(Alliance News) - European markets pushed ahead on Tuesday after a rollercoaster session on Wall Street, with the FTSE 100 advancing with help from banks and oil majors.
However, with New York equity markets back in the red in Tuesday morning trade, volatility seems set to continue ahead of Wednesday's US interest rate decision.
The FTSE 100 index closed up 74.31 points, or 1.0%, at 7,371.46. The FTSE 250 ended up 193.21 points, or 0.9%, at 21,645.71, and the AIM All-Share closed up 6.18 points, or 0.6%, at 1,084.21.
The Cboe UK 100 ended up 1.0% at 733.15, the Cboe UK 250 closed up 0.4% at 19,322.82, and the Cboe Small Companies ended up 0.2% at 15,186.75.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended up 0.8%.
European markets took their cues from Wall Street's rebound on Monday, overlooking Tuesday's tumble back into red in New York. The FTSE 100 outperformed, led by banks and oil majors.
"Signs of a recovery in metals and oil have boosted the relevant sectors in the index, while higher yields have done their bit to lift bank stocks once again," commented Chris Beauchamp, chief market analyst at IG, of the FTSE 100's performance.
Ahead of Wednesday's Fed decision - which is expected to see the central bank line up an interest rate hike in March - London-listed financials advanced as investors look towards a higher interest rate world.
Standard Chartered rallied 5.0%, HSBC rose 3.5% and Lloyds rose 3.3%.
Another group higher were oil majors, with BP up 4.3% and Royal Dutch Shell 'A' and 'B' shares up 3.6% and 3.7% respectively, as the companies tracked a rebound in energy prices. Brent oil was quoted at USD87.57 a barrel at the London equities close Tuesday, from USD85.51 late Monday.
Supporting oil prices were ongoing tensions over Ukraine. US President Joe Biden declared "total" unity among Western powers Monday after crisis talks with European leaders on deterring Russia from an attack against Ukraine, while the Pentagon said 8,500 US troops were put on standby for possible deployment to boost NATO.
"Today's downgrade by the IMF to its global growth forecast would in ordinary times probably have acted as a drag on [oil prices], however on this occasion it barely registered," said CMC Markets chief market analyst Michael Hewson.
The Washington-based crisis lender cut its world GDP forecast for 2022 to 4.4%, half a point lower than the October estimate, due to the "impediments" caused by the Omicron outbreak, though those are expected to begin to fade in the second quarter of the year.
"The global economy enters 2022 in a weaker position than previously expected," the IMF said in the quarterly update to its World Economic Outlook, adding that "the emergence of the Omicron variant in late November threatens to set back this tentative path to recovery."
Safe haven asset gold was quoted at USD1,846.58 an ounce at the London equities close Tuesday, up against USD1,833.82 at the close on Monday.
The pound was quoted at USD1.3491 at the London equities close Tuesday, higher compared to USD1.3451 at the close on Monday. The euro stood at USD1.1279 at the European equities close, down against USD1.1312 at the same time on Monday.
Against the yen, the dollar was trading at JPY113.92, up compared to JPY113.88 late Monday.
Stocks in New York were in the red at the London equities close on Tuesday. The Dow Jones was down 0.9% in late morning trade, the S&P 500 index down 1.6%, and the Nasdaq Composite down 2.3%.
Indices embarked on an astonishing recovery as Monday's session progressed, with the Nasdaq ending in positive territory, up 0.6%, despite at one stage trading nearly 5% lower. But stocks were failing to follow through with this rebound on Tuesday.
"It is far too early to say if this European outperformance versus the US is here to stay – we have had plenty of false dawns in recent years – but if the shift away from tech and other growth names really gets going a different market environment could be upon us, one where US outperformance is not a given," said IG's Beauchamp.
Back in London, shares in Capricorn Energy rose 6.6% after saying its new Egyptian assets were exceeding production expectations, and it plans to return a substantial Indian tax refund to shareholders.
Formerly known as Cairn Energy, the Edinburgh-based oil and gas exploration company said revenue for its Egyptian assets in the final quarter of 2021 totalled USD56 million, since the assets were acquired back in late September from Shell.
HomeServe ended at the bottom of the FTSE 250, down 4.5% at 741.50 pence, after Morgan Stanley cut its price target on the home emergency repairs firm to 810p from 1,020p.
"UK membership issues are well debated but risks to profits are still underappreciated," said Morgan Stanley.
Amigo shares slumped a further 43%, after Monday's 42% tumble. The guarantor loans provider after the market close on Monday said Chief Financial Officer Mike Corcoran has stepped down with immediate effect, though will support business through handover period.
Corcoran's departure came the same day Amigo warned of insolvency if a new business scheme and equity raise are not approved. The scheme is being proposed to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
The stock has fallen 67% since the start of 2022.
Staffline rose 8.1% after recording full-year revenue growth and a more than doubled underlying operating profit due to a "strong" trading performance throughout the year.
The Nottingham, England-based recruitment and training company generated revenue of GBP942.7 million in 2021, up 1.6% on GBP927.6 million the year before. Staffline's underlying operating profit more than doubled to GBP10.0 million from GBP4.8 million throughout the year. This was 11% ahead of expectations, the company noted.
The UK corporate calendar on Wednesday has production results from precious metals miner Fresnillo and third quarter results from airline Wizz Air. Online trading platform CMC Markets and Tullow Oil release trading updates.
Wednesday's economic calendar is headlined by interest rate decisions from the US Federal Reserve at 1900 GMT and the Bank of Canada at 1500 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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