ADVFN Morning London Market Report: Monday 4 January 2021

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London open: Stocks rally on vaccine optimism, deal news

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London stocks rallied in early trade on Monday, kicking off the new year in style amid optimism over the latest Covid vaccine rollout, while deal news also provided a boost.

At 0900 GMT, the FTSE 100 was 2.2% higher at 6,603.23 despite worries about another national lockdown, while sterling was up 0.1% against the dollar at 1.3690.

Spreadex analyst Connor Campbell said: “Determined to make the New Year better than the last, the European indices opened the first trading day of 2021 with much fanfare this Monday.

“Despite the rapid increase in daily Covid-19 case numbers and the impending need for a new national lockdown – be it immediately, as urged by Keir Starmer, or in a couple of weeks, as suggested by Boris Johnson – the FTSE was the most bombastic of the major indices after the bell.

“Part of that will be overcompensation. Even with the Christmas Eve Brexit trade deal, the Covid situation in the UK prevented the FTSE from reaching the same all-time highs struck by the DAX and Dow Jones in the closing stages of 2020.”

Campbell attributed the gains to the rollout of the Oxford/AstraZeneca vaccine in the UK and “the continuation of 2021’s great hope for ending the coronavirus pandemic”.

“It is another step on the journey back to normality, and investors have seized upon it with all their might,” he said.

Investors were also digesting the latest data out of China, which showed the manufacturing industry expanded at its slowest pace in three months in December as rising costs put pressure on hiring of workers.

The Caixin/Markit manufacturing purchasing managers’ index dipped to 53.0 from 54.9, missing a consensus forecast of 54.8 compiled by Reuters. The reading was well above 50, which separates expansion and contraction.

Slower production weighed on the index, partly due to weaker growth in export sales. China’s huge manufacturing sector has recovered strongly from the Covid-19 crisis supported by strong exports but renewed restrictions in many export markets could hit demand for Chinese-made goods.

On home shores, Markit’s manufacturing PMI for December is due at 0930 GMT.

In corporate newsEntain surged after the Labdrokes owner rejected a proposed offer from its US partner MGM Resorts International valuing it at about £8.1bn. Entain said it had told MGMRI the proposal “significantly undervalues” the company. It has also asked for more information about the strategic rationale for combining the companies.

Neil Wilson, chief market analyst at Markets.com, said: “The market thinks MGM (or another) will be good for more. We knew the opening up of the US gaming market would be good news for UK firms with interests there and so it is proving. And it should be said the yanks would certainly prefer the Brits to stay off their turf.

“We should also note that good global businesses trading with a UK-listed discount to the share price remain attractive to foreign groups hungry for growth. Clarity around Brexit at long last may see more bids of this nature emerge.”

Precious metals miners were on the rise as gold prices shone, with FresnilloPolymetalHochschild and Centamin all higher.

Miners also gained, with AngloGlencoreBHP and Rio all up.

On the downside, banks and housebuilders lost ground, while Rolls-Royce fell after the Financial Times reported that the engine maker will be putting its UltraFan engine programme “on ice” when testing finishes in 2022.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Fresnillo Plc +8.01% +90.50 1,220.00
2 Tui Ag +8.01% +36.70 495.10
3 Anglo American Plc +4.78% +116.00 2,540.50
4 Glencore Plc +4.44% +10.35 243.35
5 Dcc Plc +4.44% +230.00 5,408.00
6 Bhp Group Plc +4.26% +82.00 2,007.00
7 Crh Plc +4.09% +125.00 3,183.00
8 Rio Tinto Plc +3.91% +214.00 5,684.00
9 Experian Plc +3.89% +108.00 2,885.00
10 Evraz Plc +3.80% +17.90 489.50

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Taylor Wimpey Plc -2.68% -4.45 161.35
2 Lloyds Banking Group Plc -2.57% -0.93 35.51
3 Easyjet Plc -1.49% -12.40 817.60
4 Barratt Developments Plc -1.49% -10.00 660.00
5 Rolls-royce Holdings Plc -1.35% -1.50 109.75
6 Barclays Plc -1.00% -1.46 145.22
7 Ocado Group Plc -0.83% -19.00 2,268.00
8 Marks And Spencer Group Plc -0.40% -0.55 135.75
9 Ferguson Plc -0.20% -18.00 8,866.00
10 Croda International Plc -0.15% -10.00 6,586.00

 

Monday newspaper round-up: Restaurant job losses, UK border, LV

UK restaurants and casual dining firms recorded almost 30,000 job losses in 2020 as the Covid-19 pandemic drove a 163% jump in redundancies. Data compiled by the Centre for Retail Research (CRR) revealed that 29,684 jobs were lost across fine dining, independent businesses and large multiple casual-dining chains during the year. – Guardian

Ministers are facing demands for more honesty and transparency over any logjams at the UK border in the wake of Britain’s exit from the EU, amid concerns that waves of disruption will last for six months. Several lorry drivers are understood to have been turned away at Dover for not having the right paperwork following the end of the Brexit transition period last week. It has caused concern among logistics and manufacturing companies that more severe problems could occur as trade flows increase later this month. – Guardian

The City’s trading relationship with the European Union will be subject to crunch talks this week as ministers race to secure a deal within two months. The UK is hurrying to nail down a plan for selling financial services across Europe after the Brexit trade deal failed to cover swathes of the banking and insurance sectors. Treasury ministers and civil servants are poised to meet with City lobby groups in days to map out a “memorandum of understanding” with the EU, the Mail on Sunday reported. – Telegraph

A £530 million plan to sell one of Britain’s biggest insurance mutuals is set to raise fresh concerns as it emerged that a key panel representing 340,000 policyholders initially vetoed it. The Times has learnt that the committee representing holders of LV= with-profits policies rejected the offer from Bain Capital, an American private equity group, in favour of a rival offer from Royal London, another mutual. – The Times

The private equity division of Lloyds Banking Group is backing the combination of two residential lettings companies to form a new national group with ambitions to grow. The merger brings together Linley & Simpson, which is focused on Yorkshire and already backed by Lloyds’ LDC division, with Lomond Capital, which owns a series of letting and estate agent brands across Britain. – The Times

 

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