European markets made modest gains on Tuesday, attempting to recover the steep losses the day prior when fears of an economic slowdown had spooked investors.
Stoking global inflationary pressures are lockdowns in dozens of locations across China - from the manufacturing hubs of Shenzhen and Shanghai to the breadbasket province of Jilin - wreaking havoc on supply chains over recent months.
The FTSE 100 index closed up 26.64 points, or 0.4%, at 7,243.22. The index closed down 171.36 points, or 2.3%, at 7,216.58 on Monday.
The FTSE 250 ended up 78.24 points, or 0.4%, at 19,384.96. The AIM All-Share closed down 0.76 of a point at 945.25
The Cboe UK 100 ended up 0.5% at 723.03, the Cboe UK 250 closed up 0.1% at 17,082.09, and the Cboe Small Companies ended down 0.7% at 14,461.28.
In European equities, the CAC 40 in Paris stock index ended up 0.5%, while the DAX 40 in Frankfurt closed up 1.2%.
‘After yet another miserable session in the US yesterday, Europe and pockets of Asia managed to avoid the rout and push ahead on Tuesday. This is unexpected given market sentiment is weak and the VIX 'fear' index yesterday jumped to its second-highest closing price in the past 12 months,’ said AJ Bell's Russ Mould. ‘Stocks in general have struggled this year, with investors worrying about inflation, rising interest rates, a slowdown in the world economy, war in Ukraine, new Covid flare-ups in China, weakness in consumer spending and concerns that business investment might take a back seat.’
In the FTSE 100, Melrose Industries ended the day as the best performer, up 3.8%, after the industrial turnaround specialist's shares hit a one-year low of 107.60p on Monday.
Tobacco firm Imperial Brands closed up 1.5% in a positive read-across after US rival Philip Morris International confirmed that talks are ongoing over a potential offer for Swedish Match.
The Wall Street Journal on Monday reported that Philip Morris was in talks to buy the Stockholm, Sweden-headquartered firm in a deal worth around $15 billion or more to bolster its slice of the smoke-free market.
Swedish Match makes a range of smoke-free products, including snus, nicotine pouches and chewing tobacco. Its largest markets for smoke-free products are the US and Scandinavia.
Philip Morris was down 1.1% in New York.
In the FTSE 250, Coats Group closed up 4.6% after the thread manufacturer signed a deal to sell its business in Brazil and Argentina. The unit will be sold to Reelpar, a local entity backed by a Sao Paulo, Brazil-based private equity firm. The deal is expected to close this month.
Coats expects to see a 50 basis point annualised lift to adjusted operating margins as a result of the deal.
It will fund $10 million to Reelpar to support a restructuring of the Brazil and Argentina business.
Centrica gained 3.9% after the British Gas parent kicked off 2022 promisingly and expects annual earnings at the top end of analyst expectations, despite seeing inflationary and supply chain ‘headwinds’.
The Windsor, Berkshire-based firm forecasts its 2022 adjusted earnings per share to be around the top of a 6.7p to 10.8p range. At the very least, this would be 63% higher than the 4.1p adjusted basic earnings per share it achieved in 2021.
It has delivered a ‘strong operational performance’ in the first four months of 2022, though the company noted it has not been all plain sailing.
In the British Gas Services & Solutions, Centrica said it has seen ‘some supply chain disruption and higher inflation impacting both the cost base and customer demand’.
At the other end of the mid-caps, Renishaw lost 3.3%. The precision measurement maker reported a sharp rise in total revenue in the first nine months of its financial year, thanks to growth in all of its product lines.
For the nine months to March 31, total revenue was up 21% to £492.4 million from £407.4 million, with Manufacturing Technologies revenue up 22% to £467.4 million.
Renishaw expects revenue in financial 2022, ending June 30, to be between £655 million and £675 million, a rise from £565.6 million the year prior.
Pretax profit was up 13% in the nine-month period to £120.2 million. Adjusted pretax profit was £124.0 million, up from £84.4 million. For all of financial 2022, adjusted profit is expected to be between £155 million and £170 million, up from the £119.7 million seen the year before.
Renishaw said it continues to see ‘strong demand’ for its product lines and has a ‘strong’ order book.
On AIM, FD Technologies rose 6.9% after the consulting services provider issued a positive outlook despite posting a drop in annual profit.
For the year ended February 28, the Belfast, Northern Ireland-based firm posted a pretax profit of £9.0 million, down 19% from £11.1 million the year before. Revenue, however, increased 11% to £263.5 million from £237.9 million the prior year. The result was slightly ahead of management's guided range of £255 million to £260 million, as a result of a stronger performance from the First Derivative and MRP.
Looking ahead, FD Technologies said it has a positive outlook across its business units, and has guided for adjusted earnings before interest, tax, depreciation and amortisation to come between £36.5 million and £28.5 million.
The pound was quoted at $1.2300 at the London equities close, down from $1.2320 at the close Monday. Sterling fell to an intraday low of $1.2295 in afternoon trade - its lowest level since mid-2020.
The euro stood at $1.0533 at the European equities close, little changed from $1.0535. Against the yen, the dollar was trading at JP¥130.38, down from JP¥130.45.
Stocks in New York were attempting to rebound at the London equities close following Monday's brutal sell-off. The DJIA was up 0.1%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.5%.
On Wall Street, Peloton Interactive sank 14% after the home fitness equipment maker reported a widened quarterly loss while struggling with slowing demand compared with earlier in the Covid-19 pandemic.
Brent oil was quoted at $104.75 a barrel at the equities close, down from $107.50 at the close Monday.
Gold stood at $1,846.88 an ounce at the London equities close, lower against $1,861.75 late Monday.
The economic events calendar on Wednesday has inflation readings from China overnight, Germany at 0700 BST and the US at 1330 BST.
The UK corporate calendar on Wednesday has annual results from telecommunications and mobile money services provider Airtel Africa, interim results from contract caterer Compass Group and a trading statement from broadcaster ITV.
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