LONDON MARKET OPEN: Stocks mixed; Phoenix rises after lifting dividend

Mon, 14th Mar 2022 08:56

(Alliance News) - Stocks in London opened mixed on Monday as investors monitor progress in peace talks between Russia and Ukraine.

The FTSE 100 index was down 0.55 of a point at 7,155.09 early Monday. The mid-cap FTSE 250 index was up 221.51 points, or 1.1%, at 20,428.12. The AIM All-Share index was up 4.89 points, or 0.4%, at 1,000.13.

The Cboe UK 100 index was up 0.4% at 714.13. The Cboe 250 was up 1.3% at 18,007.53, and the Cboe Small Companies down 0.4% at 14,426.92.

In mainland Europe, the CAC 40 stock index in Paris rose 0.7% and the DAX 40 in Frankfurt was 1.0% higher.

Russia said Sunday that negotiators were making headway at talks to resolve fighting in Ukraine, more than two weeks after President Vladimir Putin ordered his army over the borders of its pro-Western neighbour.

However, talks have yet to yield a ceasefire and Russian forces have shown no sign of easing their onslaught.

"With more questions than answers currently available, any short-term market rallies are currently lacking conviction," said Interactive Investor's Richard Hunter. "In terms of [the FTSE 100's] exposure to the likes of the oil and mining sectors, the drop in black gold has taken some shine from early gains, even though the oil price remains ahead by 40% in the year to date."

In the FTSE 100, Phoenix Group was up 1.7% after the insurer lifted its dividend and revealed a new payout policy after an "outstanding" 2021.

For 2021, Phoenix generated an operating profit of GBP1.23 billion, up from GBP1.20 billion in 2020, reflecting the contribution of a full year of profit from its ReAssure business and increased bulk purchase annuity new business in the period.

The London-based insurance services provider reported record cash generation of GBP1.72 billion in 2021, exceeding its GBP1.5 billion to GBP1.6 billion target range for the year and just ahead of the GBP1.71 billion generated in 2020.

Phoenix declared a final dividend of 24.8 pence, up 3% on a year before in its inaugural organic dividend increase. This took the year's dividend to to 48.9p, having paid a total dividend of 47.5p in 2020.

Steve Clayton, fund manager of the HL Select UK Income Shares fund, said: "This is a pivotal moment for Phoenix. Ever since the Standard Life acquisition the group has been talking about 'proving the wedge'. The revelation that new business is now more than offsetting the natural decline of the acquired legacy books upon which the group is built shows that the group is now driving its own destiny organically.

"The dividend increase announced today leaves the stock trading on a very attractive yield of 7.8%. Phoenix's challenge is now to prove that they can indeed maintain their new business capabilities and support the growth of their dividend into the future."

At the other end of the large-caps, Rio Tinto was the worst performer, down 3.6%, after the Anglo-Australian miner proposed to buy the 49% of Canada's Turquoise Hill it does not already own.

Rio said Turquoise Hill minority shareholders would receive CAD34 in cash per Turquoise Hill share, representing a premium of 32% to Turquoise Hill's last closing share price on the Toronto Stock Exchange.

The offer would value the Turquoise Hill minority share capital at USD2.7 billion. The offer follows the agreement reached between Rio Tinto, Turquoise Hill and the government of Mongolia to move the Oyu Tolgoi project forward, reset the relationship between the partners and approve commencement of underground operations.

Reckitt Benckiser was down 1.1% after Bernstein downgraded the household goods company to 'underperform' from 'market perform'.

In the FTSE 250, China-focused investment trusts Fidelity China Special Situations and Schroder AsiaPacific Fund were the worst performers, down 5.5% and 3.0% respectively, tracking steep falls in Asian equity markets.

In China on Monday, the Shanghai Composite ended down 2.2%, while the Hang Seng index in Hong Kong finished down 5.1%.

The selling came after news Sunday that China has placed all 17 million residents in Shenzhen under lockdown as it battles a flare-up of Covid-19 cases across the country. Public transport has been suspended and officials have told all residents to stay at home, with the lockdown set to last until March 20 while three rounds of mass testing are carried out. The move has led Foxconn, which is a key supplier for Apple and maker of iPhones, to halt operations in the city.

The news compounded problems for China's tech industry, which has been under increasing pressure from Beijing's regulatory crackdown on the private sector.

Elsewhere in Asia on Monday, the Japanese Nikkei 225 index closed up 0.6%. The S&P/ASX 200 in Sydney closed up 1.2%.

The pound was quoted at USD1.3048 early Monday, down from USD1.3075 at the London equities close Friday.

The euro was priced at USD1.0950, soft from USD1.0955. Against the yen, the dollar was trading at JPY117.73, up from JPY117.05.

Brent oil was quoted at USD110.21 a barrel on Monday morning, down from USD111.92 late Friday. Gold stood at USD1,970.48 an ounce, lower against USD1,982.75.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com