LONDON MARKET OPEN: FTSE 100 jumps 55 points with banks in green

(Alliance News) - Stocks in London rallied in early trade on Tuesday, with banks amongst the best performers.

Naeem Aslam at AvaTrade said traders are "feeling relieved that the recent hedge fund event wasn't contagious."

The FTSE 100 index was up 55.66 points, or 0.8%, at 6,791.83 early Tuesday. The mid-cap FTSE 250 index was up 121.11 points, or 0.6%, at 21,556.65. The AIM All-Share index was up 0.2% at 1,196.07.

The Cboe UK 100 index was up 0.7% at 677.19. The Cboe 250 was up 0.6% at 19,277.98, and the Cboe Small Companies up 0.1% at 13,897.54.

In mainland Europe, the CAC 40 in Paris was up 0.7% while the DAX 30 in Frankfurt was up 0.6%.

In Zurich, Credit Suisse shares were 1.0% higher, after slumping 14% on Monday when it had warned of a sizeable hit to its first-quarter results from a US-based hedge fund defaulting on a margin call.

The Financial Times on Sunday reported that private investment firm Archegos Capital was behind a sale which sent media stocks in the US tumbling on Friday.

However, banks were looking brighter on Tuesday. London-listed lenders were higher in early trade, with HSBC up 2.2%, Barclays up 2.1% and Lloyds Banking up 1.6%.

The week ahead could still see more volatility, AvaTrade's Aslam warned.

"There is no shortage of action during this week, and traders are going to remain on their toes as the firework will continue. For instance, on Wednesday, President Biden is likely to highlight his USD3 trillion stimulus plan for the economy and...we will have the US non-farm payroll data, which is due on the final trading of the week. The event is going to provide a fresh picture for the US economy, which will be closely looked at by the Fed, and of course, by traders," said Aslam.

While Tuesday just has eurozone consumer confidence at 1000 BST and German inflation at 1300 BST, things begin to pick up on Wednesday with UK GDP, German unemployment, eurozone inflation and US ADP employment.

The highlight of the week's data calendar is the US monthly jobs report, due out on Friday despite the day being a market holiday.

Back in London, Royal Mail shares rose 2.2% on plans to pay a final dividend.

Adjusted operating profit for the financial year ending on Wednesday is still expected to be around GBP700 million, the firm said, and, after reviewing its performance over the past year, has decided to pay a one-off final dividend of 10p per share. Royal Mail expects to unveil a new dividend policy as its results in May.

Royal Mail - boosted this year by the pandemic, with customers turning to online deliveries as high store stores were forced to shut - had previously said it would not pay a dividend for the 2021 financial year.

The postal operator added that it will provide a business update on medium-term targets for the GLS arm later on Tuesday. This includes a focus on international and business-to-consumer as key growth opportunities. From the 2020 financial year to 2025, GLS expects to grow revenue at a compound annual growth rate of around 12%, more than double operating profit to EUR500 million and generate EUR1 billion of free cash flow.

For financial 2021, Royal Mail expects GLS to report adjusted operating profit of GBP350 million, with a profit margin by the same measure of 8.7%.

Victrex rose 3.7% after Citigroup raised the polymer supplier to Neutral from Sell.

Pennon Group fell 2.7% despite saying it is on track to deliver "resilient" results for the financial year ending on Wednesday.

The water utility said the financial impact from Covid-19 is in line with expectations, and it remains in a "strong" financial position with expected cash and committed facilities well in excess of GBP3 billion at the year's end.

"Pennon believes there is significant value potential from the reinvestment of the Viridor sale proceeds in the UK water sector and continues to narrow down its review of potential growth opportunities. In the event a major value accretive investment opportunity is not available, Pennon expects to make a substantial return of capital to shareholders," the company added.

Back in July, Pennon completed the sale of recycling and waste business Viridor to funds advised by Kohlberg Kravis Roberts & Co for an enterprise value of GBP4.2 billion.

In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite ended up 0.6%, while the Hang Seng index in Hong Kong closed up 1.0%. The S&P/ASX 200 in Sydney closed down 0.9%.

Japan's unemployment rate was steady in February, slightly bettering market expectations.

According to the Statistics Bureau, the jobless rate remained steady at 2.9%, beating expectations of a slight increase to 3.0%.

Meanwhile, retail sales in Japan fell annually for the third successive month, though February's decline was smaller than expected. Retail trade sales fell 1.5% year-on-year in February, according to the Ministry of Economy, Trade & Industry, following January's 2.4% drop. A steeper fall of 2.8% was expected, according to consensus cited by FXStreet.

Against the yen, the dollar rose to JPY110.19 early Tuesday in London versus JPY109.77 at the London equities close on Monday.

Sterling was quoted at USD1.3759, down from USD1.3790 late Monday. The euro traded at USD1.1744, soft on USD1.1761.

Gold was quoted at USD1,701.06 an ounce early Tuesday, lower than USD1,711.45 on Monday.

By Lucy Heming; lucyheming@alliancenews.com

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