ADVFN Morning London Market Report: Thursday 14 January 2021

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London open: Stocks edge up amid deluge of corporate news


London stocks edged higher in early trade on Thursday as investors waded through a deluge of corporate releases, amid expectations that US President-elect Joe Biden will unveil a Covid-19 relief package.

At 0845 GMT, the FTSE 100 was up 0.3% at 6,765.94, with Biden set to announce a $2 trillion relief bill, according to reports. This comes after Donald Trump was impeached for the second time, for inciting violence at the Capitol Hill riots.

Spreadex analyst Connor Campbell said: “Though the uncertainty surrounding Donald Trump – who just became the first President in history to be impeached twice – remains, the prospect of Joe Biden’s Covid-19 stimulus plan started to warm up the Dow Jones futures. The incoming President is set to reveal his package this Thursday, setting the Dow up for a 110-point, record high-teasing rise.”

On the corporate front, investors were sinking their teeth into a raft of updates, with TescoTaylor WimpeyAssociated British Foods and Whitbread among the big names reporting.

AB Foods said Primark will lose an extra £355m in sales due under new restrictions to control the spread of Covid-19 in the UK.

Meanwhile, Tesco stuck to its guidance for annual results after a 6.8% increase in Christmas sales helped offset an £85m increase in Covid-related costs. The company said retail operating profit is likely to be at least the same as in 2019-20 excluding the cost of repaying business rates relief.

Housebuilder Taylor Wimpey said its 2020 results will be in line with market expectations despite the impact of the pandemic.

Premier Inn owner Whitbread warned of a “challenging” trading environment, after the latest round of lockdown restrictions caused accommodation sales to plummet by more than half.

Dunelm shares slid slid as it reported a spike in second-quarter sales, boosted by strong demand for homewares, but warned of a more uncertain outlook following the latest round of lockdown restrictions.

Just Group surged to the top of the FTSE 250 after it said retirement income sales for 2020 rose 12% to £2.15bn.

Elsewhere, B&M European Value RetailerSage and SSE were all weaker as their stock went ex-dividend.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Tui Ag +4.32% +15.80 381.20
2 Carnival Plc +4.01% +50.00 1,297.00
3 Centrica Plc +3.01% +1.49 51.06
4 Easyjet Plc +2.49% +19.00 781.80
5 Whitbread Plc +2.39% +73.00 3,133.00
6 Micro Focus International Plc +2.11% +8.40 405.70
7 Segro Plc +2.10% +20.00 970.80
8 Bhp Group Plc +2.02% +43.00 2,171.00
9 Smurfit Kappa Group Plc +1.86% +68.00 3,728.00
10 International Consolidated Airlines Group S.a. +1.84% +2.80 155.30


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Sage Group Plc -2.79% -15.80 549.80
2 Sse Plc -2.09% -33.00 1,543.50
3 Taylor Wimpey Plc -1.83% -2.95 158.05
4 Rentokil Initial Plc -1.65% -8.80 524.20
5 Bunzl Plc -1.65% -41.00 2,450.00
6 Tesco Plc -0.99% -2.40 239.70
7 Ocado Group Plc -0.93% -24.00 2,553.00
8 Spirax-sarco Engineering Plc -0.88% -100.00 11,310.00
9 Intertek Group Plc -0.85% -48.00 5,604.00
10 Ashtead Group Plc -0.82% -30.00 3,645.00


Europe open: Shares higher on China exports, US stimulus hopes

European shares opened higher on Thursday, driven by positive economic data from China and continuing hopes of a larger US fiscal stimulus package under incoming President Joe Biden.

The pan-European STOXX 600 index rose 0.39% while Germany’s DAX index was up 0.4%.

Biden is expected to outline his plans for the economy later on Thursday, with reports suggesting he could propose $2 trn in stimulus.

In Asia, China’s December exports grew more than expected as coronavirus disruptions around the world fuelled demand for Chinese goods.

In equity news, supermarket chain Carrefour fell 6% after the French government raised concerns about a possible merger with Canadian convenience-store operator Alimentation Couche-Tard.

Shares in Italian-American carmaker Fiat Chrysler fell after the company on Wednesday said the payment of a planned €2.9bn special dividend as part of its merger with France’s PSA had “become unconditional”.

The special dividend, worth 1.84 euros per share, will be paid on Jan. 29, Fiat Chrysler (FCA) said in a statement.

Centrica shares rose after the company said it expected annual earnings to beat expectations but British Gas’s owner said it was cautious about the outlook for energy demand and bad debts.

Shares in semiconductor equipment makers ASMI and ASML were higher after Barclays boosted its price target on the stocks.


US close: Stocks mixed as House moves to impeach Trump

Wall Street stocks turned in a mixed performance on Wednesday after the majority of the House of Representatives voted to impeach the President for inciting last week’s deadly riot at the Capitol Building.

At the close, the Dow Jones was down 0.03% at 31,060.47, while the S&P 500 was 0.23% firmer at 3,809.84 and the Nasdaq Composite saw out the session 0.43% stronger at 13,128.95.

The Dow closed 8.22 points lower on Wednesday, slightly cutting into gains recorded in the previous session.

Market participants kept a keen eye on the December consumer price index report for any hints about rising inflation, which could potentially drive already inflated rates even higher.

The report revealed that the cost of living in the US rose a bit more quickly than expected at the end of 2020, mainly due to a jump in energy costs, although price pressures at the ‘core’ level remained subdued.

According to the Department of Labor, in seasonally adjusted terms the US consumer price index advanced at a month-on-month pace of 0.4%, which pushed the year-on-year rate of price increases to 1.4%. Economists had forecast a rise from 1.2% for November to 1.4% last month.

Treasury rates eased from highs, with the benchmark 10-year note yield falling more than 5 basis points to 1.092%.

Also in focus, the House of Representatives voted to impeach Trump for a second time following last week’s events in Washington – making him the first president impeached by the House twice.

House majority leader Steny Hoyer rejected Republicans’ arguments that an impeachment would only further divide the US after the president incited the violent mob to storm the Capitol Building, while the President called on Americans to help him ease political tensions.

Once the House sends the impeachment article to the Senate, the upper chamber will be forced to quickly start a trial before Trump leaves office next week.

On the macro front, as mortgage rates remain at all-time lows, applications for home loans reached their highest level since March, according to the Mortgage Bankers Association, with mortgage applications soaring 16.7% week-on-week, in the seven days ended 8 January.

Also in data news, the Treasury Department said the US budget deficit rose 60.7% in first three months of the budget year to a record of $572.9bn.

No major corporate earnings were released on Wednesday.


Thursday newspaper round-up: Unilever, high streets, Carillion, property funds

The boss of Unilever, one of the UK’s biggest companies, has said his office workers will never return to their desks five days a week, in the latest indication that coronavirus will transform modern working life. Alan Jope, the chief executive of the consumer goods group, said the company would also encourage all of its employees to receive vaccinations against Covid-19, but would stop short of making jabs mandatory. Employees who opt not to be vaccinated, however, will face mandatory testing. – Guardian

England’s high streets could lose up to 400,000 retail jobs as a result of more people working from home and shopping online after the coronavirus pandemic, according to a report, with affluent towns in the south among the most vulnerable. Out of the 109 towns and cities studied by the accountancy firm KPMG, Bracknell in the London commuter belt was judged to be most at risk of having the greatest declines in retail employment as a share of local economic activity. – Guardian

Eight former Carillion bosses could be banned from serving as directors for up to 15 years after ministers launched legal action over the contractor’s collapse in 2018. The outsourcer’s former chairman, two chief executives, two finance directors and three non-executives could be disqualified under proceedings brought by Kwasi Kwarteng, Business ­Secretary. – Telegraph

Property funds suffered £1.1 billion of outflows last year, despite many of the biggest suspending dealing for months as the pandemic took hold. Investors who had been prevented from withdrawing funds rushed for the exit later in the year, according to Calastone, a fund network. Outflows hit £315 million in October, the third-worst month on record, and fell to £263 million in November and £224 million in December. – The Times

The death of Sir David Barclay has opened the door to a sale of the Telegraph newspapers, City insiders believe. One analyst said that potential buyers would be exploring bids knowing that Sir David was more enthusiastic about the newspaper business than his brother. Another said that a recovery in the newspaper business would have suitors “dusting off their valuation models”. – The Times


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