ADVFN Morning London Market Report: Tuesday 5 January 2021

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London open: Stocks in the black despite lockdown, ahead of Sunak statement


London stocks rose in early trade on Tuesday despite the imposition of a third national lockdown in England, as investors eyed a statement from Chancellor Rishi Sunak on a fresh business support package.

At 0840 GMT, the FTSE 100 was up 0.6% at 6,609.84, faring well considering England was set to endure another six weeks at least of lockdown.

Spreadex analyst Connor Campbell said: “Avoiding the collapse that greeted previous lockdown announcements, the return to the harshest measures in the UK nevertheless clipped the FTSE’s wings on Tuesday.

“At points on Monday, the UK index was up 2.9%, galloping to levels last seen at the start of March 2020 following the Oxford/AstraZeneca vaccine rollout. Then it was shot down by the announcement Boris Johnson would be addressing the nation to outline the latest set of restrictions.

“It shows how keen investors were to start 2021 on the front foot that the FTSE still managed to end Monday up 1.7% despite a fresh six-week lockdown (with the pound admittedly taking much of the flak).”

Campbell said sterling held up as well as it could, nudging 0.1% higher against the dollar but remaining unchanged against the euro. “Not great, given the extent of yesterday’s fall against both rival currencies,” he added.

“How the index and currency perform throughout the rest of the day may well come down to what additional support Chancellor Rishi Sunak announces this Tuesday, ideally at least a return to the kind of aid offered during Lockdown 1.0,” said Campbell.

In equity marketsNext surged after the retailer reported a smaller-than-expected drop in sales over Christmas and said online sales made up for almost all those lost in retail stores. In the nine weeks to 26 December, full price sales declined 1.1% on last year, coming in ahead of the retailer’s central guidance for an 8% drop in its October trading update.

Online sales during the period rose 38%, with UK online sales up 36%, while retail sales slumped 43%.

Supermarket chain Morrisons was also in the black after it reported a 9.3% rise in like-for-like sales over the key Christmas and New Year three-week period to January 3.

Softcat pushed higher after it said trading has remained positive since its first-quarter statement in mid-November and that it is ahead of where it expected to be, amid strong demand from its public sector customers.

Iron ore pellet producer Ferrexpo was also sharply higher after announcing a special interim dividend of 13.2 US cents, reflecting “the strong operational and financial performance of the group in 2020, and strong balance sheet”.

In broker note action, Royal Mail was boosted by an upgrade to ‘hold’ at Berenberg , while British Land and TI Fluid Systems were hit by downgrades at Morgan Stanley and JPMorgan, respectively.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Next Plc +7.99% +552.00 7,464.00
2 Royal Dutch Shell Plc +2.73% +35.60 1,337.80
3 Kingfisher Plc +2.72% +7.50 283.20
4 Royal Dutch Shell Plc +2.46% +31.00 1,289.60
5 Bp Plc +2.28% +5.80 260.30
6 Carnival Plc +2.19% +28.00 1,304.00
7 Micro Focus International Plc +2.17% +8.80 414.70
8 Dcc Plc +2.10% +112.00 5,454.00
9 Marks And Spencer Group Plc +1.79% +2.35 133.75
10 Rolls-royce Holdings Plc +1.74% +1.80 105.00


Top 10 FTSE 100 Fallers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Easyjet Plc -2.85% -21.80 743.00
2 Rentokil Initial Plc -1.48% -7.80 521.00
3 Evraz Plc -1.30% -6.40 485.70
4 Fresnillo Plc -1.28% -16.00 1,233.00
5 United Utilities Group Plc -1.25% -11.40 900.60
6 Associated British Foods Plc -1.17% -26.00 2,200.00
7 London Stock Exchange Group Plc -1.12% -104.00 9,158.00
8 Smurfit Kappa Group Plc -1.12% -40.00 3,542.00
9 National Grid Plc -1.04% -9.20 873.40
10 Severn Trent Plc -0.86% -20.00 2,316.00


US close: Dow Jones and S&P 500 turn in worst showing in more than two months

Wall Street stocks closed sharply lower on Monday as major indices recorded their worst performance in more than two months on the first day of trading for 2021.

At the close, the Dow Jones Industrial Average was down 1.25% at 30,223.89, while the S&P 500 was 1.48% weaker at 3,700.65 and the Nasdaq Composite saw out the session 1.47% softer at 12,698.45.

The Dow closed 382.59 points lower on Monday, reversing gains recorded on the final day of trading for 2020.

Traders were focussed on the US state of Georgia as the final two runoffs which will decide exactly who runs the Senate take place.

Although Democrats appear unlikely to be able to claim both remaining seats, the polls have turned in their favour of late as the president continues to search for a way to overturn November’s election result.

Also in focus was news that the rollout of multiple Covid-19 vaccines across the US had been slowed down due to supply constraints amid an ever-increasing number of new cases, with the US having now recorded more than 21.11m cases of Covid-19, claiming the lives of more than 360,078 Americans in the process.

Pharmaceutical giant Moderna raised the lower end of its 2021 forecasts for vaccine production by 100.0m doses to 600.0m.

On the macro front, US manufacturing activity accelerated at the fastest pace seen in six years during December amid the strongest pricing environment for goods producers since 2011 despite the Covid-19 pandemic. IHS Markit said its manufacturing PMI climbed to 57.1 in December, up from 56.7 in November and ahead of its flash reading of 56.5.

Elsewhere, US construction spending rose 0.9% month-on-month to a seasonally adjusted annual rate of $1.46trn in November, according to the Census Bureau, following an upwardly revised 1.6% growth in October. However, this figure was still slightly below market expectations of a 1.0% increase.

In the corporate space, Tesla shares closed 3.42% higher after delivering 180,570 electric vehicles last quarter, topping expectations.


Tuesday newspaper round-up: Aldi, Best Western, Post Offic

A leading thinktank has called for action to make Britain a fairer country after its research showed that the Covid-19 pandemic had led to greater inequality. The Institute for Fiscal Studies said the most vulnerable – those on lower incomes, the young, the least-educated and people from black, Asian and minority ethnic backgrounds – had been hit hardest by the crisis. – Guardian

Aldi UK has reported a record Christmas performance, with sales rising 10.6% year-on-year in the four weeks to 24 December boosted by demand for premium products and champagne. All UK supermarket groups benefited in the run-up to Christmas from unprecedented demand due to the Covid-19 pandemic, driven by a large part of the population working from home and restrictions on cafe, pub and restaurant openings. – Guardian

Best Western is spearheading a plan to turn as many as 500 hotels into “cottage hospitals” that could ease the pressure on the NHS as it reels from surging Covid cases. The reconfigured sites would handle pre-surgery assessments, IV treatments such as for antibiotics or dialysis as well as MRI and CTI scans and post-Covid recovery support, according to proposals sent to the Cabinet Office this week. – Telegraph

Thousands of businesses will be forced to sack staff or go bust without fresh financial support to get through a new national coronavirus lockdown, bosses have warned. On Monday evening Boris Johnson announced an imminent lockdown in England until at least the middle of February, implementing by far the strictest measures seen since March. – Telegraph

Two serving postmasters will join the board of the Post Office as it seeks to repair relations with local managers and move on from the IT scandal that led to some being wrongly imprisoned. The state-owned enterprise will appoint two new non-executive directors in the spring, in a move that it hailed as a “progressive” step to ensure that the views of its 8,000 postmasters are “directly reflected” at the top.- The Times


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