4th Oct 2022 08:46
(Alliance News) - Stock prices in London opened sharply higher on Tuesday, lifted by more positive market sentiment following the UK government's tax U-turn, as well as some positive trading updates.
The FTSE 100 index opened up 73.28 points, 1.1%, at 6,982.04. The FTSE 250 opened up 274.82 points, 1.6%, at 17,558.98 and the AIM All-Share opened up 6.51 points, 0.8% at 815.24.
The Cboe UK 100 opened up 1.3%% at 699.00, the Cboe UK 250 opened up 1.2% at 14,965.48, and the Cboe Small Companies opened 0.1% higher at 12,758.68.
In European equities on Tuesday, the CAC 40 in Paris opened up 2.2%, while the DAX 40 in Frankfurt opened up 2.0%.
Liz Truss has stressed she must take a "responsible" approach to the public finances, as she faces a Cabinet split and a fresh battle with Tory rebels fighting real-terms cuts to benefits.
The prime minister is refusing to rule out a return to austerity or say whether welfare payments will be increased in line with soaring inflation.
Critics who forced a U-turn over the plan to abolish the 45 pence tax rate for top earners are now stepping up pressure on the government to confirm benefits will be raised.
Meanwhile, the Conservative Party Conference continues in Birmingham.
Keynote speeches by Home Secretary Suella Braverman and Foreign Secretary James Cleverly will aim to set out the government's plans on immigration and commitment to support Ukraine.
As discontent brews within the party, Priti Patel is set to accuse Truss and Kwarteng of "spending today with no thought of tomorrow".
"I want to see our party regain its credibility by restoring its commitment to sustainable public spending...which is affordable today, tomorrow and for the foreseeable future," the former home secretary will tell a conference fringe event, according to The Times.
"The UK government's decision to reverse part of its previous tax-cutting plan also had a disproportionately positive effect on sentiment generally, with sterling recouping some of its previously precipitous losses following the initial announcement," interactive investor's Head of Markets Richard Hunter said.
The pound was quoted at USD1.1365 at the London equities open Tuesday, continuing to rise from USD1.1309 at the close on Monday.
Hunter added: "Nonetheless, the longer term impact of the attempt to stimulate growth is yet to be proven, while the government's initial announcement seemed at odds with what the Bank of England is trying to achieve."
In the FTSE 100, Legal & General added 4.7% in early trading.
The financial services firm said it has maintained positive momentum from the first half into the second, "despite market volatility", which has had a "limited economic impact" on the firm. L&G said it expects to deliver annual operating profit growth in line with the 8% seen in the first half.
It said recent "extraordinary" interest rate hikes have been challenging for its pension fund clients and counterparties of its Investment Management liability-driven investment business. However, recent purchases of long-dated gilts by the Bank of England have helped to alleviate the pressure.
Its annuity portfolio continues to perform well, and "has not experienced any difficulty in meeting collateral calls and we have not been forced sellers of gilts or bonds", it said.
L&G estimates a solvency coverage ratio between 235% to 240% as at September 30.
In the FTSE 250, Greggs gained 6.0%.
The pastry chain said total sales were up 15% for the 13 weeks to October 1, and backed its full-year expectations.
It continues to expect around 150 net shop openings in 2022, and left its cost inflation outlook unchanged for the year at around 9%.
"As expected, year-on-year growth moderated in August given the particularly strong 'staycation' effect seen in 2021, however, momentum returned in September. We closed our shops on September 19 for the funeral of Her Majesty The Queen and this impacted reported LFL sales growth for the third quarter by around one percentage point," the food-to-go seller noted.
It acknowledged "considerable" economic uncertainty but expects full-year results to be in line with previous expectations.
Royal Mail rose 3.1%, as its name change to International Distributions Services takes effect. It was first announced back in July.
Wizz Air rose 2.8%, after sharing significant annual growth in September. The budget airline said passengers in the month were up 52% year-on-year to 4.5 million, as capacity rose 37% to 5.3 million.
Ryanair also put in a good performance in the month, with guests rising 49% year-on-year to 15.9 million, and load factor improving to 94% from 81% a year prior. Its shares were up 2.5% in Dublin.
On AIM, N4 Pharma was 12% higher as it reported the successful in vitro testing of Nuvec, its novel delivery system for cancer treatments and vaccines.
Poolbeg Pharma rose 6.0%. The pharmaceutical firm said the US Patent & Trademarks Office has indicated that its patent application "that is directed to the use of POLB 001 and its homologues for the treatment of hypercytokinemia" is allowable.
It expects the formal patent grant in due course, and has filed a continuing application to protect additional claims around this indication.
The euro stood at USD0.9871, up against USD0.9834 at the same time on Monday.
Against the yen, the dollar was trading at JPY144.67, higher compared to JPY144.35 late Monday.
Brent oil was quoted at USD89.38 a barrel at the London equities open Tuesday, up from USD88.30 late Monday.
Gold was quoted at USD1,706.10 an ounce Tuesday, higher against USD1,690.38 at the close on Monday.
Stocks in the Asia Pacific region were stronger on Tuesday. The Nikkei 225 in Tokyo closed up 3.0%, while the S&P/ASX 200 in Sydney ended up 3.8%, after an unexpectedly dovish move from its central bank.
"Australia injected some hope into the region, as its central bank lifted interest rates by just 0.25%, rather less than expected, and prompting wider hopes that other monetary authorities might also consider such a wait and see approach," said ii's Richard Hunter.
In China, financial markets were closed as National Day Golden Week continues.
Still to come in the day's economic calendar, there's EU producer inflation at 1000 BST, and comments from US Federal Reserve officials later in the day.
By Elizabeth Winter; [email protected]
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