The FTSE 100 fell into the red in afternoon trade, as housebuilding stocks fell again, while Imperial Brands slid on a report that the UK government is sizing up a tax on vaping products.
Mainland European equities ended higher, meanwhile, though stocks in New York were mixed on underwhelming US data.
The FTSE 100 index ended down 1.28 points at 7,683.02. The FTSE 250 rose 36.74 points, 0.2%, at 19,163.66, and the AIM All-Share fell just 0.16 of a point to 745.65.
The Cboe UK 100 ended flat at 769.53, while the Cboe UK 250 rose 0.2% to 16,524.02. The Cboe Small Companies climbed 1.1% to 14,565.90, with holiday firm On the Beach leading the charge.
In European equities on Tuesday, the CAC 40 in Paris rose 0.2%, while the DAX 40 in Frankfurt ended up 0.8%.
In New York, the Dow Jones Industrial Average was down 0.4%, while the S&P 500 was a touch lower. The Nasdaq Composite managed a 0.2% gain at the time of the European equities close.
US orders for durable goods were markedly below expectations in January, data on Tuesday showed.
According to the US Census Bureau, new orders for durable goods fell by 6.1% to $276.7 billion in January. FXStreet were expecting a 4.5% fall, after a 0.3% fall in December.
Excluding transportation, new orders fell by 0.3% in January, after a 0.1% fall a month earlier. Excluding defence, new orders plummeted by 7.3% after a 0.1% fall.
Separate data showed US consumer confidence fell much more than expected in February, as respondents voiced concern about the US political environment ahead of high-stakes elections this year.
The fall in consumer confidence could cause concern for President Joe Biden’s administration, which has been looking to highlight US economic strength ahead of the Democrat’s likely rematch in November against Republican Donald Trump.
Despite data showing falling inflation, strong growth and a surprisingly resilient labor market, public perception on the economy has proven to be an ongoing challenge.
Consumer confidence slipped to 106.7 in February, the Conference Board said in a statement, while last month’s figure was reduced to 110.9.
Focus shifts to the latest economic growth figures on Wednesday, with personal consumption expenditures - which contains a key inflation metric - to follow on Thursday. The PCE reading is closely followed by the Federal Reserve when making decisions on interest rates.
According to FXStreet-cited consensus, the headline annual PCE inflation rate is to ease to 2.4% in January, from 2.6% in December. The core reading, the Fed’s preferred inflationary gauge, is to ebb to 2.8% from 2.9%.
The pound was quoted at $1.2693 at the London equities close on Tuesday, higher compared to $1.2676 at the same time on Monday. The euro stood at $1.0854, up from $1.0849. Against the yen, the dollar was trading at JP¥150.41, down compared to JP¥150.81.
Brent oil was quoted at $82.25 a barrel, up from $82.18 late Monday. Gold was quoted at $2,033.79 an ounce, up against $2,028.18.
‘Gold prices have been volatile recently, driven by a combination of factors. On the positive side for gold, global economic uncertainty and geopolitical tensions remain elevated. Russia’s invasion of Ukraine and unrest in certain areas of the Middle East continues to generate spikes in gold prices as investors seek safe haven assets. High US interest rates and a hawkish stance by the Federal Reserve also supports gold prices as investors look to hedge against rising prices. On the negative side, an aggressive Fed tightening cycle has strengthened the US dollar and bond yields, creating headwinds for gold. The Fed is widely expected to continue raising interest rates over the next coming months, which could limit gains for the non-yielding commodity,’ XS.com analyst Mabyanine Phiri commented.
In London, Imperial Brands shares fell 4.8%, while British American Tobacco shed 0.3% on a report that the vaping sector could come under scrutiny in an upcoming UK fiscal policy announcement.
UK Chancellor Jeremy Hunt may announce a new UK tax on vapes as part of his budget next week, Bloomberg reported on Tuesday.
The potential move on March 6 would come as part of a wider package that aims to reduce overall taxation, with Hunt still debating whether the headline announcement will be to lower income tax or to cut national insurance.
Croda slumped 3.2%, after it reported a hefty drop in annual profit.
The chemicals firm said sales fell 19% year-on-year to £1.69 billion from £2.09 billion, with the year hit by prolonged destocking and a weak macroeconomic environment. Company-compiled consensus had expected £1.71 billion for 2023.
Pretax profit slumped by 70% to £236.3 million from £780.0 million, though the prior year saw £356.0 million in divestment profit. Adjusted pretax profit fell 33% to £308.8 million from £463 million.
Edison analyst Neil Shah labelled it a ‘troubling’ set of results.
‘The general macroeconomic situation has been difficult; disruptions to supply chains have raised costs; and – most significantly – buying trends after the pandemic have reduced demand: consumers stocked up on chemical products just after the end of the pandemic and have not yet exhausted this stock – leading to a steep drop in purchases. These results show that suppliers like Croda are still feeling the effects of this sector-wide drought, with sales falling by a further 11% on a pro forma basis,’ Shah added.
Also falling, London-listed housebuilders continued to decline. Barratt Developments was among the worst of the lot, losing another 1.5%.
The Competition & Markets Authority said Monday it is investigating Barratt, Bellway, Berkeley, Persimmon, Redrow, Taylor Wimpey and Vistry, as well as privately-held Bloor Homes. The UK watchdog said the new investigation concerns ‘suspected sharing of commercially sensitive information’ among housebuilders, which could be influencing the build-out of sites and new home prices.
Among London’s small-caps, On the Beach shares flew 13% higher.
The beach package holiday retailer signs a long-term distribution agreement with budget airline Ryanair.
OTB customers will be able to access Ryanair’s flights as part of their holiday packages with ‘full price transparency’, while continuing to utilise OTB’s flexible payment plans, customer perks and Air Travel Organisers’ Licensing protection, OTB says.
Wednesday’s economic diary has the US gross domestic product data at 1330 GMT. There is a eurozone consumer confidence reading at 1000 GMT.
The local corporate diary has full-year results from consumer goods and hygiene products maker Reckitt Benckiser and carmaker Aston Martin Lagonda.
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