(Alliance News) - Both the FTSE 100 and the pound were underperforming on Tuesday, the former dragged down by Standard Chartered and the latter as jitters set it over whether the Bank of England will go ahead with an interest rate rise later this week.
The FTSE 100 index was down 47.42 points, or 0.7%, at 7,241.20 midday Tuesday. The mid-cap FTSE 250 index was down 51.076 points, or 0.2%, at 23,160.15. The AIM All-Share index was flat at 1,228.91.
The Cboe UK 100 index was down 0.8% at 717.75. The Cboe 250 was down 0.4% at 20,730.19, and the Cboe Small Companies up 0.1% at 15,592.11.
In mainland Europe, the CAC 40 in Paris was up 0.3% while the DAX 40 in Frankfurt was up 0.6%. The German index was boosted by a 14% share price surge for Hello Fresh after the meal kit firm lifted its revenue outlook.
"With the Australian central bank stepping towards a more hawkish view (or at least, less dovish) and forecasts of a rate increase there being brought forward, attention has been shifted towards central banks, as we gear up for a tapering announcement from the Fed and as possible rate hike from the BoE this week," said Chris Beauchamp, chief market analyst at IG.
The Reserve Bank of Australia overnight said an interest rates lift-off could occur in 2023, as it also dropped the yield target for a security which matures in 2024, following a recent spike.
This has brought two other central bank meetings later this week, the Bank of England and US Federal Reserve, into even sharper focus.
The US Fed is expected to make a formal QE taper announcement on Wednesday, while the BoE on Thursday could raise UK interest rates for the first time since 2018.
Despite the possibility of policy tightening on the horizon, the pound was underperforming on Tuesday. Sterling was quoted at USD1.3632 at midday, slipping from USD1.3675 at the London equities close on Monday.
Ricardo Evangelista at ActivTrade commented: "Sterling had been on a winning streak for most of October, as investors priced-in expectations of a rate hike in November...However, judging by the behaviour of the markets over the last few sessions, which were marked by pound weakness, it appears that investors' expectations have somehow shifted to accommodate a readjusted outlook in which there is a delay in raising rates or a less ambitious guidance."
The euro traded at USD1.1595 on Tuesday, higher than USD1.1589 late Monday even after survey data from IHS Markit the showed eurozone manufacturing sector grew at a slightly slower pace than first expected last month.
The eurozone manufacturing purchasing managers' index eased to 58.3 points in October from 58.6 in September. The final October reading also slipped from the flash figure of 58.5. While the reading remained above the no-change mark of 50.0, it signalled that the eurozone's manufacturing rebound lost some momentum in October.
Supply chain issues hit production schedules and dented order books. This was compounded by strengthening inflationary pressures across the euro area, with input costs and output prices both rising at new survey-record rates in October.
The Japanese yen and precious metal gold benefited as the dollar eased.
Against the yen, the dollar fell to JPY113.67 versus JPY114.02. Elsewhere in commodities, gold was quoted at USD1,792.11 an ounce on Tuesday, higher than USD1,790.75 on Monday.
Wall Street is called for a tepid start to Tuesday's session following another record close on Monday. The Dow Jones is called up 0.1%, the S&P 500 seen flat the Nasdaq Composite set to slide 0.2%.
In London, the FTSE 100 was underperforming on a drag from Standard Chartered, the bank down 7.7% despite reporting double-digit profit growth in the third quarter..
Operating income rose to USD3.77 billion in the three months that ended September 30, up 7% year-on-year. It was up 5% on a constant currency basis. Pretax profit jumped 44% to USD1.08 billion, helped as the lender's credit impairment charge was reduced to USD107 million from USD353 million.
IG's Beauchamp commented: "Standard Chartered beat expectations in its results this morning, but after a 24% bounce from the October low to yesterday's close, investors are relearning the phrase, 'it is better to travel than to arrive'."
Flutter Entertainment fell 7.0% after following its full-year earnings guidance on a string of punter-friendly sports results in October.
Total revenue for the third quarter of the year was GBP1.44 billion, up 8.6% on GBP1.33 billion a year ago. Meanwhile, online revenue growth of 13% at constant currency was driven by Australia, up 20%, and the US, up 85%.
However, the betting operator noted that it has seen unfavourable sports results in the first 24 days of October. This has hit earnings before interest, tax, depreciation and amortisation by around GBP60 million.
Combined with an expected GBP10 million hit from a temporary Netherlands exit, it now expects adjusted Ebitda for 2021, for its operations excluding the US, in the range of GBP1.24 billion to GBP1.28 billion. Previous guidance was for an adjusted Ebitda between GBP1.27 billion to GBP1.37 billion.
BP shares fell 2.3% with traders unimpressed by a fresh USD1.25 billion share buyback.
Underlying replacement cost profit for the third quarter of 2021 rose to USD3.32 billion from just USD86 million year-on-year, driven by improved commodity prices. This prompted the oil major to plan a further share buyback worth USD1.25 billion.
It said: "On average, based on BP's current forecasts, at around USD60 per barrel Brent and subject to the board's discretion each quarter, BP continues to expect to be able to deliver buybacks of around USD1.0 billion per quarter and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025."
Brent oil was trading at USD84.42 a barrel on Tuesday, soft on USD84.65 late Monday.
It was also a tough session for miners, with Anglo American down 3.7%, BHP Group down 3.2% and Glencore down 3.1%.
In the FTSE 250, Ferrexpo fell 8.1% after Credit Suisse cut the iron ore pellet maker to Neutral from Outperform.
TP ICAP fell 6.8%. The interdealer broker said trading conditions improved in the third quarter, with the firm's revenue growth driven by a strong performance from its Energy & Commodities business.
In the three months to September 30, TP ICAP recorded total revenue of GBP447 million, up 15% from GBP388 million a year earlier. Total Global Broking revenue on the third quarter rose 2.4% to GBP252 million from GBP246 million, while Energy & Commodities revenue surged 16% to GBP92 million from GBP79 million.
Elsewhere in London, shares in THG dropped 8.0% to 200.10 pence - having hit an all-time low of 198p earlier on Tuesday - after BlackRock sold a chunky stake following a torrid few weeks for the firm.
THG dropped 21% in one day alone in October after a disastrous capital markets day left analysts with more questions than answers. The beauty products retailer and e-commerce platform provider floated in September last year at an IPO price of 500p.
"Asset managers rarely sell after a stock has already fallen so much unless they've lost all confidence in the business and/or found something that completely changes the investment case," said Russ Mould, investment director at AJ Bell, of the BlackRock sale.
By Lucy Heming; lucyheming@alliancenews.com
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