LONDON MARKET OPEN: Compass And Others Continue To Get Vaccine Lift

(Alliance News) - Stock prices in London opened higher on Tuesday with travel and oil stocks providing the FTSE 100 with a boost as hopes for an imminent coronavirus vaccine rollout continued to buoy sentiment.

The FTSE 100 index was up 31.58 points, or 0.5%, at 6,383.03. The mid-cap FTSE 250 index was up 159.95 points, or 0.8%, at 19,666.91. The AIM All-Share index was up 0.3% at 1,034.08.

The Cboe UK 100 index was up 0.6% at 635.36 points. The Cboe 250 was up 0.9% at 17,128.89, and the Cboe Small Companies up 0.4% at 11,471.50.

In mainland Europe, the CAC 40 in Paris was up 0.8%, while the DAX 30 in Frankfurt was up 0.6%.

Investors reacted positively after news US President Donald Trump's team will now work with Joe Biden to begin his transition into the White House and on optimism that Covid-19 vaccines could soon be rolled out around the world.

Anglo-Swedish drugmaker AstraZeneca and the University of Oxford will seek regulatory approval for their coronavirus vaccine, following similar announcements by Pfizer and Moderna.

"The prospect of a disorderly transfer of power has dragged on the market for the past three weeks since the election; a line can now be drawn under this risk," said City Index analyst Fiona Cincotta.

In the FTSE 100, travel and travel-related stocks, which were hit hard by the pandemic, were once again in the green following the positive vaccine developments.

British Airways parent International Consolidated Airlines was the best performer, up 8.0%, and jet engine maker Rolls-Royce was up 5.8%.

Compass Group was up 4.6% after the contract caterer reported a sharp fall in annual earnings, but had returned to profit by the fourth quarter.

For the 12 months ended September 30, revenue fell 20% to GBP20 billion from GBP24.9 billion in financial 2019, and pretax profit slumped 86% to GBP210 million from GBP1.49 billion last year. Operating profit dropped 82% to GBP294 million from GBP1.63 billion.

As such, Compass axed its annual dividend, having paid out 40.0 pence per share in financial 2019. The company said it will keep future dividends under review and will restart payments when it is appropriate to do so.

More encouragingly, Compass said in the fourth quarter it returned the business to profitability and is now cash neutral. This was achieved, it said, mainly through contract renegotiations to reflect the difficult trading environment, continued discipline in terms of costs, and improvement in volumes.

Oil majors also were in the green, with BP, Royal Dutch Shell 'A' and 'B' shares, up 4.4%, 3.0% and 2.9% respectively, tracking spot oil prices higher.

Brent oil was quoted at USD46.60 a barrel Tuesday morning, up sharply from USD45.78 a barrel at the equities close in London on Monday.

At the other end of the large caps, Intertek was the worst performer, down 1.5%, after the quality assurance provider reported a fall in third-quarter revenue.

For the quarter ended October 31, revenue was down to GBP941.0 million from GBP1.04 billion in the third quarter last year.

Looking ahead, Intertek said it was on track to deliver a "resilient" financial 2020 performance, with a mid-single digit like-for-like revenue decline at constant rates.

The Japanese Nikkei 225 index closed up 2.5% on Tuesday. Financial markets in Japan reopened on Tuesday after being closed for a holiday on Monday.

In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong ended up 0.2%.

The risk-on sentiment sent the dollar lower against major counterparts for the second straight day.

The pound was quoted at USD1.3367 early Tuesday, up sharply from USD1.3289 at the London equities close on Monday.

The euro stood at USD1.1876, up from USD1.1821. Against the Japanese yen, the dollar was trading at JPY104.27, lower from JPY104.52.

Gold was trading at USD1,828.65 an ounce, lower from USD1,833.31, as demand for the safe-haven metal waned.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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