ADVFN Morning London Market Report: Monday 25 January 2021

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London open: Stocks edge lower as travel & leisure sector hit


London equity markets nudged lower in early trade on Monday, with travel and leisure stocks under the cosh as the prospect of tighter border restrictions and a prolonged lockdown weighed on sentiment.

At 0850 GMT, the FTSE 100 was down 0.2% at 6,681.91.

Spreadex analyst Connor Campbell said: “The UK markets are reflecting the tone of its officials. The government has struck an unusually pessimistic tone over the last few days. Learning from past mistakes, ministers have refused to make promises about when the UK will come out of its current lockdown, including refusing to commit to schools opening post-Easter.

“Monday is very much an outlier in terms of action this week. Tuesday sees the latest UK jobs report, Wednesday has the first Federal Reserve meeting not only of 2021, but the Biden administration, and Thursday gives investors a first look at the USA’s fourth quarter GDP performance.

“And that’s not to mention a stacked US earnings calendar, including Microsoft on Tuesday, and TeslaFacebook and Apple on Wednesday, the latter of which is potentially set for its first ever $100 billion-plus quarter.”

In equity markets, travel and leisure stocks bore the brunt of the selling, with British Airways owner IAG, engine maker Rolls-Royce, Premier Inn owner Whitbread, InterContinental Hotels, budget airline easyJet, travel company TUIWizz Air, Upper Crust Owner SPP, cruise operator Carnival and Cineworld all lower.

On the upside, Russian steelmaker Evraz was the standout gainer on the FTSE 100 after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan Cazenove.

TI Fluid Systems was also on the front foot after it said it was paying a first quarter interim dividend of 6.74 euro cents a share, but not a final payout for 2020 as it forecast adjusted EBIT margin to be “slightly better than expected”. The group said it expected to report revenue of approximately €2.8bn for the year to December 31. On a constant currency basis, it guided for 2020 revenue performance to be in line with the decline in global light vehicle production.



Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Evraz Plc +3.81% +19.60 534.60
2 Scottish Mortgage Investment Trust Plc +2.03% +26.00 1,305.00
3 Bunzl Plc +1.83% +44.00 2,452.00
4 Sage Group Plc +1.81% +11.00 618.00
5 Phoenix Group Holdings Plc +1.50% +10.40 705.80
6 Antofagasta Plc +1.30% +19.50 1,524.00
7 Rio Tinto Plc +1.26% +74.00 5,950.00
8 Ocado Group Plc +1.19% +32.00 2,722.00
9 St. James’s Place Plc +1.09% +13.00 1,201.00
10 Vodafone Group Plc +1.05% +1.34 128.68


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. -6.83% -10.35 141.25
2 Easyjet Plc -5.64% -44.00 736.60
3 Rolls-royce Holdings Plc -5.33% -5.49 97.46
4 Carnival Plc -4.22% -53.50 1,214.00
5 Compass Group Plc -2.83% -39.50 1,355.00
6 Intercontinental Hotels Group Plc -2.76% -131.00 4,616.00
7 Burberry Group Plc -2.39% -42.00 1,717.50
8 Land Securities Group Plc -2.27% -14.40 619.90
9 Itv Plc -2.25% -2.40 104.05
10 Royal Dutch Shell Plc -1.54% -21.00 1,338.60


Europe open: Earnings help shares edge higher in subdued trade

European shares were slightly higher on a subdued Monday morning, lifted by upbeat earnings reports as investors also eyed results from US tech heavyweights this week.

The pan-European STOXX 600 index rose 0.24% in early trade. Investor optimism was tempered by tougher lockdowns and the emergence of new strains of the coronavirus from South Africa and Brazil appearing in the UK and Germany respectively.

London’s FTSE 100 was 0.22% lower as the government was atypically blunt about the date of any relaxation of lockdown measures.

“UK markets are reflecting the tone of its officials. The government has struck an unusually pessimistic tone over the last few days. Learning from past mistakes, ministers have refused to make promises about when the UK will come out of its current lockdown, including refusing to commit to schools opening post-Easter,” said Spreadex analyst Connor Campbell.

“At the moment the day’s Covid-led quiet is set to extend into the American session. The Dow Jones is heading for a 70 point rise this afternoon, one that would put it back above 31,050.”

AppleMicrosoft and Facebook all have results out this week, along with American ExpressBoeingTesla and McDonald’s.

In equity news, Dutch technology investor Prosus led the gainers with a 6.39% rise, while compatriot Philips rose 2.3% as it reported a 7% increase in fourth-quarter core profit.

Shares in Siemens Energy rose after the company swung to a first quarter core profit.

On the downside, the lack of any vision on a recovery from the pandemic continued to batter travel stocks, with aircraft engine maker Rolls-Royce down 6.48%.

Budget carriers easyJet and Ryanair were both down by more than 5.5%, while cruise ship operator Carnival, holiday operator TUITrainlineAccor and Frankfurt airport operator Fraport were also in the red.


Monday newspaper round-up: Kickstart scheme, Eurostar, BoE, HSBC

The economic impact of Covid will leave Boris Johnson’s government with a costly “double challenge” to level-up the north and Midlands while protecting the affluent towns and cities in southern England suffering most job losses, according to a report. Warning that the prime minister’s election promise to rebalance Britain’s lopsided economy had been made four times harder by the pandemic, the Centre for Cities said a dual approach to the post-Covid recovery was required. – Guardian

British businesses that export to the continent are being encouraged by government trade advisers to set up separate companies inside the EU in order to get around extra charges, paperwork and taxes resulting from Brexit, the Observer can reveal. In an extraordinary twist to the Brexit saga, UK small businesses are being told by advisers working for the Department for International Trade (DIT) that the best way to circumvent border issues and VAT problems that have been piling up since 1 January is to register new firms within the EU single market, from where they can distribute their goods far more freely. – Guardian

Ministers are under mounting pressure to further extend the Government’s £2bn scheme to tackle youth unemployment despite throwing it open to more employers today. The Kickstart scheme, which offers paid six-month placements to 16 to 24-year-olds claiming universal credit, was launched in November after being unveiled by the Chancellor, Rishi Sunak, last July. – Telegraph

The potential collapse of Eurostar risks costing taxpayers £80m under a complex legal agreement that leaves Britain exposed to the operator’s financial plight. Costs to run on a 67-mile stretch of railway between London St Pancras and the Channel Tunnel can be transferred from Eurostar to a domestic operator whose costs are funded by the Government, The Daily Telegraph has learnt. The current legal arrangement allows for a shortfall of up to £10m to be transferred to operator Southeastern every six months between now and 2025. This means the Exchequer could be on the hook for £80m of costs if a rescue deal cannot be agreed. – Telegraph

The Bank of England is under pressure to rethink its financial backing of oil and gas companies after being warned by an influential group of MPs that it risks creating a “moral hazard”. The Commons’ environmental audit committee has written to Andrew Bailey, governor of the Bank, warning that the institution threatens to undermine Britain’s efforts to tackle climate change by buying bonds issued by oil and gas companies. – The Times

A parliamentary inquiry into HSBC’s relationship with Beijing will look at allegations that a Chinese executive was protected from accusations of sexual assault by his role as a senior Communist Party official. The allegations are part of a dossier compiled for the foreign affairs select committee before a hearing this week at which Noel Quinn, HSBC’s chief executive, and Colin Bell, its head of compliance, will be questioned about the bank’s freezing of the account of a Hong Kong pro-democracy activist. – The Times


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