28th Jul 2020 11:57
(Alliance News) -Â The FTSE 100 dipped into negative territory by midday on Tuesday as early optimism over US stimulus and vaccine hopes faded, replaced by apprehension ahead of the US Federal Reserve's latest policy announcement on Wednesday.
The FTSE 100 index was down 7.21 points, or 0.1%, at 6,097.67 on Tuesday. The mid-cap FTSE 250 index was up 93.42 points, or 0.5%, at 17,251.36. The AIM All-Share index was up 0.1% at 890.00.
The Cboe UK 100 index was down 0.3% at 607.59. The Cboe 250 was up 0.2% at 14,633.72 and the Cboe Small Companies up 0.3% at 9,100.44.
In mainland Europe, the CAC 40 in Paris was down 0.8%, while the DAX 30 in Frankfurt was down 0.5% Tuesday afternoon.
Having started the day in positive territory, the FTSE 100 slipped into the red at midday as stocks entered "wait and see mode", said Pierre Veyret, technical analyst at ActivTrades.
"The current short-term lack of directionality is partly explained by expectations investors have towards the ongoing negotiations between Republicans and Democrats in the Senate about a multi-trillion-dollar recovery plan aiming to provide more support to the US economy," said Veyret.
US Republicans put forward a proposal for another coronavirus stimulus bill worth around USD1 trillion dollars on Monday.
The plan would see another round of one-off payments of USD1,200 to most American adults, Senator Chuck Grassley said.
Grassley defended plans to replace USD600 weekly payments for the unemployed - which are due to expire at the end of the month - with payments of 70% of laid-off workers' last wages. Republicans argue that expanded jobless benefits encourage people to stay home and not go back to work, although it is unclear the extent to which this is true.
The Democrats have called for a package of around USD3 trillion, including continued weekly unemployment payments of USD600, which are due to expire in several days.
In addition, markets have an eye on Wednesday's policy decision from the US Federal Reserve.
The Fed rushed in to bolster the US economy before lockdowns across the country were even implemented, slashing its lending rate to near zero in March and pumping trillions of dollars into the financial system and into lending programs to support corporations, small- and medium-sized businesses and local governments.
The federal funds rate is currently 0.00% to 0.25%. The CME's FedWatch tool has it fully priced in that the Fed stands pat on rates this week.
Wall Street is on course for a lower start on Tuesday, with the Dow Jones and S&P 500 both called down 0.4% and the Nasdaq Composite down 0.5%.
The dollar nudged higher. Against the yen, the dollar was quoted at JPY105.20, up versus JPY105.15.
"EUR/USD and GBP/USD are in the red as the US dollar index rebounded from its lowest level in over two years yesterday," commented David Madden at CMC Markets.
The euro traded at USD1.1730, lower than USD1.1775 late Monday.
Germany's disease control agency voiced "great concern" Tuesday over rising virus numbers in the country as authorities issued a travel warning against parts of Spain.
"We must prevent that the virus once again spreads rapidly and uncontrollably," Robert Koch Institute head Lothar Wieler told reporters.
Germany has fared better than many of its neighbours in suppressing the virus, but Wieler urged citizens not to squander the progress following a spike numbers in recent weeks.
Germany's foreign ministry updated its travel advisory on Tuesday, recommending against travel to three regions in northern Spain grappling with renewed outbreaks.
"Non essential, tourist travel to the autonomous communities of Aragon, Catalonia and Navarra are currently discouraged due to renewed high levels of infections and local lockdowns," a statement said.
The RKI chief said Germans bringing the virus back from their summer holidays was one reason for the surge in cases, but he also pointed to outbreaks happening at workplaces and open-air parties.
The UK government on Tuesday defended its decision to quarantine all travellers arriving from Spain after it was openly criticised by the Spanish prime minister.
Pedro Sanchez called the move to impose a 14-day quarantine on all those entering Britain from Spain – abruptly introduced by London on Saturday night – as "unbalanced" and insisted parts of his country were safer than the UK.
The UK imposed the measure, which has also been heavily criticised within the country, following a surge of cases in Spain in recent days.
Sanchez defended Spanish tourist hotspots, including the Balearic and Canary islands, Andalucia and the Valencia region, saying they had "a cumulative incidence of the virus that is lower than that currently in the UK".
Sterling was quoted at USD1.2877 on Tuesday, lower than USD1.2888 at the London equities close on Monday.
Among the worst blue-chip performers in London on Tuesday were gold miners, with Fresnillo and Polymetal International down 3.4% and 3.0% respectively. The two were retracing some gains posted on Monday, when both advanced 7.1%, as gold surged to record levels.
Gold was quoted at USD1,930.04 an ounce Tuesday midday, lower than USD1,937.08 on Monday. The precious metal closed in on the USD2,000 mark late Monday, trading just above USD1,980 an ounce, but since has given back some gains - though continues to trade around record high levels.
Brent oil was trading at USD43.39 a barrel on Tuesday, higher than USD42.47 late Monday.
St James's Place fell 2.5% as it reported a drop in assets under management and cancelled its interim dividend, but is confident 2020 will be a year of "major" net inflows.
At June 30, the FTSE 100-listed wealth manager reported funds under management of GBP115.68 billion, down 1.1% from the GBP116.99 billion seen at the beginning of the six months.
"The first half of 2020 has been an extraordinary period, both here in the UK and across the world, as the Covid-19 pandemic has profoundly impacted all our lives," Chief Executive Andrew Croft said.
As announced back in April, St James's Place will pay no interim dividend, compared to a 18.49 pence payout a year before. St James said Tuesday it will make dividend decision for 2020 in February 2021, when it hopes to be in a better position to assess the impact of Covid-19.
In the FTSE 250, Sabre Insurance rose 7.7% as it posted a first-half profit fall but noted that it is now in a more "favourable position" as the UK lockdown has eased.
Gross written premiums in the six months to June 30 fell 14% year-on-year GBP86.9 million from GBP101.2 million, the private motor insurance underwriter said. Gross earned premiums fell 7.8% annually to GBP94.0 million from GBP102.0 million, with pretax profit down 8.9% to GBP27.8 million from GBP30.5 million.
Chief Executive Officer Geoff Carter noted that at the time of the firm's annual general meeting in May, Sabre was in the "eye of the storm" as Covid-19 lockdowns continued to cripple trading, shrinking new business volumes.
"At the half-year mark, we are in a more favourable position. Quotation requests in the market have increased markedly as lockdown restrictions have eased. From a position of being around 25% down at the end of April year-on-year quote requests now appear to be in line with the previous year. Our written premium for June, on a week on week basis, exceeded that for the same period last year by over 10%, with July likely to deliver a similar increase," Carter added.
Greggs dipped 2.7% after swinging to an interim loss.
Total sales in the half were GBP300.6 million, down 45% on GBP546.3 million a year ago. Company-managed shop like-for-like sales slumped 49%.
This saw the sausage roll maker swing to a pretax loss of GBP65.2 million from a GBP36.7 million profit a year prior.
The closure of shops resulted in a number of one-off costs, Greggs said, with the total charge for write-offs and provisions for unusable stock being GBP9.0 million. The weekly cash outflow during the closure period, after support and mitigating actions, was GBP4.4 million per week.
By Lucy Heming;Â [email protected]
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