LONDON MARKET OPEN: UK banks boost FTSE 100 as payout curb removed

(Alliance News) - London's blue-chip index was higher Tuesday morning, boosted by big UK banks, as the Bank of England removed blanket restrictions on dividend payments.

The FTSE 100 index was up 21.30 points, or 0.3%, at 7,146.72 early Tuesday. The mid-cap FTSE 250 index was up 44.94 points, or 0.2%, at 22,940.80. The AIM All-Share index was down 0.44 of a point at 1,247.93.

The Cboe UK 100 index was up 0.2% at 711.56. The Cboe 250 was flat at 20,601.25, and the Cboe Small Companies up 0.1% at 15,365.14.

In mainland Europe, the CAC 40 in Paris was down 0.2% while the DAX 30 in Frankfurt was 0.1% lower early Tuesday.

Germany's annual inflation rate slowed slightly in June, data from Destatis showed Tuesday, though energy prices continued to rise, albeit at a slower pace than in May.

The inflation rate in Germany, measured as the year-on-year change in the consumer price index, stood at 2.3% in June. The figure was in line with the provisional estimate.

June was the first time the annual inflation rate has slowed in 2021, having stood at 2.5% in May. On a monthly basis, consumer prices were up 0.4% in June.

Energy product prices surged 9.4% compared with a year earlier, considerably higher than the overall inflation rate, though slowed from May's 10% hike.

The euro traded at USD1.1864 early Tuesday, marginally higher than USD1.1861 late Monday. Against the yen, the dollar was quoted at JPY110.43, firm versus JPY110.33.

Sterling was priced at USD1.3889, firm from USD1.3881 at the London equities close on Monday.

On the LSE, Natwest, HSBC, Lloyds and Barclays were among the best performers in the blue-chip index, up 1.8%, 1.6%, 1.2%, and 0.9%, respectively, after the Bank of England removed restrictions on UK commercial banks paying dividends, saying they are "well capitalised and able to withstand headwinds to capital".

The decision was unveiled in the central bank's Financial Stability Report, which sets out the view of the BoE Financial Policy Committee on the stability of the UK financial system.

The BoE added: "Major UK banks and building societies have been resilient to the challenges posed by Covid and their capital and liquidity positions remain strong."

Also in the green was Royal Dutch Shell as Barclays lifted the oil major to Overweight from Equal Weight. The company's B shares were up 1.1% early on Tuesday, while its A shares were up 0.7%.

Brent oil was trading at USD75.56 a barrel, rising from USD75.00 late Monday. Gold was quoted at USD1,811.26 an ounce early Tuesday, up from USD1,803.57 on Monday.

Italy, Germany and Poland are among the destinations most likely to be added to the UK government's green travel list, according to an analyst. Robert Boyle, former director of strategy at British Airways-parent IAG, predicted that 12 countries could be put in the low-risk tier this week.

He wrote on his website www.gridpoint.consulting that this includes nine European countries which are all "strong candidates", consisting of Austria, Bulgaria, Germany, Italy, Latvia, Lithuania, Poland, Slovakia and Switzerland.

The UK government's travel lists are expected to be updated on Thursday. People arriving in the UK from green list destinations are not required to self-isolate.

IAG was marginally lower, easyJet down 0.7% and Wizz Air down 0.8%, though Ryanair was up 0.4%,

Among mid-caps, Dr Martens gained 3.7% after Goldman Sachs raised the footwear manufacturer to Buy from Neutral.

Howden Joinery advanced 2.5% after posting a strong first half performance, ahead of its expectations, with revenue of almost GBP785 million versus GBP465.0 million a year ago.

Going forward, the supplier of kitchens said this pattern of trade has continued since the end of the first half of 2021, and it remains "cautiously optimistic" in its outlook for the second half.

Howden Joinery said it is currently expecting pretax profit of around GBP300 million for 2021 as a whole, up from GBP185.3 million posted for 2020.

In Asia, the Japanese Nikkei 225 index and the Shanghai Composite both closed up 0.5%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney closed up 0.2%.

Tokyo's athletes' village opened on Tuesday, ten days before the start of the Olympic Games.

What usually marks the start of a cheery Olympic countdown was overshadowed by ongoing concerns of many people in the host country about the spread of the coronavirus during the massive sporting event.

Host city Tokyo entered its fourth coronavirus state of emergency on Monday, which is due to go on until August 22, beyond the end of the Games scheduled from July 23 to August 8.

The economic events calendar has a June inflation reading from the US at 1330 BST.

While the CPI will dominate attention, Tuesday also will see the latest NFIB small business survey at 1100 BST and the release of federal budget data at 1900 BST.

In addition, bank earnings will be a key focus for investors, with Goldman Sachs and JP Morgan Chase both reporting their latest quarterly results on Tuesday.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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