The two-day US Federal Reserve policy meeting gets underway on Tuesday, with a decision due after the London close on Wednesday. In the meantime, the earnings season was dominating market attention.
The FTSE 100 was up 32.29 points, or 0.4%, at 7,338.59. The FTSE 250 index was down 94.03 points, or 0.5%, at 19,708.39. The AIM All-Share index was down 1.09 points, or 0.1%, at 901.05.
The Cboe UK 100 index was up 0.3% at 731.47. The Cboe 250 was down 0.6% at 17,158.12. The Cboe Small Companies was down 0.1% at 13,633.61.
In mainland Europe, the CAC 40 stock index in Paris was down 0.3%, while the DAX 40 in Frankfurt was 0.1% lower.
The US central bank continues to ramp up borrowing costs, with another 75 basis point lift expected on Wednesday, and more before the end of the year.
Several officials at the Fed, including Chair Jerome Powell, have suggested they are determined to bring US inflation down from four-decade highs, even at the expense of economic growth.
In London early Tuesday, Unilever was the best FTSE 100 performer, up 2.6%, after the consumer goods firm said it delivered a first half performance that built on the momentum of 2021.
For the six months to June 30, revenue was €29.62 billion, up 15% from €25.79 billion last year. Unilever posted first-half pretax profit of €4.359 billion, down 0.2% from €4.369 billion a year before.
Operating profit was €4.5 billion, up 1.7% from €4.4 billion. Underlying operating profit growth was 4.1%. Operating profit margin was 15.2% in the first half, down by two percentage points from a year before, though underlying operating profit margin was 17.0%.
Unilever said it generated underlying sales growth of 8.1% in the first half as it raised prices to counter rising costs and slumping volumes.
Looking ahead, Unilever expects 2022 underlying sales growth to be above its previous 4.5% to 6.5% guidance range. The Ben & Jerry's ice cream maker had previously forecast full-year underlying sales growth at the top end of a range of 4.5% to 6.5%.
Oil majors BP and Shell were up 1.6% and 1.5% respectively, tracking spot oil prices higher. Tullow Oil was the best midcap performer, up 5.3%.
Brent oil was quoted at $106.88 a barrel Tuesday morning, up sharply from $104.78 at the close Monday.
Compass was up 1.4% after the contract caterer said the strong growth momentum seen throughout the first half of the year continued into the third quarter, with all three of its geographic regions operating above 2019 levels.
For the three months to June 30, Compass said underlying revenue was up 109%. North American revenue was up 112%, while revenue from Europe and the rest of the world were 104% and 106% stronger, respectively.
Looking ahead, Compass raised its 2022 organic revenue growth guidance to around 35% from around 30%. It also confirmed financial 2022 operating margin guidance of over 6% and now expects exit margin to ‘moderate slightly’ from around 7% due to the strong net new performance and ongoing inflationary pressures.
In response, Shore Capital said it expects to upgrade its financial 2022 revenue estimate for Compass by £1 billion to about £25 billion, with this building to £26.6 billion in financial 2023.
The broker retained its 'buy' rating. ‘The shares may appear up with events near term, but we continue to see very favourable structural growth trends,’ said analyst Greg Johnson.
Rolls-Royce was up 0.9%. The jet engine maker has hired former BP executive Tufan Erginbilgic as its new chief executive officer. Erginbilgic will take up his new role on January 1, succeeding Warren East who had previously announced his intention to step down at the end of this year.
In his last role before leaving in 2020, Erginbilgic led BP's downstream business, which included Refining, Petrochemicals, Service Station Network, Lubricants, Midstream operations and the Air BP jet fuel operation.
New York ended mostly higher on Monday. The Dow Jones Industrial Average closed up 0.3% and the S&P 500 up 0.1%, but the Nasdaq Composite lost 0.4%.
Big-box retailer Walmart on Monday said its annual profit will be weaker than expected as rampant food inflation means consumers are doing less general merchandise spending.
Second quarter sales will top expectations, though the top-line will be boosted by lower margin offerings, such as food. For its second quarter, which concludes on Sunday, Walmart expects comparative sales in the US to rise 6% annually, excluding fuel.
Consolidated net sales for the quarter are expected to rise 7.5% yearly. For the full-year, Walmart expects growth of 4.5%. Excluding disposals, annual sales are to rise 5.5%, Walmart said.
There will be a double-digit profit fall, however, Walmart said. Operating income for the second quarter will decline 13% to 14%. For the full-year, it will slump 11% to 13%.
The stock dropped 9.9% in after-hours trade in New York. Retailing peers Amazon and Target lost 3.9% and 5.1%, respectively, in a read-across.
In the US earnings calendar Tuesday, Alphabet and Microsoft, 3M, Coca-Cola, General Motors, Texas Instruments and Visa all release second-quarter results.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.2%. In China, the Shanghai Composite closed up 0.8%, while the Hang Seng index in Hong Kong was up 1.7%. The S&P/ASX 200 in Sydney ended 0.3% higher.
The pound was quoted at $1.2050 early Tuesday, up from $1.2041 at the London equities close Monday.
The euro was priced at $1.0227, up from $1.0215. Against the Japanese yen, the dollar was quoted at JP¥136.56, lower against JP¥136.71.
Gold stood at $1,723.58 an ounce, higher against $1,718.56 late Monday.
A light economic events calendar on Tuesday has US Richmond Fed business activity survey and new residential sales at 1500 BST.
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