4th Mar 2014 10:45
LONDON (Alliance News) - UK stocks are firmly higher Tuesday, while gold and oil prices have fallen, as the markets put Monday's safe-haven flows into reverse on the apparent de-escalation of tensions between Russia and Ukraine.
The Crimea situation continues to be in focus, with markets on edge about the volatile situation, but for now news reports that President Vladimir Putin has ordered Russian troops back from the Ukrainian border to their bases has been enough for investors to put risk back in their portfolios.
By mid-morning Tuesday, the FTSE 100 is up 1.2% at 6,785.72, the FTSE 250 is up 1.3% at 16,587.45, and the AIM All-Share is up 0.4% at 885.90.
Although stocks are higher, most European indices have not retraced all of Monday's losses. The German DAX, which lost 3.4% on Monday has rebounded just 1.0% so far. The French CAC 40 is up 1.4% currently, after losing 2.7% on Monday.
After a surprise jump to 64.6 in January, the UK construction PMI dropped to 62.6 in February, according to Markit data released Tuesday. The reading still indicates strong growth, but with forecasts of 63.0, the drop in construction activity was sharper than expected.
"The UK economy surprised us all in January with British construction activity at a post financial crisis high. Today?s PMI figures, however, serve as a sobering reminder that demand for new properties is putting pressure on house prices and a number of large suppliers are struggling to deliver due to the rising price of construction materials," said UFXMarkets managing director Dennis de Jong.
In the Eurozone, producer prices are falling faster than expected, with January PPI data showing the price of goods leaving the factory gates 0.3% lower in January that December. On a yearly basis prices fell by 1.4% in January. Economists had expected prices to fall by 0.1% over the month and 1.35 over the year.
Factory gate prices in the eurozone have now been declining for six consecutive months and analyst say the latest reading is likely to increase the risk of a further round of policy easing by the European Central Bank at this week's rate-setting meeting.
The euro showed very little reaction to the disappointing numbers however, remaining stable against the dollar at USD1.3760. The pound dropped about 0.4 cent against the dollar to session lows of USD1.6670 following the disappointing construction data and continues to trade at that level.
Mirroring the move in equity markets, precious metals are off Monday's highs, but still higher than before the spike caused by the situation in the Crimea. Gold is down about USD15 from Monday's highs, currently trading at USD1,339.60. Silver is also off slightly, currently at USD21.28.
Oil prices have retraced further, currently off more than USD2.5 per barrel from Monday's spike as concern over Russia's supply route, through Ukraine, to Europe ease. Brent Crude currently trades at USD109.80 per barrel.
Within UK equities, the Industrial Metals sector, which was the stand-out loser on Monday, is the biggest gaining sector Tuesday, with Evraz up 4.3% and Ferrexpo up 2.5%.
Fresnillo is the biggest blue chip faller, down almost 9%, more than wiping out Monday's gain, after saying its profit fell by 65% during the 2013 full-year.
Ashtead is the biggest FTSE 100 gainer, up 8.5% after reporting impressive full-year results. Despite comparing to a previous year that was boosted by Hurricane Sandy recovery operations, Ashtead still managed to deliver a 22% rise in annual revenue.
Devro shares lead the FTSE 250 losers, down 9.2% after the group announced results in line with expectations but also plans to spend GBP450 million on a new site in China.
Still to come Tuesday, the US Redbook of retail sales is due at 1355 GMT, followed by the New York ISM index of business conditions at 1445 GMT. Analysts are expecting a drop in the index to 63.2 in February, from 64.4 in January.
By Jon Darby; [email protected]; @jondarby100
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