Stock prices in London were broadly lower on Tuesday, though the FTSE 100 finished in the green due to well-performing miners like Antofagasta, Glencore and Rio Tinto as well as oil majors BP and Shell.
The FTSE 100 index closed up 9.31 points, or 0.1%, at 7,370.62. The FTSE 250 ended down 104.20 points, or 0.6%, at 18,544.76, and the AIM All-Share closed down 1.80 points, or 0.2%, at 821.74.
The Cboe UK 100 ended flat at 736.89, the Cboe UK 250 closed down 0.6% at 16,022.67, and the Cboe Small Companies ended down 0.1% at 12,892.36.
Miners and oil majors helped lift the FTSE 100 on Tuesday as optimism around the continued relaxation of Covid-19 restrictions in China buoyed demand outlook for commodities. This was despite the latest resurgence in Covid cases in the world’s second largest economy.
Antofagasta closed up 2.4%, Glencore finished 1.9% higher and Rio Tinto finished up 0.8%. BP was up 0.3% and Shell was 0.9% higher.
Gold was quoted at $1,814.62 an ounce at the London equities close Tuesday, sharply higher against $1,787.77 at the close on Monday. Brent oil was quoted at $79.88 a barrel, up a touch from $79.85.
In the FTSE 250, Hilton Foods finished 3.3% higher after it entered a long-term strategic partnership with Country Foods in Singapore, expanding its global footprint and helping to diversify its business across Asia.
The food packaging business said the partnership will provide Singaporeans the opportunity to purchase ‘high quality, good value protein products produced from Hilton’s global manufacturing sites, including: seafood, slow cooked meats and Australian beef, lamb and pork products’.
Elsewhere in London, Petrofac dropped 3.0% after it said it an annual loss before interest and tax due to adverse commercial settlements and cost increases.
The energy services company expects an Ebit loss of around $100 million in 2022, alongside $190 million in engineering and construction Ebit loss.
It said this was due to adverse commercial settlements and unrecovered cost overruns in legacy, alongside cost increases on its Thai Oil clean fuel joint-venture contract.
In 2021, the firm posted an Ebit loss of $14 million for E&C, and an overall reported operating loss of $130 million.
On AIM, Velocity Composites soared 56% as it said trading in financial 2022 was in line with expectations, and announced it signed an agreement to enter the US market.
The aerospace composite material kits supplier said revenue for the year that ended October 31 will be no less than £11.9 million, up by 21% from £9.8 million a year before, amid ‘encouraging’ signs of stability and growth throughout the year.
The company also expects its loss before interest, tax, depreciation, and amortisation for financial 2022 will be £500,000 in financial 2022, flat against the previous year.
Velocity Composites explained the loss is in line with company expectations following planned investments in research & development and business development activities over the last year.
The company also said it signed a five-year work package agreement in the US with GKN Aerospace Services to support its international expansion.
The deal is expected to be worth over $100 million in revenue over five years, with initial revenue expected to commence in the first quarter of financial 2023 and will continue through to financial 2028.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt ended down 0.4%.
Factory gate inflation in Europe’s largest economy slowed on an annual basis in November, with prices dropping from the month before.
According to Destatis, the German producer price index fell 3.9% month-on-month in November, compared to a 4.2% fall in October from September. This was a sharper fall than expected, with FXStreet-cited consensus of a 2.6% fall.
It was mostly due to a 9.6% monthly fall in energy costs, Destatis said, as prices for natural gas fell the most, followed by electricity.
The euro stood at $1.0627 at the London equities close on Tuesday, higher against $1.0608 at the close on Monday. The pound was quoted at $1.2139, lower compared to $1.2160.
Against the yen, the dollar was trading at JP¥131.27 at the close on Tuesday, significantly lower compared to JP¥137.00 late Monday.
Japan’s central bank tweaked its longstanding monetary easing programme in a surprise move that saw the yen strengthen against the dollar while Tokyo stock markets fell.
The change marks a rare shift of gears for the dovish central bank, which has largely left its policy intact even as counterparts in other major economies hike rates to tackle inflation.
After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would ‘improve market functioning’.
‘The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,’ it said in a statement.
In Tokyo, the Nikkei 225 closed down 2.5%. For Francesco Pesole at ING, markets will now be assessing whether today’s announcement is the first step towards a broader policy normalisation process in Japan.
Pesole argued this would ‘quite radically’ change the outlook for the yen in 2023 as the BoJ’s role as an ‘ultra-dovish outlier’ among global central banks has been a ‘key driver’ of yen weakness this year.
Stocks in New York were mixed at the London equities close, with the DJIA up 0.1%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.3%.
The economic calendar on Wednesday has a consumer confidence survey from the US at 1500 GMT. In UK corporate calendar, there are trading statements from distribution and outsourcing firm Bunzl and cruise line operator Carnival.
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