ADVFN Morning London Market Report: Tuesday 2 February 2021

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London open: Stocks rise but BP slumps on Q4 results

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London stocks edged higher in early trade on Tuesday, although oil giant BP was under the cosh after its fourth-quarter results.

At 0900 GMT, the FTSE 100 was up 0.5% at 6,497.01.

Spreadex analyst Connor Campbell said: “With silver continuing to retreat from yesterday’s 8-year highs, and as yet no new contender for the latest Reddit darling, the markets felt calmer, pushing ahead with their attempt to reclaim January’s heavy losses.

“It does seems that investors have very quickly set aside the fears that tanked January’s gains during the final sessions of the month. This despite a lack of material change in three of the key areas – Covid-19, the progress of the US stimulus package, Reddit-led volatility – that caused such conniptions last week. That’s a potential danger as the month progresses, though a swift and decisive move on the covid-19 relief bill would keep any other fears at bay.”

In corporate news, sales, marketing and support services company DCC rallied after it said third-quarter group operating profit was “strongly ahead” of the prior year.

Virgin Money was also in the black after saying it has aside another £726m in bad loan provisions in the first quarter to deal with the impact of the coronavirus pandemic. The lender said it had granted mortgage payment holidays on £12.1bn of loans at December 31, equivalent to around 21% of balances, compared with £11.9bn at its fiscal full-year.

Travel and leisure stocks gained, with Premier Inn owner WhitbreadInterContinental Hotels and cruise operator Carnival all higher.

On the downside, BP slid after fourth-quarter profits at the oil company fell to a worse-than-expected $115m as the coronavirus epidemic battered energy demand. The company reported a full-year loss of $5.7bn after writing down the value of oil and gas assets by $6.5bn in response to lower long-term energy prices forecasts.

Precious metals miners Fresnillo and Hochschild also lost their shine, having surged on Monday in tandem with silver prices.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Whitbread Plc +3.40% +97.00 2,947.00
2 Carnival Plc +2.99% +35.00 1,206.00
3 Intercontinental Hotels Group Plc +2.82% +130.00 4,737.00
4 Rolls-royce Holdings Plc +2.59% +2.44 96.54
5 Prudential Plc +2.47% +29.00 1,203.50
6 Ashtead Group Plc +2.34% +88.00 3,854.00
7 Melrose Industries Plc +2.25% +3.85 175.05
8 Diageo Plc +2.16% +63.50 3,006.00
9 Scottish Mortgage Investment Trust Plc +2.03% +26.00 1,306.00
10 Dcc Plc +2.00% +114.00 5,828.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Fresnillo Plc -4.37% -47.00 1,029.00
2 Bp Plc -3.73% -9.95 257.15
3 Pearson Plc -2.42% -18.60 748.60
4 Itv Plc -2.28% -2.50 107.00
5 Anglo American Plc -1.83% -45.50 2,446.00
6 Sainsbury (j) Plc -1.11% -2.70 239.60
7 Morrison (wm) Supermarkets Plc -1.08% -1.95 177.90
8 Glencore Plc -1.06% -2.65 247.25
9 Centrica Plc -1.04% -0.54 51.46
10 Reckitt Benckiser Group Plc -1.02% -64.00 6,232.00

 

Europe open: Shares higher on recovery hopes, strong Wall St session

European shares opened higher on Tuesday after strong US and Asia sessions overnight, driven by upbeat manufacturing survey data which fuelled hopes of a swift economic recovery.

The pan-European Stoxx 600 index rose 0.9% with all major regional bourses higher. Shares were also driven by news that French IT firm Atos had ended takeover talks with US rival DTC Technology.

Atos shares rose 4% after the firm said it has decided to stop talks on the potential $10bn acquisition.

In other corporate news, Fresenius Medical Care slumped 12% after the kidney dialysis firm warned its adjusted net profit would fall this year due to “accelerated Covid-19 related excess mortality of dialysis patients”.

BP shares fell 2.88% after its profit in the last quarter of 2020 missed analyst expectations of $440m , coming in at $115m due to weak energy demand and poor trading results.

Shares in Italian infrastructure group Atlantia rose on news that consortium led by Italian state lender Cassa Depositi e Prestiti asked for more time to submit “an improved and more compelling” binding bid for a stake in its motorway unit.

 

US close: Major indices shake off previous week’s volatility

Wall Street stocks closed higher on Monday as market participants shook off anxiety stemming from last week’s speculative retail trading mania.

At the close, the Dow Jones Industrial Average was up 0.76% at 30,211.91, while the S&P 500 was 1.61% firmer at 3,773.86 and the Nasdaq Composite saw out the session 2.55% stronger at 13,403.39.

The Dow closed 229.29 points higher on Monday, extending modest gains recorded in the final session of a volatile week for stocks.

In focus on Monday was news that ten Republican senators had pleaded with President Joe Biden to consider implement a smaller, more scaled back Covid-19 relief package than his current $1.9trn plan.

The opposition’s call came after House Speaker Nancy Pelosi stated the chamber would push to pass a budget resolution, the first step in approving the legislation through reconciliation without votes from the GOP.

Corporate earnings will be in focus again this week, with the likes of AlphabetAmazonSnapExxonBiogenPfizer and Chipotle set to update the market on their latest quarterly performances later in the week.

GameStop, the heavily-shorted stock at the centre of last week’s frenzied trading, closed 30% lower on Monday, as the Reddit-led trading boom has now seemingly spread to other areas of the market, with futures contracts for silver surging 11% – their biggest single-day jump in over a decade.

On the macro front, manufacturing sector activity in the US continued to surge ahead at the start of the year with the majority of respondents to a closely-followed survey reporting very strong demand. The Institute for Supply Management‘s factory sector purchasing managers’ index dipped from a December reading of 60.5 to 58.7 for January.

Elsewhere, IHS Markit‘s manufacturing PMI rose to 59.2 in January from 57.1 in December, slightly higher than the flash estimate and market expectations for a print of 59.1.

Lastly, US construction spending rose a modest 1% in December, according to the Commerce Department, as strength in home building offset continued weakness in non-residential construction. The increase follows a 1.1% gain in November.

 

Tuesday newspaper round-up: Northern Ireland, Tom Hayes, insurance firms

Brexit checks on animal and food products arriving into Belfast and Larne ports have been suspended amid fears over the safety of staff, Northern Ireland’s agriculture ministry has said. The decision came after Mid and East Antrim borough council agreed on Monday night to remove 12 of its staff at Larne port with immediate effect, following an “upsurge in sinister and menacing behaviour in recent weeks”. – Guardian

More than 200,000 households could face delays to their boiler repairs during some of the coldest weeks of winter as the GMB union calls to resume its British Gas strike from Friday. The union has called on its members working as field engineers for Britain’s largest energy supplier to down tools for another five days as part of a nation-wide response to the company’s “fire and rehire” plans. – Guardian

The Governor of the Bank of England and other senior regulators showed a “lack of judgment” by asking not to be named in a report into the City watchdog’s response to the London Capital and Finance investment scandal, MPs have been told. Andrew Bailey, who led the Financial Conduct Authority until last March, was one of three executives named in a damning report last month by Dame Elizabeth Gloster into the FCA’s handling of the LCF scandal. – Telegraph

The first person convicted by a jury for manipulating Libor has accused his former employer UBS of using him as a “negotiating pawn” during the scandal and pledged to clear his name just days after finishing a five-and-a-half year spell in prison. In his first interview since his release last Friday, Tom Hayes, 41, told The Times that he “absolutely” believed he would have his conviction for Libor-rigging overturned. – The Times

Insurance firms have been accused of “dragging their heels” over Covid-19 payouts, despite a Supreme Court judgment that is expected to pave the way for payments to tens of thousands of companies. Law firms representing claimants who believe they have a valid claim on their business interruption insurance policies say there is a fear that companies could go to the wall before they receive a settlement. – The Times

 

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