ADVFN Morning London Market Report: Thursday 22 January 2021

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London open: Stocks edge up amid Biden cheer


London stocks edged higher in early trade on Thursday, underpinned by stimulus hopes as investors welcomed the start of Joe Biden’s US presidency.

At 0850 GMT, the FTSE 100 was up 0.3% at 6,758.87, while sterling was 0.4% firmer against the dollar at 1.3707. The stronger pound was likely holding back the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.

Spreadex analyst Connor Campbell said: “Breaking in the Biden administration with a fresh all-time high, the Dow’s inauguration day gains fed into the European open this Thursday.

“The 46th President of the United States was aggressive in first few hours after taking office, announcing 17 executive actions, with 15 of those executive orders. These include reversing Trump’s Muslim travel ban, halting the construction of the US-Mexico border wall, and putting things in motion for the States to re-join the Paris climate agreement. Biden has also mandated the wearing of masks and social distancing in federal buildings and lands.

“It appears that Biden isn’t messing around. And it is exactly this purposeful and robust approach the markets were hoping for – especially if it leads to his $1.9 trillion covid-19 stimulus package escaping the Senate unscathed.”

Investors will also be eyeing the latest policy announcement from the European Central Bank, due at 1245 GMT. The Bank is widely expected to stand pat on policy but keep the door open to more stimulus.

In equity markets, software group Sage was the top gainer on the FTSE 100 after saying it traded in line with expectations in the first quarter as recurring revenue grew strongly. Total revenue rose 1.4% to £447m in the three months to the end of December from a year earlier as recurring revenue increased 4.7% to £408m.

Sainsburys was boosted by an upgrade to ‘hold’ from ‘sell’ at Berenberg, while Ocado gained after Berenberg bumped up its price target.

4imprint rallied after the direct marketer of promotional products said that full-year underlying pre-tax profit is set to be in line with the board’s expectations, as order intake continues to recover.

Brick maker Ibstock rose sharply after it saying it now expects to report adjusted EBITDA for 2020 “modestly above” previous guidance of £50m.

Pets at Home gained after it stuck to its outlook for annual results as the company posted an 18% increase in third-quarter revenue amid a boom in pet product sales.

On the downside, energy producer and explorer Energean slumped after it said delivery of first gas from its Israeli fields could slip by up to three months due to manpower shortages.

Hiscox was knocked lower by a downgrade to ‘hold’ at Jefferies.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Sage Group Plc +6.18% +35.40 608.40
2 Hsbc Holdings Plc +2.07% +8.45 416.45
3 Halma Plc +1.90% +48.00 2,574.00
4 Ferguson Plc +1.84% +166.00 9,186.00
5 Ocado Group Plc +1.63% +42.00 2,614.00
6 Kingfisher Plc +1.51% +4.00 269.40
7 Sainsbury (j) Plc +1.33% +3.20 243.40
8 Spirax-sarco Engineering Plc +1.25% +145.00 11,715.00
9 Persimmon Plc +1.06% +29.00 2,762.00
10 Ashtead Group Plc +1.00% +37.00 3,747.00

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Informa Plc -2.66% -14.40 527.40
2 Pearson Plc -2.28% -16.80 720.40
3 Rolls-royce Holdings Plc -2.14% -2.30 105.10
4 Bhp Group Plc -1.38% -30.00 2,139.50
5 Wpp Plc -1.28% -10.40 800.40
6 Carnival Plc -0.88% -11.50 1,292.50
7 British Land Company Plc -0.87% -3.90 444.20
8 Smith & Nephew Plc -0.87% -14.50 1,654.00
9 Rio Tinto Plc -0.83% -50.00 5,984.00
10 Royal Dutch Shell Plc -0.80% -11.40 1,406.60


Europe open: Shares up on US stimulus hopes as Biden takes charge

European stocks started Thursday with a spring in their step after the inauguration of new US President Joe Biden with investors now looking for an increased package of stimulus measures to boost the battered economy.

The pan-European STOXX 600 index rose 0.66% in early trade. Shares in Asian and Wall Street hit record highs after Biden took office on Wednesday and swiftly moved to reverse some of the isolationist policies of his predecessor included a return to the Paris climate change accord.

Biden announced 17 executive actions, including 15 executive orders, in his first hours, including reversing the Muslim travel ban, halting the construction of the US-Mexico border wall and mandated the wearing of masks and social distancing in federal buildings.

“It appears that Biden isn’t messing around. And it is exactly this purposeful and robust approach the markets were hoping for – especially if it leads to his $1.9trn Covid-19 stimulus package escaping the Senate unscathed,” said Spreadex analyst Connor Campbell.

Investors were also keeping an eye on the European Central Bank’s first meeting of the year and US jobless claims later in the day, with analysts guiding for a fall to 935,000 from 965,000.

In corporate news, Sage Group shares topped the gainers, up 5.5%, after the company said it traded in line with expectations in the first quarter as the business software group’s recurring revenue grew strongly.

Tool maker Sandvik rose after the firm reported better-than-expected quarterly earnings.

Spanish cellphone mast operator Cellnex and German telecoms group Deutsche Telekom were both higher after the duo announced a plan to combine their tower business in the Netherlands.


US close: Stocks finish firmer as Biden enters White House

Wall Street stocks closed in positive territory on Wednesday, as new president Joe Biden was sworn into office.

At the close, the Dow Jones Industrial Average was up 0.83% at 31,188.38, the S&P 500 added 1.39% to 3,851.85, and the Nasdaq Composite advanced 1.97% to 13,457.25.

The Dow closed 257.86 points higher on Wednesday, extending gains recorded on Donald Trump’s last full day in the Oval Office.

Wednesday’s primary focus was Biden’s inauguration as the 46th president of the United States, with him making a speech focussing on the need to bring the US together following the violent riot on Capitol Hill earlier in the month.

CMC Markets analyst David Madden said traders were in risk-on mode, given Biden’s keenness to stimulate the US economy.

“Last week, he announced a $1.9trn relief package, but the spending won’t stop there as he also has big infrastructure, energy and education investment plans,” he said.

“There is a view in the markets that more spending is in the pipeline, after all, Mr Biden will want to start his presidency on a positive note.”

Turning to the Covid-19 pandemic, the US had now recorded more than 24.8m cases of the coronavirus, claiming the lives of more than 411,500 Americans in the process.

On the macro front, mortgage applications in the US fell 1.9% in the week ended 15 January, according to the Mortgage Bankers Association.

Applications to refinance a home loan dropped 4.7%, but were up 87% year-on-year, while those to purchase a home rose 2.7% and were 15% higher than a year ago.

Elsewhere, homebuilder confidence unexpectedly fell in January, dragged down by rising Covid-19 cases and increased lumber prices.

The National Association of Housebuilders/Wells Fargo housing market index slipped to a reading of 83, down from 86 in December, short of expectations for a flat month-on-month reading of 86.

In the corporate space, Procter & Gamble shares reversed earlier gains to close down 1.25%, after the consumer goods giant raised its forecast as its earnings topped expectations.

Netflix soared 16.85% after the streaming giant hit 200 million subscribers, and said it was considering share buybacks.

Bank of New York Mellon skyrocketed down 7.25% after it said its quarterly profits had fallen on lower revenues, while Morgan Stanley slipped 0.24% after posting record profits on the back of a blowout trading quarter.

UnitedHealth slipped 0.38% even after it topped its fourth-quarter guidance and reaffirmed guidance for 2021, while United Airlines gained 0.96%, ahead of its earnings due after the closing bell.


Thursday newspaper round-up: Saga, supermarkets, new offices

Saga has become the first UK tour operator to tell cruise and holiday customers that they must be vaccinated to travel with them this summer. The over-50s travel firm, which has reported a surge in bookings since the vaccination programme was announced, is taking reservations on condition that customers are fully inoculated, with two shots where necessary, at least 14 days before departure. Passengers will also need to take a Covid test at the departure terminal. – Guardian

Parliament’s spending watchdog has called on the government to explain and fix issues with the tax system that have denied whole groups of freelancers and self-employed workers financial support during the coronavirus pandemic. The powerful cross-party public accounts committee (PAC) said some of the workforce had “not had a penny” from the government’s multibillion-pound support schemes despite repeat lockdowns blocking many from work, while some large companies had received taxpayer support and paid dividends to shareholders and high salaries to executives. – Guardian

Supermarket workers are battling a surge of violence as customers vent their rage over a new crackdown on face coverings, the boss of Co-op Food has said. Demands for staff to enforce mask-wearing and social distancing rules have created a major flashpoint for “abuse, threats and violence”, Jo Whitfield said, with thousands of incidents every week. – Telegraph

New offices and commercial properties will have to install better ventilation systems to help to reduce the spread of airborne diseases such as Covid-19, under government proposals. Offices would have to have systems that can provide fresh air at 50 per cent higher rates than the existing minimum standards. This would enable an “increased ventilation rate to be used during a period when infection rates are raised, such as in a future pandemic”, according to the consultation documents. – The Times

The founder of Monzo is to leave the challenger bank altogether at the end of the month, staff were told yesterday. Tom Blomfield was chief executive until May last year when he assumed the newly created role of president and resigned from the Monzo board. Founded in 2015, Monzo is one of the UK’s leading fintech start-ups and seeks to disrupt the retail banking industry. Its app allows customers to track their spending and to hold savings in different pots. – The Times


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