LONDON MARKET OPEN: Miners and tech investors jump; Joules dives

(Alliance News) - Stock prices in London started Tuesday's session strongly, lifted by a resurgent mining sector and hefty gains for technology investors, after another strong day for the sector on Wall Street on Monday.

The FTSE 100 index was up 61.39 points, or 0.8%, at 7,525.76 early Tuesday. The mid-cap FTSE 250 index was up 261.98 points, or 1.2%, at 22,188.60. The AIM All-Share index was up 8.80 points, 0.8%, at 1,103.77.

The Cboe UK 100 index was up 0.9% at 747.52. The Cboe 250 was up 1.2% at 19,797.91, and the Cboe Small Companies was 0.2% higher at 15,376.15.

In mainland Europe, the CAC 40 stock index in Paris was up 1.0% and the DAX 40 in Frankfurt was 1.3% higher.

Wall Street closed higher on Monday. The Dow Jones Industrial Average advanced 1.2%, the S&P 500 index added 1.9%, and the Nasdaq Composite surged 3.4%.

Wall Street's rally on Monday was not enough to ensure its major benchmarks advanced over the course of January. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all lost ground at the start of the year.

"The thought of less stimulus to which the market has become accustomed after years of easing is one which will take some time to process and in the meantime is leading to dislocations in pricing. In terms of interest rate increases this year, for example, opinions are divided on how aggressive the Federal Reserve will need to be. While most expect around four rate rises to be the likely outcome for the year, there are others who expect the inflation targeting to be more pronounced, with as many as seven rises being seen by one market outlier," Interactive Investor analyst Richard Hunter commented.

The FTSE 100, meanwhile, has been bolstered by the oil and banking sectors and remains higher than it was at the end of 2021.

Hunter added: "The spectre of rising rates and a surging oil price has resulted in a positive opening to the year for some. The banking sector has seen an early bout of investor interest and with the full-year reporting season yet to come in the UK, there will be high expectations not only for a robust showing but also for a further return of capital to shareholders in the face of the embarrassment of riches accumulated at the height of the pandemic.

"The easing of restrictions and the diminishing effect of the Omicron variant could also provide some support to the beleaguered travel and hospitality sectors, although the escalating cost of living in the UK could crimp some of this progress. Meanwhile, the UK is currently becoming an interesting investment destination to those investors who have been searching for a source of mature, cyclical businesses with a relatively attractive dividend yield to boot."

Brent oil was quoted at USD89.33 a barrel on Tuesday morning, down markedly from USD91.12 at the London equities close on Monday. Gold stood at USD1,803.27 an ounce, up from USD1,797.05.

A weaker dollar on Tuesday helped the precious metal.

The pound was trading at USD1.3474 early Tuesday, up from USD1.3425 at the London equities close on Monday. The euro rose to EUR1.1259 early Tuesday from USD1.1211 late Monday. Against the yen, the dollar fetched USD115.04, down from JPY115.25.

"In currency markets, sterling overall showed little reaction to the latest political developments as it moved up against the dollar but slipped slightly against the euro," analysts at Lloyds Bank commented.

UK Prime Minister Boris Johnson has gotten a temporary reprieve from any immediate threat to his leadership as Conservative members of Parliament appeared to be satiated by promises to overhaul the operation of Number 10 in response to the partygate saga.

Johnson apologised to MPs after senior official Sue Gray found "failures of leadership and judgment" as gatherings were held while England was under coronavirus restrictions in 2020 and 2021.

In Tokyo, the Nikkei 225 closed up 0.3%, S&P/ASX 200 in Sydney added 0.5%. Financial markets are closed in Hong Kong and Shanghai for Lunar New Year.

In London, Glencore climbed 2.3% and Rio Tinto rose 2.8%. The mining sector had struggled on Monday after PMI data suggested China's manufacturing activity contracted in January. China is a key buyer of minerals.

Scottish Mortgage Investment Trust, Allianz Technology Trust and Baillie Gifford US Growth added 4.2%, 4.1% and 4.0%, tracking big US tech stocks higher.

Among the US tech stocks to post hefty share price growth on Monday was Netflix. The streaming service rose 11% but is still 29% below where it ended 2021, with the stock being hit by a combination of rate hike worries and poorly received quarterly results.

Elsewhere in London, Joules plunged 39%. The retailer cut its annual outlook.

The AIM listing said revenue was weaker than expected in January, hit by the emergence of the Omicron variant. Delays to new stock arrivals hit margins and full price sales, meanwhile.

In a trading update for the six months to November 28, Joules had said it expected annual adjusted pretax profit of between GBP9 million and GBP12 million. At the time, it said that was "below current market expectations".

Joules gave a new profit warning on Tuesday. It now expects adjusted pretax profit for the financial year of no less than GBP5 million, meaning as much as 18% below GBP6.1 million from financial 2021.

The economic events calendar on Tuesday has manufacturing PMI readings from the eurozone, the UK and US at 0900 GMT, 0930 GMT and 1445 GMT respectively.

In data already out, German retail sales took a hit at the end of 2021 as the Omicron wave damped activity numbers from Destatis showed on Tuesday.

Retail sales in December fell 5.5% on the month before, after growth of 0.8% in November. On an annual basis, they were flat in December after November's 0.5% rise.

"In short, German consumers’ spending suffered a big hit at the end of 2021 as virus cases soared, and new restrictions were imposed," said Pantheon Macroeconomics.

By Eric Cunha; ericcunha@alliancenews.com

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