ADVFN Morning London Market Report: Wednesday 3 February 2021

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London open: Stocks rise on vaccine, US stimulus hopes


London stocks rose in early trade on Wednesday, with sentiment underpinned by vaccine optimism and US stimulus hopes.

At 0845 GMT, the FTSE 100 was up 0.6% at 6,556.06.

Spreadex analyst Connor Campbell said markets were being lifted “by the same news that has been the bedrock of any growth seen in 2021”.

“There were multiple positive headlines related to vaccines. A study has shown that one dose of the Oxford/AstraZeneca preparation provides protection against Covid for at least three months, while cutting transmission by 67%. At the same time a partnership has been announced between AstraZeneca’s FTSE 100 rival GlaxoSmithKline and CureVac, to develop the new generation of vaccines to tackle covid-19 variants.

“On the stimulus front, the Senate voted 50 to 49 to begin the process of budget reconciliation, meaning the Democrats can push through the package without needing to bring 10 Republicans over to their side of the table. It’s the best option for the markets, as it should preserve the scale of the $1.9 trillion plan.

“Plenty, then, for investors to feel happy about. As long as they continue to keep the blinkers on regarding the short- and long-term economic impact of the pandemic.”

On the data front, investors will be eyeing Markit’s UK services PMI for January at 0930 GMT.

In equity marketsVodafone rallied as it said it was confident about the full-year outlook after its German business drove a return to organic growth in the third quarter.

Aviva advanced after an upgrade to ‘overweight’ at Morgan Stanley, while Upper Crust owner SSP was boosted by an upgrade to ‘buy’ at Berenberg.

Elsewhere, housebuilders Persimmon and Taylor Wimpey were lifted by upgrades to ‘overweight’ at Barclays, while Redrow was higher on the back of a positive note from JPMorgan.

GlaxoSmithKline ticked up after it and CureVac announced a new €150m collaboration to develop a vaccine to combat emerging variants of Covid-19.

Unite Group fell after it announced a three-week extension to its 50% student discount and said the move would cost it £6m in lost revenue. It was also hit by a downgrade to ‘underweight’ at Barclays.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Vodafone Group Plc +4.18% +5.32 132.70
2 Aviva Plc +2.88% +9.90 354.20
3 Persimmon Plc +2.48% +66.00 2,725.00
4 Compass Group Plc +2.28% +31.00 1,391.00
5 Whitbread Plc +2.19% +66.00 3,082.00
6 Easyjet Plc +2.02% +15.60 788.60
7 Taylor Wimpey Plc +1.75% +2.70 157.25
8 Wpp Plc +1.68% +13.40 809.40
9 Ocado Group Plc +1.68% +47.00 2,847.00
10 Prudential Plc +1.67% +20.00 1,217.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Rolls-royce Holdings Plc -2.66% -2.52 92.24
2 Bp Plc -1.24% -3.15 251.85
3 Royal Dutch Shell Plc -1.11% -14.60 1,302.20
4 Evraz Plc -1.09% -5.50 497.30
5 Fresnillo Plc -0.98% -10.00 1,014.00
6 Royal Dutch Shell Plc -0.77% -9.60 1,240.60
7 Melrose Industries Plc -0.62% -1.10 177.05
8 Bhp Group Plc -0.61% -12.50 2,023.00
9 Mondi Plc -0.61% -11.00 1,781.00
10 Smurfit Kappa Group Plc -0.61% -22.00 3,614.00


Europe open: Shares boosted by ‘Super Mario’ optimism

European shares rose again on Wednesday as investors took heart from positive sessions overnight on Wall Street and Asia and the prospect of political stability in Italy.

The pan-European Stoxx 600 index was up 0.85%, marking a third straight day of gains. Italy’s FTSE MIB outperformed with a 2.24% rise as former European Central Bank chief Mario Draghi was expected to be asked on Wednesday to form a government of national unity after yet another Italian coalition collapsed amid infighting.

“Draghi’s high profile gives him clout. As all three main parties of the previous government and some other smaller groups in parliament would likely do badly in potential snap elections, chances are that Draghi will be able to form a new government eventually,” said Berenberg economist Christopher Dembik.

“As before, (President Sergio) Mattarella seems determined to avoid snap elections. In a statement last night, he cited the need to steer Italy through the pandemic, to distribute the EU support funds and to reform the country as reasons to avoid new elections. Nonetheless, with the failure of the attempts to revive the old coalition, the prospect of new elections in June looms a little larger than before.”

“By officially bringing in former ECB president Draghi as a potential leader in a critical period of the pandemic, Italy seems poised to return to the model of technocratic government.”

The news spilled over into equities, with Italian stocks among the major gainers. UnicreditIntesa SanpaoloPoste ItalianeBanco BPM and Atlantia were all higher.

Elsewhere, shares in German telecoms group Freenet soared after the company announced another €135m share buyback and special dividend payment.


US close: Stocks extend rally as wave of speculative retail trading subsides

Wall Street stocks closed firmly in the green on Tuesday, with major indices extending yesterday’s strong rally.

At the close, the Dow Jones Industrial Average was up 1.57% at 30,687.48, while the S&P 500 was 1.39% firmer at 3,826.31 and the Nasdaq Composite saw out the session 1.56% stronger at 13,612.78.

The Dow closed 475.57 points higher on Tuesday, building on gains recorded yesterday that came as concerns regarding a recent wave of speculative retail trading subsided.

Corporate earnings were again in focus on Tuesday, with Pfizer in the red after falling short of profit expectations and ExxonMobil topping fourth-quarter earnings per share estimates but falling short on revenues.

Amazon revealed that chief executive Jeff Bezos would be stepping down from the role and said fourth-quarter sales had topped $100.0bn, while Google parent Alphabet said revenues had frown 23% but warned that its cloud business was still haemorrhaging billions of dollars.

Following a meteoric rise last week, GameStop shares were down 60% at the close of trading following a 30% slide on Monday, meaning the stock has now lost more than half of its value in just two days.

Stimulus negotiations in Washington were also in focus after congressional Republicans made a counteroffer to Joe Biden’s $1.9trn stimulus plan on Sunday. Biden met with the GOP lawmakers on Monday after congressional Democrats looked on track to pass a reconciliation bill despite not having bipartisan support.

On the macro front, the Institute for Supply Management‘s New York Index revealed current business conditions decreased 10.1 points to a two-month low of 51.2 in January, down from 61.3 a month earlier.


Wednesday newspaper round-up: Furlough scheme, Alphabet, LV

Rishi Sunak has been warned by the leaders of Britain’s most influential business groups and the trade union movement that he risks plunging Britain into a period of mass unemployment unless he extends the furlough scheme. Before the budget on 3 March, both sides of industry told the chancellor that the economy was too fragile to end the wage subsidy scheme at the end of April and that he risked undoing the efforts to protect jobs over the past year if he did so. – Guardian

Google parent company Alphabet had a better-than-expected fourth quarter in 2020, the company announced Tuesday, bolstered by a rebound in ad spending during the holiday season. Alphabet stocks were up as much as 7% in after hours trading following the company’s earnings report, which showed it reported record revenue for the second quarter in a row, beating analyst estimates. – Guardian

Rishi Sunak could launch a tax raid on banks to help tackle the UK’s record deficit, according to the investment bank UBS. The warning comes amid speculation that the Chancellor will use next month’s Budget to begin the task of putting the public finances on a “sustainable” footing as vast pandemic spending pushes borrowing above £400bn this financial year. – Telegraph

The LV= life insurance group is under growing pressure from policyholders and politicians over its handling of a takeover bid from Bain Capital. The deal with the American private equity firm will mark the end of the life insurer’s mutual structure, under which policyholders own the company. LV= is to hold a virtual meeting with policyholders today to discuss the £530 million Bain deal. A cross-party group of more than 100 MPs and peers have raised concerns about a ban on media attending the event. – The Times


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