence of exploration write-offs and recovering demand.

Underlying replacement cost profit, BP's preferred measure, was USD86 million for the three months to September 30, compared with a loss of USD6.68 billion in the second quarter, and USD2.25 billion profit for the third quarter of 2019.

BP said the gradual recovery in oil demand is set to continue; however, the shape and pace of recovery from the Covid-19 pandemic remains uncertain as it depends on the further spread of the virus.

"Better than forecast numbers from oil major BP are just as much an indication of how low expectations had fallen ahead of its third-quarter update as a sign of tangible green shoots for the company's recovery. While better than the loss which had been pencilled in and a big improvement on the record loss posted for the second quarter, the uncomfortable truth is a huge amount of manpower, resources and effort was put into achieving a profit of less than USD100 million," said AJ Bell's Russ Mould.

The pound was quoted at USD1.3030 at midday on Tuesday, up from USD1.3017 at the London equities close Monday.

The euro was priced at USD1.1815, flat at midday from USD1.1818 late Monday. Against the yen, the dollar was trading at JPY104.68, lower from JPY104.85.

Brent oil was trading at USD40.80 a barrel Tuesday at midday, up from USD40.38 late Monday. Gold was quoted at USD1,901.91 an ounce, soft from USD1,903.80.

US stock market futures were pointed higher following steep losses on Monday, with a week to go before Americans head to the polls to cast their vote in the presidential election, which sees President Donald Trump face challenger Joe Biden.

The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%.

Trump's struggling re-election campaign received a boost Monday with the confirmation of his latest Supreme Court nominee, tilting the top body to the right and clinching his judicial legacy in a landmark victory for American conservatives.

The Republican-controlled Senate elevated Amy Coney Barrett to the lifelong position in a 52-48 vote, capping a rapid and deeply contentious process that makes her the sixth conservative, and third Trump appointee, on the nine-member court.

As election days draws closer, the confirmation marks an undeniable victory for the president to tout as he barnstorms battleground states in a final bid to claw back ground against Democrat Biden.

Analysts at RMB said: "Further volatility should be injected into markets as we draw ever nearer to 3 November - when those voters who have not cast their ballot early will have one last opportunity to have their say on who will lead the US for the next four years. In this respect, the Republican party, and President Trump, will be claiming a victory with the installation of Amy Coney Barret in the vacant seat of the Supreme Court.

"This leaves the balance of the court heavily conservative, with President Trump possibly hoping that, should he choose to contest the election, or parts of it, his case will be heard by a panel of justices he hopes will be supportive."

On the campaign front, Biden on Tuesday is travelling to Georgia, which has not supported a Democratic nominee for president since 1992, while Trump will hold a rally in Wisconsin.

The economic events calendar for Tuesday has US advance report on durable goods at 1230 GMT and the Johnson Redbook retail sales index at 1255 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com