LONDON MARKET OPEN: FTSE 100 extends rally as traders await NY return

Writer,

The FTSE 100 continued its strong start to the week on Tuesday, shaking off recent concerns over rising interest rates and recession risks.

However, the return of US markets to the fray following Monday's day will be an ‘important test’ of the week's improved mood.

‘Yesterday's US holiday seem to have calmed markets following last week's sharp sell-off. With several indicators hitting oversold territory towards the end of last week we have seen equities rebound, global yields move modestly higher, oil rebounding and the USD posting modest losses. With US markets back today it will act as an important test on whether recent price action is but another bear-market rally or instead constitute the beginning of a more sustainable rebound in risky assets,’ said Danske Bank.

The FTSE 100 index was up 29.53 points, or 0.4%, at 7,151.34. The mid-cap FTSE 250 index was up 59.44 points, or 0.3%, at 19,070.26. The AIM All-Share index was up 1.01 point, or 0.1%, at 898.18.

The Cboe UK 100 index was up 0.5% at 712.60. The Cboe 250 was up 0.3% at 16,753.33, and the Cboe Small Companies up 0.3% at 13,725.71.

In mainland Europe, the CAC 40 stock index in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 0.9%.

In the FTSE 100, DS Smith was up 2.0%, after the packaging company raised its dividend after strong annual results.

For the financial year that ended April 30, pretax profit increased 64% to £378 million from £231 million the year before, on revenue of £7.24 billion, up 21% from £5.98 billion.

DS Smith declared a total dividend of 15.0 pence, up 24% from 12.1p paid out in financial 2021.

Looking ahead, DS Smith said it has seen good early momentum at the start of its current financial year, despite a more-challenging backdrop.

Rival paper and packaging companies Mondi and Smurfit Kappa were up 1.7% and 1.2% respectively in a positive read-across.

At the other end of the large-caps, Ocado Group was the worst performer, down 5.0%, at 834.00 pence, after the online grocer completed its fundraise, announced after the market close on Monday.

Ocado had said it planned to raise the funds to expedite growth plans, amid what it called surging online grocery demand in the wake of the Covid-19 pandemic and the need to bring new technology solutions to the market faster.

The online grocer placed 72.3 million shares at 795p each, raising £575 million. The placing price was a 9.4% discount to Monday's market close of 877.6p.

The placing, led by Goldman Sachs, was done in conjunction with an offer to retail investors via PrimaryBid involving 246,405 shares and 150,944 subscription shares taken by members of the senior management team, including Chief Executive Officer Tim Steiner, Ocado said.

The total equity raise was £578 million, and the new shares represent about 9.7% of Ocado's share capital total prior to the raise.

Associated British Foods was down 1.5% after JPMorgan downgraded the Primark clothing chain owner to 'neutral' from 'overweight'.

In the FTSE 250, Spire Healthcare was the best performer, up 3.5%, after Berenberg started coverage on the private hospital group with a 'buy' rating.

At the other end of the midcaps, Asos was the worst performer, down 4.2% after JPMorgan cut the online fashion retailer to 'neutral' from 'overweight'. Asos joined the FTSE 250 at the start of this week following an index review earlier this month.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 1.8%. In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong was up 1.4%. The S&P/ASX 200 in Sydney ended up 1.4%.

The economic events calendar on Tuesday has US existing home sales at 1500 BST. Financial markets in New York reopen after being closed for a holiday on Monday.

The pound was quoted at $1.2300 early Tuesday, up from $1.2246 at the London equities close Monday.

The euro was priced at $1.0540, higher against $1.0528. Against the yen, the dollar was trading at JP¥135.15 in London, up from JP¥135.03.

Brent oil was quoted at $114.60 a barrel Tuesday morning, up from $113.70 late on Monday. Gold stood at $1,834.42 an ounce, lower against $1,838.66.

Copyright 2022 Alliance News Limited. All Rights Reserved.