London stocks were off earlier highs but still in the black by midday on Tuesday, recovering some ground following heavy losses in the previous session but with rising Covid cases still weighing on investors’ minds.
The FTSE 100 was up 0.5% at 6,875.84.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Although bargain hunters will be sniffing around, nervousness is still largely the sentiment rippling through the markets, as concerns are growing that higher infection rates will bring about a fresh economic slowdown.
“It isn’t just the spread of new variants causing jitters, rising tensions between the US and China are also a worry, after the Biden administration accused Beijing of being behind the hack of Microsoft’s exchange email server software. As China grows increasingly isolated, it’s sparked fresh worries that global trade will suffer as a consequence.”
In equity markets, housebuilders were among the top performers. IG market analyst Chris Beauchamp said: “Updates from the sector have been rosy” over the past few months, providing a positive backdrop to the shares, and with the sector down some 13% from its peak in April it looks like the time is ripe to go shopping in the likes of Persimmon and Barratt Developments.”
Elsewhere, some of the stocks that were hit hardest on Monday were the standout gainers. Engine maker Rolls-Royce, InterContinental Hotels, broadcaster ITV, Cineworld, Tui and easyJet were all higher.
InterContinental Hotels was also boosted by an upgrade to ‘buy’ at Stifel, while easyJet was in focus after the budget airline said it had reduced cash burn amid continuing Covid restrictions as it reported a £318m third-quarter loss.
Rolls-Royce, meanwhile, was lifted by a research note from Citi, which said the shares offer “significant” long-term value.
Elsewhere, Transact owner IntegraFin was higher after it said third-quarter funds under direction passed £50bn for the first time amid positive equity markets, rising 7.2% over the previous quarter.
Morrisons was in the spotlight as it emerged that US private equity firm Apollo Global Management was in talks with Fortress Investment Group to join its bid for the supermarket chain. Apollo said it would not make an offer for Morrisons on its own.
