London shares were being sold early Tuesday, after another US technology stock issued an earnings warning and saw its stock punished.

The FTSE 100 index was down 74.37 points, or 1.0%, at 7,439.07 early Tuesday. The mid-cap FTSE 250 index was down 198.55 points, or 1.0%, at 19,947.63. The AIM All-Share index was down 3.37 points, or 0.4%, at 960.48.

The Cboe UK 100 index was down 0.7% at 742.95. The Cboe 250 was down 0.5% at 17,708.43, and the Cboe Small Companies was 0.1% lower at 14,645.15.

In mainland Europe, the CAC 40 in Paris fell 1.0%, while the DAX 40 in Frankfurt lost 1.1% early Tuesday.

Stocks in Europe had climbed on Monday, on news that US President Joe Biden was mulling an end to some Donald Trump-era trade tariffs on China.

In New York on Monday, stocks also closed higher. The Dow Jones Industrial Average and S&P 500 rose 1.9%, while the Nasdaq Composite climbed 1.6%.

However, the mood among US investors took another knock from the technology sector after market close, after the owner of Snapchat warned about a deteriorating economic environment. Snap will miss revenue and earnings expectations as a result.

Snap shares were down 29% in the New York pre-market on Tuesday. Fellow social media stock Meta Platforms was down 6.3%.

What’s more, despite the promising trade development on Monday, tensions between the US and China continue to simmer.

Biden on Tuesday said Washington’s ‘strategic ambiguity’ policy for Taiwan remains in place, a day after his comment about readiness to defend the island against a Chinese invasion suggested a change.

Biden’s latest declaration followed similar insistence from top US officials that a decades-old approach to Taiwan remains in place. This includes arming the democratic island for its own defence, while acknowledging China’s legal sovereignty and expressing ‘strategic ambiguity’ on whether American troops would ever intervene.

In Tokyo, the Nikkei 225 ended 0.9% lower. In China, the Shanghai Composite ended down 2.4%, while the Hang Seng in Hong Kong was down 1.9% in late trade. The S&P/ASX 200 in Sydney ended 0.3% lower.

Ahead of a slew of purchasing managers’ index releases, the dollar was on the back foot.

The pound was quoted at $1.2590 early Tuesday in London, up from $1.2575 late Monday. The euro stood at $1.0722, up from $1.0690. Against the yen, the dollar was trading at JP¥127.45, down from JP¥127.78.

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

Barclays was bucking the downward move of the wider FTSE 100 index, as the bank launched its delayed share buyback programme. The stock was up 2.3%, the best large-cap performer.

Barclays said it will kick off a £1.00 billion share buyback programme on Tuesday. The programme, initially announced in February, had been delayed in March after the bank admitted it sold more products to investors than it was allowed to.

The London-based bank explained at the time that securities offered and sold under its US shelf registration statement for an approximate one-year period had exceeded a registered amount. This, the bank explained, gave the purchasers of the affected securities a right of rescission, requiring Barclays Bank to repurchase the affected securities at their original purchase price.

Late Monday, Barclays provided further explanation. ‘The provision for over-issuance of US securities is particularly sensitive to equity market movements, however, this would be expected to be substantially offset by hedging arrangements, including specific hedging and overall portfolio positioning,’ it said.

The company on Monday said it had found ‘one material weakness’ in its internal controls.

‘The material weakness that has been identified relates to a weakness in controls over the identification of external regulatory limits related to securities issuance and monitoring against these limits. As a result of this weakness, BBPLC issued securities in excess of the amount registered under the US shelf,’ it said.

Barclays, as announced in its first quarter results, set aside a £540 million provision as a result of the matter, £410 million post-tax.

At the other end of the large cap index, SSE tumbled 8.5%. Citi cut the electricity utility to ‘neutral’ from ‘buy’.

The US investment bank also cut electricity generator Drax to ‘sell’ from ‘neutral’. Shares in the FTSE 250-listed power generation firm slumped 12%.

Rising to the top of London’s mid-cap index was SSP, up 6.6%. The company, which operates food and beverage outlets in travel locations, reported a better first half.

Revenue in the six months ended March 31 was up more than three-fold to £803.2 million from £256.7 million a year earlier. Compared to financial 2019 levels, however, revenue was 36% lower.

SSP’s pretax loss was all but eliminated, narrowing to £2.3 million from £299.7 million.

The better top and bottom line figures were ‘driven by a recovery in passenger numbers, despite the impact of the spread of the Omicron variant in many of our markets in December and January’, SSP said.

‘The recovery has been led by leisure travellers, with business related travel recovering more slowly as expected. Encouragingly we have also seen increased spend per passenger in some markets reflecting the higher proportion of leisure travellers,’ SSP said.

Convenience foods maker Greencore added 3.5% as it reported stronger interim earnings and announced plans for a £50 million return to shareholders.

Revenue in the six months ended March 25 climbed 34% to £770.8 million from £577.1 million. Greencore swung to a pretax profit of £1.0 million from a £1.8 million loss.

‘The group is encouraged by the momentum in revenue and profit conversion in the first seven weeks of H2, in what continues to be a challenging environment and as the group enters its period of peak seasonal trading,’ Greencore said.

‘The group has now substantially recovered the significant input cost and other inflation incurred during Q1 and early Q2 through explicit price recovery mechanisms, constructive dialogue with customers, and operational efficiencies.’

The company unveiled plans for a £50 million ‘value return’ over the next two years, initially in the form of a share buyback.

One-time FTSE 250 stock Avon Protection was suffering another hefty share price slump. It was down 13% in early dealings.

Avon reported a swing to an interim loss and said its Chief Executive Paul McDonald will step down.

In the six months ended April 2, the personal protection company’s revenue was largely flat annually at $121.9 million from $122.0 million.

Avon swung to a pretax loss of $13.6 million from a $400,000 profit.

In addition, it said McDonald will step down after five years as CEO. He will leave at the end of the financial year, but will make himself available to support a new CEO’s transition.

The latest share price slide comes after a tough period for the company. Avon dropped out of the FTSE 250 in September last year, following an August guidance cut due to delayed deliveries. It then in October lowered its margin guidance further and in November started a review of its body armour business, deciding the month after to wind down the business.

Avon shares have fallen roughly 70% over the past 12 months.

Brent oil was quoted at $112.17 a barrel early Tuesday in London, down slightly from $112.23 late Monday. Gold edged up to $1,856.74 an ounce from $1,854.61.

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Issue Date: 24 May 2022