Stocks in London ended broadly lower on Tuesday as a drop in US stocks caused the evaporation of earlier gains, although the FTSE 100 remained in the green due to heavyweight oil majors.
Investors have felt unease over hawkish-minded central banks and ongoing supply chain pressures that have been exacerbated with China's lockdowns.
The FTSE 100 index closed up 5.65 points, or 0.1%, at 7,386.19. The mid-cap FTSE 250 index ended down 107.10 points, or 0.5%, at 20,492.12. The AIM All-Share index closed down 8.76 points, or 0.9%, at 1,024.29.
The Cboe UK 100 index ended down 0.1% at 735.56. The Cboe 250 closed down 0.5% at 18,117.48, and the Cboe Small Companies ended flat at 15,127.05.
In mainland Europe, the CAC 40 stock index in Paris closed down 0.5%, while the DAX 40 in Frankfurt ended down 1.2%.
In the FTSE 100, oil majors BP and Shell closed up 2.9% and 2.4% respectively, tracking spot oil prices higher.
Brent oil was quoted at $103.65 a barrel at the equities close, up sharply from $100.33 at the close Monday.
Taylor Wimpey closed up 0.6% after the housebuilder said it expects house price growth to offset cost pressures. For now, it said, the higher cost of mortgages has not hurt demand.
‘The UK housing market remains healthy, underpinned by continued strong customer demand, low interest rates and good mortgage availability. The recent increase in interest rates, from 0.5% to 0.75%, has not impacted customer appetite and the mortgage market remains competitive, with good availability of low-cost fixed rate mortgage products,’ Taylor Wimpey explained.
At the other end of the large-caps, online grocer Ocado Group was the worst performer, down 8.3%, on the back of disappointing UK grocery market share figures from Kantar.
UK grocery sales have fallen year-on-year in recent weeks and notably declined on a two-year basis for the first time since the pandemic began, figures from Kantar showed. In the 12 weeks to April 17, UK grocery sales fell by 5.9% year-on-year to £29.73 billion from £31.60 billion. On a two-year basis, sales fell 0.6%.
Ocado sales fell 11% to £521 million and its market share was unchanged at 1.8%. Online sales fell 15% yearly over the period.
HSBC Holdings closed down 5.5% after the global lender reported a slump in profit in the first quarter, but the expected rise in interest rates in coming months gives the bank confidence for future income generation.
In the three months to March 31, the Asia-focused lender recorded $4.17 billion in pretax profit, down 28% from $5.78 billion in the same period the year prior.
Total revenue in the first quarter dropped 4.1% to $12.46 billion from $12.99 billion.
AB Foods slumped 5.0% as it warned that its Primark fashion stores will need to raise prices in order to offset cost inflation. Discount prices are a major differentiator for Primark.
AB Foods said group revenue in the financial first half ended March 5 rose 25% to £7.88 billion from £6.31 billion a year prior.
Pretax profit more than doubled to £635 million from £275 million. Operating profit jumped to £686 million from £320 million.
Chief Executive George Weston said: ‘Primark will implement selective price increases across some of the autumn/winter stock.’
In addition, AB Foods warned margins in its food businesses will be hit.
In the FTSE 250, National Express closed up 4.0% after the transport operator said revenue in March beat the same month of the pre-pandemic year 2019.
Noting it was posting its seventh consecutive quarterly improvement in results, the Birmingham-based firm said first quarter revenue ended March 31 equalled its 2019 level. Compared to a year ago, the first quarter of 2021, revenue grew 30%. The company expects 2022 revenue to be in line with 2019.
Revenue in the UK grew by 33% in the first quarter compared to a year ago, while revenue generated through its rail services in Germany jumped by 64% in constant currency. The business in Germany was ‘boosted by the successful mobilisation of the two emergency contract awards,’ National Express explained.
Smaller rival Go-Ahead Group closed up 7.6% in a positive read-across.
On AIM, Origo Partners lost 33% after the investment company said shares will be suspended from trading on Thursday, before being cancelled in late-May.
Origo said that since Arden Partners is being acquired by Ince Group, it is no longer able to serve as its nominated advisor. It means that should Origo wish to continue trading on AIM, it must find a new nomad.
Further, Origo said it has fulfilled announced objectives, including returning proceeds to shareholders, so appointing a new nomad is not in is best interests.
The pound was quoted at $1.2622 at the London equities close, down from $1.2715 at the close Monday. Sterling fell to an intraday low of $1.2617 in afternoon trade - its lowest level since September 2020.
The euro stood at $1.0655 at the European equities close, lower against $1.0715. Against the yen, the dollar was trading at JP¥107.27, down from JP¥127.70.
New York was lower at the London equities close amid fears over lacklustre global growth, tighter lending conditions and uncertainty over earnings.
The DJIA was down 1.2%, the S&P 500 index down 1.6% and the Nasdaq Composite down 2.8%.
Dow member 3M Co was down 3.7% in New York after the industrial conglomerate posted a drop in first-quarter earnings. Revenue edged down to $8.83 billion in three months to end of March from $8.85 billion a year before. Net income attributable to 3M declined by 20% to $1.30 billion from $1.62 billion. Diluted earnings per share slipped to $2.26 from $2.77.
Tech earnings begins in earnest on Tuesday with Microsoft and Google-parent Alphabet due to report earnings after the close. The pair are significant components of major indices and further affect sentiment.
‘This earnings season will give real insight into how companies are coping in what's being described as an increasingly hostile economic environment, forged by covid and exacerbated by conflict. Even the return of the political status quo in France hasn't calmed jitters as one election battle merges into another,’ said Danni Hewson of AJ Bell.
Gold stood at $1,903.55 an ounce at the London equities close, higher against $1,898.25 late Monday.
The economic events calendar on Wednesday has US trade data at 1330 BST.
The UK corporate calendar on Wednesday has first-quarter results from lender Lloyds Banking Group, stock exchange operator London Stock Exchange Group and drugmaker GlaxoSmithKline.
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