LONDON MARKET OPEN: FTSE 100 Weakened As Pound Continues To Surge

(Alliance News) - Stock prices in London opened mixed on Tuesday, following the long UK bank holiday weekend, with the internationally-exposed FTSE 100 hindered by a strong pound.

In London, the blue-chip FTSE 100 index was down 16.83 points, or 0.3%, at 5,946.74. The mid-cap FTSE 250 index flat at 17,787.54. The AIM All-Share index was up 0.2% at 966.24.

The Cboe UK 100 index was down 0.5% at 591.69. The Cboe 250 was down 0.1% at 15,149.68. The Cboe Small Companies was down 0.1% at 9,482.65.

In mainland Europe, the CAC 40 index in Paris was up 0.1%, while the DAX 30 in Frankfurt was up 0.4%.

"The [large cap] index hasn't been helped by the pound's continued rise against the dollar, the greenback suffering in the aftermath of last week's dovish Jackson Hole address from Federal Reserve head honcho Jerome Powell," commented Spreadex analyst Connor Campbell.

The pound was quoted at USD1.3411 Tuesday morning, sharply higher from USD1.3347 at the London equities close Friday. Sterling was trading at its highest levels since mid-December.

On the London Stock Exchange, gold miners Fresnillo and Polymetal International were the best performers, up 4.3% and 2.0% respectively, tracking spot gold prices higher.

Gold was quoted at USD1,989.44 an ounce Tuesday morning, up from USD1,968.01 late Friday.

"The future looks glittering for gold as the fundamental bullish factors continue falling into place beyond 20220 as the Federal Reserve will remain mute to lower unemployment levels or higher inflation. Hence, there is a tremendous potential for broad-based dollar weakness and higher gold prices well into 2022, suggesting we will be talking gold up for an exceptionally long time," said AxiCorp's Stephen Innes.

AstraZeneca was up 1.3% after the Anglo-Swedish drugmaker secured EU approval for its Imfinzi small cell lung cancer treatment.

In addition, AstraZeneca late on Monday said it expanded US trials of its Covid-19 vaccine and the drugmaker added that its applications for regulatory approvals across the globe will meet "stringent" requirements.

The US probe of the AZD1222 vaccine will see trial centres recruit up to 30,000 adults from a variety of ethnic groups and will also include those with underlying medical conditions that leave them more exposed to the SARS-CoV-2 virus.

At the other end of the large caps, Rolls-Royce was the worst performer, down 8.1%. Shares were in freefall after the jet engine maker said last week it was looking to sell assets amid a gaping loss and a warning of "material uncertainties" caused by the coronavirus pandemic.

International Consolidated Airlines Group was down 7.0% after JPMorgan downgraded the British Airways parent to Neutral from Overweight.

In the FTSE 250, Dunelm Group was up 6.0% after the home furnishings retailer reported a sharp rise in sales over the past two months but was still unable to provide financial guidance.

The retailer said sales have been strong in the last two months, with total year over year sales growth up 59% in July and up 24% in August. Dunelm said the rise was partly "as a result of pent-up demand" following the store closure period and the timing of its summer sale.

"Whilst the year to date performance has been materially ahead of our initial expectations, it is very difficult to provide any meaningful guidance on the future outlook given the uncertainty in the wider economy and the potential impact of further regional or national lockdowns. However, we remain confident in our ability to adapt to the environment and are well-positioned to continue to grow market share," Dunelm said.

At the other end of the mid-caps, Trainline was the worst performer, down 7.8% following a substantial share sale from its chief executive. The rail and coach ticketing platform's CEO Clare Gilmartin sold 800,000 shares at 400 pence each last Thursday, the company said.

The euro stood at USD1.1990, up from USD1.1900. Against the yen, the dollar was trading at JPY105.73, up from JPY105.26.

Brent oil was trading at USD45.80 a barrel Tuesday morning, flat from USD45.78 late Friday.

The economic events calendar on Tuesday has manufacturing PMI prints from the eurozone, UK and the US at 0900 BST, 0930 BST and 1445 BST respectively.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.