(Alliance News) - The FTSE 100's losing streak continued into a second session, with gains for oil majors on Tuesday unable to offset pressure from a stronger pound.
Sterling rallied after the governor of the Bank of England spoke of "issues" over cutting UK interest rates into negative territory.
The FTSE 100 index closed down 44.37 points, or 0.7%, at 6,754.11. The FTSE 250 ended down 63.17 points, or 0.3%, at 20,712.96, and the AIM All-Share closed just 0.27 of a point higher at 1,179.03.
The Cboe UK 100 ended down 0.7% at 672.27, the Cboe UK 250 closed down 0.2% at 18,008.58, and the Cboe Small Companies ended up 0.7% at 12,217.32.
London's FTSE 100 was "kicked down a peg or two" on Tuesday in the wake of the pound's rally," said Connor Campbell at Spreadex.
"Just like on Monday, a session that started off quiet for the FTSE soon went south – though this time it was sterling's fault," said Campbell. "Well, to be more precise, Andrew Bailey's fault, by way of the pound. The Bank of England governor once again appeared to shoot down the idea of negative interest rates as a potential tool for the MPC."
Bank of England Governor Andrew Bailey on Tuesday said there are "issues" with cutting UK interest rates below zero, Reuters reported.
In "simple economics and maths terms", Bailey said, when asked about negative rates after an online speech to the Scottish Chambers of Commerce, there is "nothing to stop it at all". However, there are a "lot of issues with it", he said.
The pound was quoted at USD1.3621 at the London equities close Tuesday, higher compared to USD1.3506 at the close on Monday.
While sterling's rally was dampening the internationally-exposed FTSE 100 index, a rise in oil prices was helping the likes of BP and Royal Dutch Shell.
"Crude prices are following the broader move into risky assets today. It seems energy traders are just looking for a reason to buy as the macro outlook seems to be very positive once we get past these next few months," said Edward Moya at Oanda.
Brent oil was quoted at USD56.61 a barrel at the London equities close Tuesday from USD55.58 late Monday.
Shares in oil major BP closed up 2.1%, while peer Shell's 'A' and 'B' shares both closed up 1.9%.
Elsewhere in London, Kingfisher ended up 1.8% with the DIY retailer helped by lockdown-driven home improvement demand.
In the 10 weeks to January 9, group like-for-like sales jumped 17% year-on-year, helped by e-commerce sales more than doubling. Kingfisher added that its year-to-date like-for-like sales are up 6.5%.
Kingfisher said it is confident its annual adjusted pretax profit can land in the top end of the GBP667 million to GBP742 million analyst expectations range. For the year ended January 31, 2020, Kingfisher reported adjusted pretax profit of GBP544 million, so financial 2021 could see a jump of up to 36%.
DIY store owners such as Kingfisher, which in mainland Europe also owns Castorama France and Brico Depot, have benefited from boosted demand for home improvement as locked down consumers spend more time indoors.
"The working from home phenomenon has driven a new DIY fad, with people realising their home could do with sprucing up, particularly if they are going to spend a lot more time inside it. Kingfisher has been on a roll since the first lockdown with sales shooting up," said Russ Mould, investment director at AJ Bell.
Games Workshop shares slipped 6.7% after warning on current trading conditions, though did report a solid rise in profit and revenue for the first half of its financial year.
For the six months ended November 29, the wargames manufacturer and retailer posted a pretax profit of GBP91.6 million, up 56% from GBP58.6 million the year before. This was on revenue that grew by 26% year-on-year to GBP186.8 million from GBP148.4 million on a reported basis.
By division, Games Workshop's Trade business grew by 33% to GBP104.0 million, as the overall number of trade outlets rose over the period to 5,100, which helped to drive forward sales.
Online rose sharply by 87% to GBP45.9 million, as the group said it is continuing to improve its online store services and functionality.
Meanwhile, the Retail business declined by 19% to GBP36.9 million, with trading in most countries stifled by government restrictions. In fact, Games Workshop warned that should current sales trends continue for the full year, the group would have around 50 stores that would not break even.
Playtech ended up 4.3% after saying it expects its 2020 results to beat forecasts, adding that while Covid-19 related uncertainties remain, it is well-placed to make progress in 2021.
The FTSE 250 online gaming and sports betting firm stated it expects adjusted earnings before interest, tax, depreciation and amortisation for 2020 of at least EUR300 million following its entry into the US market and its expansion in Latin America. This would reflect a 22% decrease from the 2019 adjusted Ebitda which was EUR383.1 million.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.2%, while the DAX 30 in Frankfurt ended down 0.1%.
The euro stood at USD1.2157 at the European equities close Tuesday, slightly lower against USD1.2163 at the same time on Monday.
Against the yen, the dollar was trading at JPY104.18, soft compared to JPY104.21 late Monday.
Stocks in New York were posting mild gains at the London equities close, with the DJIA up 0.1%, the S&P 500 index flat, and the Nasdaq Composite up 0.3%.
US President Donald Trump emerged from isolation at the White House on Tuesday to brand the likely second impeachment of his presidency "absolutely ridiculous" and warn that it has triggered "tremendous anger."
With only eight days left in his one-term administration, Trump finds himself alone, shunned by former supporters, barred by social media, and now facing a second impeachment over his instigation of a riot against Congress on January 6.
The House of Representatives will vote Tuesday on a longshot bid to get Vice President Mike Pence and the cabinet to invoke the US Constitution's 25th Amendment, which would declare Trump unfit to perform his duties and install Pence as acting president.
Democrats will follow up the 25th Amendment vote with impeachment proceedings in the House on Wednesday. The single charge of "incitement of insurrection" is all but sure to get majority support. The Republican-controlled Senate, however, is in recess until January 19 and its leadership says there is no way to rush through an impeachment trial before Biden takes over the following day.
Gold edged down to USD1,844.07 an ounce at the London equities close Tuesday against USD1,845.86 at the close on Monday.
The UK corporate calendar on Wednesday sees trading statements from food delivery platform Just Eat Takeaway.com, housebuilder Persimmon, bookmaker William Hill and online clothing retailer ASOS.
Wednesday's economic calendar has eurozone industrial production at 1000 GMT and US inflation at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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