ADVFN Morning London Market Report: Wednesday 13 January 2021

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London open: Stocks little changed; Just Eat in the red

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London stocks were little changed in early trade on Wednesday, with investors sifting through a raft of corporate updates amid ongoing worries about the Covid-19 crisis, and ahead of a vote on US President Donald Trump’s impeachment.

At 0850 GMT, the FTSE 100 was up 0.1% at 6,759.87, while sterling was 0.2% higher against the dollar at 1.3694, having risen sharply in the previous session after Bank of England Governor Andrew Bailey cautioned over negative interest rates.

Neil Wilson, chief market analyst at Markets.com, said: “European stock markets were flat in early trade on Wednesday after a mildly positive session on Wall Street and mixed bag in Asia. Reflationary pressures continued as US 10-year rates rose close to 1.2% and the 2s10s curve steepened to its widest since May 2017. Equity markets are coming off record highs and the chop sideways reflects a degree of uncertainty as investors pick their way through the minefield of cases, vaccines, stimulus, reflation and an upcoming earnings season.

“Coronavirus cases are picking up in China, raising concerns about a fresh wave in Asia’s largest economic driver. Chinese stocks were lower, while shares in HSBC and Standard Chartered led the decliners on the FTSE 100 at the open. But progress in vaccinating populations in the UK and US, with Europe moving more slowly but still in the right direction, continues to underpin a broadly positive risk outlook, even if valuations are stretched and rising rates could cause trouble down the line. Investors are probably now looking for a bit of a consolidation and some more visibility over what is coming over the hill in terms of stimulus and vaccines.”

In equity marketsJust Eat Takeaway fell even as it said revenue rose by more than 50% in 2020 after UK delivery orders increased 387% in the fourth quarter.

Spreadex analyst Connor Campbell said that while the results might look good at a glance, growth in the second half of 2020 came at a cost, with underlying profit margins dropping from 42% in H1 to 10% for the full year, “reflecting the substantial investments made in Q4”.

“It was this disclaimer that caused investors to send back their order,” he said.

Persimmon lost ground as the housebuilder reported a drop in full-year completions and group revenues, while PageGroup declined after it said fourth-quarter profit fell by a fifth as tough conditions and Brexit uncertainty in the UK weighed on the recruitment company’s performance.

On the upside, Howden Joinery gained as it lifted profits guidance after a better-than-expected performance in the final weeks of the year as locked down Britons spent more time improving their homes during the pandemic.

Gambling firm William Hill nudged up after it said net annual revenue fell 16% to £1.32bn, reflecting the impact of betting shop closures during the Covid-19 pandemic. The company, which is being taken over by US giant Caesars Entertainment, reported a 9% rise in fourth-quarter net revenue.

In broker note action, Intertek was lifted by an upgrade to ‘hold’ at HSBC, while Electrocomponents and Ashtead were both higher after upgrades to ‘buy’ by the same outfit.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Next Plc +2.58% +198.00 7,868.00
2 Dcc Plc +2.33% +130.00 5,700.00
3 Ocado Group Plc +2.17% +54.00 2,543.00
4 Smith & Nephew Plc +2.05% +31.50 1,564.50
5 Vodafone Group Plc +1.99% +2.50 128.20
6 Sainsbury (j) Plc +1.74% +4.10 239.30
7 Bp Plc +1.66% +5.05 310.05
8 Pearson Plc +1.64% +11.00 682.40
9 Spirax-sarco Engineering Plc +1.55% +175.00 11,470.00
10 National Grid Plc +1.43% +12.20 868.20

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. -2.56% -4.05 153.85
2 Persimmon Plc -2.33% -65.00 2,720.00
3 Hsbc Holdings Plc -2.18% -9.00 403.80
4 Itv Plc -1.84% -2.05 109.65
5 Whitbread Plc -1.78% -55.00 3,040.00
6 Rio Tinto Plc -1.32% -81.00 6,047.00
7 Evraz Plc -1.28% -6.50 499.90
8 Barclays Plc -1.27% -1.96 152.28
9 Rolls-royce Holdings Plc -1.16% -1.25 106.50
10 Wpp Plc -1.11% -9.00 803.60

 

Europe open: Shares muted as investors look for direction

European shares were subdued on Wednesday with a profit warning from Danish wind farm developer Oersted and worries over the rise in Covid-19 cases dragging on sentiment.

The pan-European Stoxx 600 index was flat in early trade, with Continental bourses muted. Germany’s DAX was slightly lower as the government said it would not be able to lift all coronavirus restrictions at the start of February as planned.

Investors were also eyeing US President-elect Joe Biden plans for a stimulus package ahead of his inauguration next week.

CMC Markets analyst David Madden said a “significant portion” of the share gains last week were on the back of stimulus hopes, “one could argue that a lot of the good news has already been factored into the price of equities”.

“Biden is keen to invest in infrastructure and green energy but there are worries that the new administration will tighten regulation for the tech sector. Hence the NASDAQ 100’s underwhelming performance lately.”

In equity news, Oersted slumped 7.9% on warning a return to more normal wind speeds this year would hit operating earnings.

Carrefour gained 7.3% as Canadian convenience-store operator Alimentation Couche-Tard said it had approached Europe’s biggest retailer to discuss a merger. Shares in rival French supermarket Casino jumped 6.4%.

Shares in Spanish telecom company Telefonica rose 9% after it agreed to sell its mobile phone masts in Europe and Latin America to US-based telecom infrastructure operator American Towers for €7.7bn in cash.

Howden Joinery shares rose as the company lifted profits guidance after a better-than-expected performance in the final weeks of the year as locked down Britons spent more time improving their homes during the coronavirus pandemic.

Shares in online fast food ordering service Just Eat Takeway fell 4.5% despite reporting revenue rising by more than half in 2020 after UK delivery orders jumped almost fivefold in the fourth quarter.

 

US close: Markets finish higher as investors cheer vaccine roll-out

Wall Street’s main market gauges closed in the green on Tuesday, as investors cheered positive news regarding the roll-out of Covid-19 vaccines in the US, and in growing anticipation of further economic stimulus.

At the close, the Dow Jones Industrial Average was up 0.19% at 31,068.69, while the S&P 500 gained 0.04% to 3,801.19 and the Nasdaq Composite was 0.28% firmer at 13,072.43.

“Vaccine rollouts have been messy, but as more vaccines get regional approval, risk appetite is thriving as we get closer to the other side of Covid-19,” said Edward Moya at Oanda.

According to Pantheon Macroeconomics, the pace of daily vaccinations in the States had climbed past 400,000, although a clip nearer 1.5 million to two million per day was needed to reach so-called ‘herd immunity’ by the spring.

Mergers and acquisitions activity was still making the headlines as medical supplies outfit Steris unveiled a takeover bid for rival Cantel Medical for $4.6bn, including debt.

There were also reports that online video conference software provider Zoom was looking to raise $1.5bn via a share sale.

Moderna stock was up 1% after the biotech outfit’s boss told a JP Morgan conference on Monday that its vaccine should offer at least a year’s worth of protection.

Banks were finding a bid after Citi upgraded its recommendation on shares of Bank of New York Mellon and PNC Financial to ‘neutral’ as well as thanks to the steeper Treasury curve.

Back on the health front, concerned with what some were labelling as too slow a roll-out of vaccine, the outgoing Trump administration was set to encourage was reportedly set to encourage state officials to broaden access to vaccines to all Americans over 65 years of age, Axios reported.

The National Federation of Independent Business‘ index of small business confidence fell to 95.9 in December from 101.4 for the month before, well below the consensus, 100.3.

Ian Shepherdson at Pantheon Macroeconomics put the drop down chiefly to Donald Trump’s election defeat.

 

Wednesday newspaper round-up: Morrisons, property market, freight costs

People who were trapped in poverty before the pandemic have suffered the most financial damage during the crisis, according to a report warning the government that more support is needed to help hard-pressed families. The Joseph Rowntree Foundation (JRF) said those who had been struggling to make ends meet before March last year were more likely to work in precarious jobs or sectors of the economy that had been hardest hit by lockdowns. – Guardian

Morrisons has become the first UK supermarket to break the £10 an hour pay barrier just as the spotlight is being shone on poor pay levels in an industry where workers are in the frontline of the pandemic. The Bradford-based supermarket said it would guarantee pay of at least £10 an hour with the new deal, which starts in April, ushering in a significant pay increase for nearly 96,000 colleagues. Its minimum hourly pay now stands at £9.20 an hour. – Guardian

The end of the stamp duty holiday will leave hundreds of thousands of buyers poorer and bring the housing market boom to a crashing halt, experts have warned. Campaigners are calling on Chancellor Rishi Sunak to extend the tax break from its current end date of March 31 to prevent chaos from engulfing the market and derailing Britain’s post-Covid recovery. – Telegraph

The cost of shipping goods from Europe to the UK has risen sharply this year, raising the prospect of higher prices for French cheese, German sausages and other imports together worth tens of billions of pounds. The average cost of transporting a lorryload of goods to Britain from Germany was 26 per cent higher in the first week of 2021 compared with the average for the third quarter of last year, according to Transporeon, which tracks freight flows. – The Times

Investors in the failed Woodford income fund have missed out on a multimillion-dollar payout from the $1.5 billion takeover of Kymab, the largest acquisition of a private UK biotechnology company. Sanofi, the French drugs group, agreed this week to purchase Kymab for an upfront payment of about $1.1 billion. The purchase price could rise by up to $350 million, depending on future milestones. – The Times

 

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