LONDON MARKET OPEN: Stocks higher; BP rises on share buyback plans

(Alliance News) - Stock prices in London opened sharply higher on Tuesday after the long Easter holiday weekend following strong US economic data, while BP rose after pledging to return cash to shareholders.

The FTSE 100 index was up 85.17 points, or 1.2%, at 6,822.47. The mid-cap FTSE 250 was up 270.59 points or 1.3%, at 22,003.26. The AIM All-Share index was up 0.3% at 1,212.92.

The Cboe UK 100 index was up 1.2% at 679.80. The Cboe 250 was up 0.9% at 19,600.30. The Cboe Small Companies was up 0.3% at 13,977.75.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.9% and 0.8% respectively.

Richard Hunter at interactive investor, commented: "Today is the first chance for European markets to react to this fresh wave of optimism after an extended weekend, and indeed to the possibility that global economies will be lifted by a recovery which is expected to be led by the US in the first instance.

"For the UK, where a further easing of lockdown restrictions was confirmed by the government, prospects increased for sectors such as the miners, banks, retailers and hospitality to participate in a potential surge in economic activity."

In the FTSE 100, BP was up 3.1% after the oil major hit its USD35 billion net debt target during the first quarter of 2021, due to the early delivery of disposal proceeds and a positive operating performance, paving the way for share buybacks.

BP had previously guided that it would get its debt down to USD35 billion by the end of 2021. It had said net debt actually was expected to increase during the first half, due to severance payments, a payment to Norway's Equinor for the completion of their US offshore wind joint venture, and BP's annual USD1.2 billion Gulf of Mexico oil spill redress payment.

On reaching this net debt target, BP said it is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks, for which it announce further details at its first quarter results on April 27.

At the other end of the large-caps, Ocado and Just Eat Takeaway, which have benefited from stringent lockdown restrictions, were the worst performers, down 1.2% and 1.0% respectively after UK Prime Minister Boris Johnson on Monday confirmed non-essential stores, restaurants, hairdressers and pub beer gardens will reopen from April 12 in England.

Johnson said he plans to stick "like glue" to his plan for easing restrictions despite scientific advisers warning it could create a wave of Covid infections akin to that seen during spring last year.

Pub operators JD Wetherspoon, Mitchells & Butlers and Marston's were up 1.8%, 0.2% and 4.9% respectively. Shopping centre operator Hammerson was the best midcap performer, up 6.4%.

At the other end of the FTSE 250, Homeserve was down 1.5% after the home emergency cover provider said adjusted pretax profit for the 2021 financial year increased in line with consensus expectations, while its UK customer base shrank.

Adjusted pretax profit for the financial year that ended March 31 is expected to be around GBP191 million, up 5.5% from GBP181.0 million the previous year, HomeServe said. The home repairs company reported 6.8% organic customer growth in North America, to 4.7 million from 4.4 million. However, its number of UK customers fell 11% to 1.6 million from 1.8 million.

In the US on Monday, the Dow Jones Industrial Average rose by 1.1%, the S&P 500 by 1.4% and the Nasdaq Composite by 1.7%.

The S&P 500 and Dow set new records on Monday, while the Nasdaq also saw strong gains, after data on Friday showed far more US jobs than expected were created last month, reinforcing the view of a strong recovery.

The US economy regained 916,000 jobs in March, the biggest increase since August, with nearly a third of the increase in the hard-hit leisure and hospitality sector, the Labor Department reported .

In addition, the service sector in the US grew at its fastest pace in almost seven years in March, increasing price pressure, according to a IHS Markit survey on Monday.

The IHS Markit US services purchasing managers' index of business activity came in at 60.4 points in March, up from 59.8 in February and the flash estimate for March of 60.0. Last month's reading was the highest since July 2014.

The Japanese Nikkei 225 index ended down 1.1% on Tuesday. In China, the Shanghai Composite closed up 0.5%. The Hong Kong market remained closed for the Easter holiday.

China's services sector posted stronger growth in March, according to survey results issued on Tuesday, with hiring also picking up and optimism surging to its highest level in over 10 years.

The Caixin headline seasonally adjusted business activity index posted 54.3 points in March, improved from 51.5 in February. It was further above the 50.0 no change mark, suggesting growth quickened in March.

Meanwhile, the dollar was lower against major counterparts. The pound was quoted at USD1.3870 early Tuesday, up from USD1.3830 at the London equities close Thursday.

The euro was priced at USD1.1800, up from USD1.1765 late Thursday. Against the yen, the dollar was trading at JPY110.30, lower from JPY110.60.

Brent oil was quoted at USD62.65 a barrel on Tuesday morning, down from USD63.63 late Thursday in London. Gold was trading at USD1,735.55 an ounce, higher against USD1,728.70.

The economic events calendar on Tuesday has eurozone unemployment at 1000 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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