ADVFN Morning London Market Report: Wednesday 6 January 2021

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London open: Stocks rise as investors eye US politics


London equity markets rose in early trade on Wednesday, with oil stocks lending support, as investors bet on a Democratic win in a US Senate run-off election in Georgia.

At 0900 GMT, the FTSE 100 was up 0.9% at 6,668.98.

Spreadex analyst Connor Campbell said: “With Saudi Arabia agreeing to a cut in output, oil was able to strike an 11-month high, prompting some rather larger gains for BP, up 4.4%, and Shell, rising 2.5%. And when those giants are in a good mood it tends to bode well for the FTSE – the UK index rose close to 1%, returning to the 10-month peak it fell from on Monday following the announcement of Lockdown 3.0.

“It seems that investors have fully moved past Boris Johnson’s latest restrictions, even if they are the most severe since the initial lockdown in March 2020. Overfamiliarity tends to breed apathy in the markets, and that is just as true of covid-19 headlines – which are more alarming now than they have been at any point in the pandemic – as it is of lockdowns. That and it appears the pull of the New Year’s vaccine hopes are stronger than any concerns over the economic impact of these fresh measures.”

Campbell said the US Senate election results coming out of Georgia were also playing their part in the FTSE’s gains. He noted that victory has already been called for Democrat Raphael Warnock over Republican Kelly Loeffler, while in the other race Jon Ossoff currently leads against the incumbent David Perdue.

Campbell said this was the ideal outcome for investors, with a Democrat-controlled Senate able to produce a far more substantial stimulus package than, for example, the bill agreed before Christmas.

In equity markets, banks were the standout gainers, with Standard CharteredHSBCBarclaysNatWest and Lloyds all firmer.

They were closely followed by oil stocks, while High Street bakery chain Greggs surged after it said its sales decline had slowed but warned that profits would not return to pre-Covid levels until 2022 at the earliest as it forecast a £15m loss this year and revealed 820 job losses.

Informa rose after it said 2020 results would be in line with guidance as the company’s subscription businesses helped offset the impact of Covid-19 on its events operations. Annual revenue will be between £1.65bn and £1.68bn and adjusted operating profit will be £250m-£270m, it said.

Marks & Spencer was in the black following reports it is close to buying Jaeger, the loss-making fashion brand hit by the Covid-19 crisis.

Elsewhere, Vodafone was boosted by an upgrade to ‘buy’ at Berenberg.


Top 10 FTSE 100 Risers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Standard Chartered Plc +5.54% +25.80 491.90
2 Hsbc Holdings Plc +5.22% +19.75 398.35
3 Crh Plc +4.72% +148.00 3,283.00
4 Bp Plc +4.50% +12.25 284.75
5 Barclays Plc +4.41% +6.32 149.52
6 Lloyds Banking Group Plc +3.18% +1.12 36.33
7 Royal Dutch Shell Plc +3.17% +42.40 1,380.00
8 Wpp Plc +2.99% +23.20 800.20
9 Royal Dutch Shell Plc +2.57% +35.80 1,427.40
10 Centrica Plc +2.41% +1.15 48.94


Top 10 FTSE 100 Fallers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Bunzl Plc -2.14% -54.00 2,468.00
2 Bae Systems Plc -1.90% -9.50 491.30
3 British American Tobacco Plc -1.60% -44.50 2,744.00
4 Experian Plc -1.54% -44.00 2,806.00
5 Intertek Group Plc -1.52% -88.00 5,714.00
6 Fresnillo Plc -1.49% -18.50 1,221.50
7 Ocado Group Plc -1.46% -35.00 2,361.00
8 Spirax-sarco Engineering Plc -1.35% -155.00 11,330.00
9 London Stock Exchange Group Plc -1.33% -120.00 8,916.00
10 Croda International Plc -1.24% -82.00 6,552.00


US close: Stocks end session in the green following solid manufacturing data

Wall Street stocks closed higher on Tuesday following a sharp sell-off in the previous session, driven by some stronger than expected manufacturing data.

At the close, the Dow Jones Industrial Average was up 0.55% at 30,391.60, while the S&P 500 was 0.71% firmer at 3,726.86 and the Nasdaq Composite saw out the session 0.95% stronger at 12,818.96.

The Dow closed 167.71 points higher on Tuesday, cutting into losses recorded in the previous session.

Yesterday’s sell-off was driven by today’s Georgia runoff elections, which will ascertain whether or not the Republican Party can hold on to control in the US Senate, with fears that increased tax rates and more progressive policies could weigh on markets if Democrats gain control of the Senate weighing on sentiment.

England’s move to impose a third Covid-19 lockdown amid worries of a more transmissible variant of the coronavirus has also rattled markets, with New York state confirming its first case of the new strain on Monday.

The US has now recorded more than 21.35m cases of the coronavirus, claiming the lives of 362,194 Americans in the process.

On the macro front, the Institute for Supply Management‘s New York index surged 17.1 points to 61.3 in December, gaining back most of the loss reported in November. As a result of the sharp improvement in current business conditions, the six-month outlook index also grew to a 16-month high of 70.7 points.

Elsewhere, manufacturing activity rose to its highest level in more than two years in December, according to the Institute for Supply Management, as last month’s index of national factory activity rebounded to 60.7 – the highest level since August 2018. Expectations on the Street were for a print of 56.6, down from 57.5 in November, with much the surprise rebound in the index due to an increase in the survey’s measure of supplier deliveries to a 67.6 from 61.7.

In corporate news, GM saw domestic sales rise 4.8% in the last three months of 2020 as retail sales for the auto industry as a whole returned to pre-pandemic levels in Q4.


Wednesday newspaper round-up: UK car sales, British bosses, deficit, Paperchase

The coronavirus pandemic pushed UK car sales in 2020 down to the lowest level since 1992, the biggest annual slump since the second world war despite surging sales of electric cars, according to industry data. Sales fell by 29% during the year to about 1.63m, preliminary figures from the Society of Motor Manufacturers and Traders (SMMT) showed. – Guardian

Bosses of top British companies will have made more money by teatime on Wednesday than the average UK worker will earn in the entire year, according to an independent analysis of the vast gap in pay between chief executives and everyone else. The chief executives of FTSE 100 companies are paid a median average of £3.6m a year, which works out at 115 times the £31,461 collected by full-time UK workers on average, according to research by the High Pay Centre thinktank. – Guardian

Britain is on course to borrow a record £450bn this year after Boris Johnson plunged the country back into a national lockdown, economists have warned. The latest Covid shutdown looks set to shatter the Office for Budget Responsibility’s £394bn borrowing forecast for the current financial year, made just six weeks ago. It will raise fresh fears that future generations will be saddled with a massive burden of state debt. – Telegraph

Paperchase is on the brink of becoming the first high street victim of Covid-19 this year as England’s third lockdown in less than 12 months threatens a fresh wave of business failures. About 1,500 jobs are at risk at the stationery and greetings card retailer after it filed notice to appoint administrators from PWC. – The Times

Business groups have warned that Rishi Sunak’s latest support package will not be enough to help millions of businesses and self-employed people to survive the latest lockdown. Businesses in the retail, hospitality and leisure sectors are to receive one-off grants worth a combined £4 billion to help them through the latest stage of the Covid-19 pandemic, but the chancellor has been told that the help will be insufficient to prevent swathes of people from losing their livelihoods. – The Times


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