LONDON MARKET CLOSE: Miners lift FTSE 100 as price of gold rises

(Alliance News) - Stock prices in London closed higher on Tuesday, with the FTSE 100 staging a late recovery on the back of mining stocks.

The FTSE 100 index closed up 6.15 points, 0.1%, at 7,306.14. The FTSE 250 ended up 138.32 points, 0.8%, at 18,697.89, and the AIM All-Share closed up 6.32 points, 0.8%, at 831.13.

The Cboe UK 100 ended up 0.1% at 730.96, the Cboe UK 250 closed up 0.8% at 16,140.75, and the Cboe Small Companies ended up 0.2% at 12,543.36.

London's bluechip index spent most of the day in the red, before mining stocks staged a late rally. This was because the price of gold saw a sharp increase, as the dollar retreated.

Gold was quoted at USD1,712.35 an ounce, rising from USD1,678.79 on Monday, and USD1,672.16 around midday on Tuesday.

Bluechip miners tracked the rising price, with Endeavour Mining, Fresnillo, Anglo American adding 4.2%, 3.8%, and 3.3% respectively.

In European equities on Tuesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended 1.2%.

"European markets have continued to trade cautiously...with the weaker US dollar appearing to help to give sentiment a lift, as voting begins in the US midterm elections," CMC's Michael Hewson said.

Americans have begun casting ballots in the midterm elections after a campaign that exposed the country's deep political divides and raised questions about its commitment to a democratic future.

Democrats were braced for disappointing results, aware that they are likely to lose the US House of Representatives and possibly their hold on the US Senate too.

"The Republicans are widely expected to make sweeping gains and should they control both houses of Congress then Democratic president Joe Biden would essentially be in office but not in power given the divisive nature of politics across the pond," said AJ Bell's Russ Mould.

"This could be a mixed blessing for markets as gridlock in Washington would at least prevent any legislation being introduced which could damage businesses."

The dollar weakened against major currencies as the elections got underway.

The pound was quoted at USD1.1566 late Tuesday, up from USD1.1459 at the London equities close on Monday. The euro rose to USD1.0075 from USD0.9940. Against the yen, the dollar was trading at JPY145.49, down from JPY146.56.

Stocks in New York were rallying at the London equities close, with the DJIA up 1.3%, the S&P 500 index up 1.0%, and the Nasdaq Composite 1.2% higher.

Meanwhile, eurozone retail sales in September saw their first monthly uptick since May.

According to Eurostat, retail sales in the single currency bloc rose 0.4% in September from August. Sales had been flat on a month-to-month basis in August.

September was the first monthly growth since a 0.2% climb in May. Sales then fell by 1.1% in June and by 0.2% in July.

The UK retail sector did not hold up as well, however. UK retail sales slowed in October as retailers prepare for consumers to turn to pre-owned gifts and strict budgets this Christmas, as the cost of living crisis deepens.

On a like-for-like basis, sales grew by 1.2% annually, driven by price increases. But this masked falling sales volumes as shoppers bought fewer items per visit, British Retail Consortium figures showed. Total sales grew by 1.6% annually. This is below the three-month average of 1.7% and the 12-month average growth of 2.7%.

However, investor sentiment towards retailers was boosted by a positive trading update from Primark-owner AB Foods, which rose 2.8%.

Revenue for the financial year that ended September 17 climbed 22% to GBP17.00 billion from GBP13.88 billion. Pretax profit jumped 48% to GBP1.08 billion from GBP725 million.

AB Foods lifted its payout by 7.9% to 43.7 pence from 40.5p. In addition, it announced a GBP500 million share buyback programme to be completed in the current financial year. The buyback represents 4.7% of the company's issued shares. They will be cancelled after being bought back.

At Primark, annual sales totalled GBP7.7 billion, up 43% at constant currency. "UK like-for-like sales and market shares [are] now broadly in line with pre-Covid levels," AB Foods said.

Coca Cola HBC added 2.5%.

The Zug, Switzerland-based soft drinks bottler said that in the third quarter that ended September 30, net sales revenue increased by 28% from a year ago. The firm upgraded guidance for annual earnings before interest and tax to between EUR860 million and EUR900 million, a 4.9% increase from its previous range.

"So far we have seen limited evidence of changing consumer behaviour, but are alert to this possibility and can adapt quickly if needed," affirmed CEO Zoran Bogdanovic.

Sales, marketing, and support services firm DCC was the worst performer, falling 8.1%. This was despite a fairly solid interim performance.

For the six months that ended on September 30, revenue jumped by 44% to GBP10.84 billion from GBP7.52 billion the year before. This is "primarily due to significantly higher revenue in DCC Energy where commodity prices were materially higher than during the first six months of the prior year", DCC explained.

Pretax profit increased by 15% to GBP132.3 million from GBP115.0 million. DCC declared an interim dividend of 60.04 pence each, up 7.5% from 55.85p a year prior.

"Today's move seems somewhat of an over-reaction even if the results were slightly below expectations, given that H2 generally tends to be the stronger half of the business," said CMC Markets' Michael Hewson.

Bluechip construction firm Persimmon was close behind, losing 5.5%.

For the period spanning July 1 and November 7, the housebuilder reported forward sales reserved beyond the current year of GBP770 million, down from GBP1.15 billion a year prior. It also saw a drop in average net private weekly sales rate per outlet, down to 0.60 from 0.78 the previous year.

While Persimmon said it was on track to deliver its full-year volume target guidance of 14,500 to 15,000 homes, it noted that in the last six weeks, cancellation rates have increased to 28% from 21% in the preceding 12 weeks from July 1.

On payouts, Persimmon ruled out a special distribution for 2022, and set out plans for a new capital allocation policy.

"Ordinary dividends will be set at a level that is well covered by post-tax profits, thereby balancing capital retained for investment in the business with those dividends. Any excess capital will be distributed to shareholders from time to time, through a share buyback or special dividend," it said.

"Today's warning from Persimmon on the housing market feels like it has been in the post for months. Housebuilders enjoyed a sugar rush driven by goodies like pent-up demand, appetite for extra space from people spending more time working at home and a stamp duty holiday, yet an inevitable crash has followed," said AJ Bell's Russ Mould.

On AIM, Applied Graphene fell 41%.

The company early Tuesday noted a media report saying it was considering an equity raise, which it denied.

Though it previously set out plans to raise further equity to fund operations and business development, Applied Graphene said that recent investigations into the feasibility of a share offer concluded it would no longer be possible.

Applied Graphene attributed this to unfavourable conditions in small-cap equity markets.

However, it acknowledged that its financial situation is precarious.

Brent oil was quoted at USD97.81 a barrel, down from USD98.97 at the close on Monday.

In Wednesday's UK corporate calendar, there will half-year results from Marks & Spencer, waste manager Biffa, as well as trading statements from gambling firm Flutter Entertainment, pub chain operator JD Wetherspoon, broadcaster ITV, insurer Aviva and fitness chain Gym Group.

The economic calendar for Wednesday has Chinese producer and consumer inflation figures overnight, Irish industrial production at 1100 GMT, and US wholesale trade figures later in the day.

By Elizabeth Winter; [e-mail]

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