ADVFN Morning London Market Report: Thursday 4 February 2021

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London open: Stocks edge higher ahead of BoE announcement

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London stocks edged higher in early trade on Thursday, helped along by a weaker pound, as investors eyed the latest policy announcement from the Bank of England.

At 0835 GMT, the FTSE 100 was up 0.3% at 6,524.79.

Spreadex analyst Connor Campbell said: “After losing steam in places on Wednesday, the markets made an attempt to return to the rebounding gains seen earlier in the week.

“The UK’s start came in the shadow of this afternoon’s Bank of England meeting. The pound was anxious after the bell, falling 0.4% against the dollar and 0.2% against the euro. That decline has sent cable below $1.359 for the first time in over two weeks.”

Weakness in the pound was helping to prop up the FTSE, Campbell said. The top-flight index tends to benefit from a weaker sterling, as around 70% of its constituents derive most of their earnings from overseas.

The BoE rate announcement is due at midday.

“Though the BoE isn’t expected to announce any changes to monetary policy, it is set to reveal the findings of its review into the impact of negative interest rates on the banking sector,” said Campbell. “Andrew Bailey has repeatedly poured cold water on the idea of negative rates; a reaffirmation of that belief could pull sterling out of its funk. Anything else would pose a big problem for the pound.”

In equity markets, caterer Compass Group was the top gainer as it told shareholders it was sorry for substandard free school meal packages and said revenue fell by a third in the first quarter, with no pickup expected in the second quarter.

Barratt Developments was on the rise after saying that first-half pre-tax profit edged higher amid record completions, as the housebuilder declared an interim dividend.

BT Group was trading higher after saying it was on track to meet full-year forecasts despite a fall in third-quarter core earnings.

Royal Dutch Shell gained ground even as it said fourth-quarter adjusted earnings fell 87% to a worse-than-expected $393m year-on-year as the Covid pandemic hammered energy consumption.

Unilever slumped as the consumer goods company increased its fourth-quarter dividend and reported a decline in annual profit caused mainly by currency swings.

Watches of Switzerland was also in the red after the release of its third-quarter update.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Whitbread Plc +3.81% +114.00 3,108.00
2 Barratt Developments Plc +3.42% +23.00 696.40
3 Carnival Plc +3.23% +41.00 1,311.00
4 Compass Group Plc +3.15% +42.50 1,392.00
5 Persimmon Plc +3.07% +83.00 2,783.00
6 Taylor Wimpey Plc +2.41% +3.75 159.55
7 Glaxosmithkline Plc +2.28% +29.20 1,311.20
8 Bt Group Plc +2.21% +2.85 131.55
9 Intercontinental Hotels Group Plc +2.17% +105.00 4,953.00
10 Rolls-royce Holdings Plc +2.09% +1.92 93.80

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Unilever Plc -3.78% -164.00 4,172.00
2 United Utilities Group Plc -1.30% -12.20 923.40
3 Fresnillo Plc -1.16% -12.00 1,022.00
4 Lloyds Banking Group Plc -0.80% -0.27 33.91
5 Barclays Plc -0.76% -1.08 140.72
6 Hsbc Holdings Plc -0.66% -2.55 386.00
7 Standard Chartered Plc -0.63% -2.80 443.40
8 Itv Plc -0.56% -0.60 106.30
9 Hiscox Ltd -0.32% -3.00 941.40
10 St. James’s Place Plc -0.30% -3.50 1,181.00

 

Europe open: Shares maintain rally as US stimulus edges closer

European shares were slightly higher at the opening as investors took heart from Democrat moves to push on with the $1.9trn Covid-relief package.

The pan-European Stoxx 600 index was up 0.2%. Italian shares continued to rally, up 0.23% as former European Central Bank chief Mario Draghi agreed to help form a unity government.

Democrats continued their efforts to get US President Joe Biden’s relief package through Congress without Republican support.

In equity news, shares in German IT group Cancom rose 6.79% as it reported strong fourth quarter earnings.

Bayer AG shares were 4.8% higher after the company struck a $2bn deal to resolve future legal claims that its widely used weedkiller Roundup causes cancer.

Deutsche Bank shares rose 0.6% after the German lender swung to a small annual profit in 2020, its first since 2014, on the back of strong gains at its investment banking division.

Caterer Compass Group gained as the firm told shareholders it was sorry for substandard free UK school meal packages and said revenue fell by a third in the first quarter, with no pickup expected in the second quarter.

Barratt Developments was on the rise after saying that first-half pre-tax profit edged higher amid record completions, as the housebuilder declared an interim dividend.

BT Group was trading higher after saying it was on track to meet full-year forecasts despite a fall in third-quarter core earnings.

Royal Dutch Shell gained ground even as it said fourth-quarter adjusted earnings fell 87% to a worse-than-expected $393m year-on-year as the Covid pandemic hammered energy consumption.

Unilever slumped as the consumer goods company increased its fourth-quarter dividend and reported a decline in annual profit caused mainly by currency swings.

(Michele Maatouk also contributed to this story)

 

US close: Stocks close mixed amid slew of data

Wall Street stocks closed in a mixed state on Wednesday, as major corporate earnings remained firmly in focus.

At the close, the Dow Jones Industrial Average was up 0.12% at 30,723.60 and the S&P 500 was ahead 0.1% at 3,830.17, while the Nasdaq Composite slid 0.02% to 13,610.54.

The Dow closed 36.12 points higher, adding slightly to the gains recorded in the previous session, as concerns regarding a recent wave of speculative retail trading subsided.

Market participants were monitoring discussions surrounding another stimulus package in Washington, after President Joe Biden met with 10 Republican senators earlier in the week to talk over a reduced aid proposal when compared to his $1.9trn package.

On the macro front, mortgage applications increased 8.15% week-on-week, according to the Mortgage Bankers Association, breaking a two-week streak of declines.

The refinance index also improved 11% on the prior week – up to its highest level since March 2020 and 59% higher year-on-year.

Elsewhere, US private employers hired more workers in January than in the previous month despite new Covid-19 infections continuing to soar across the country.

Private payrolls increased by 174,000 in January, according to ADP, ahead of expectations for a print of 49,000, while data for December was revised to show 78,000 jobs lost instead of the 123,000 initially reported.

Still on data, economic activity in the US service sector expanded at a solid clip last month, with IHS Markit‘s services PMI rising to 58.3 from 54.8, ahead of both the flash estimate and market expectations of 57.5.

The composite PMI also improved – up to 58.7, ahead of forecasts for a print of 58.

Lastly, the services PMI increased to 58.7 in January from 57.7 in December, beating market forecasts of 56.8, according to the Institute for Supply Management, pointing to the strongest expansion in the services sector since February 2019.

In equities, solid quarterly report cards from both Amazon and Google parent Alphabet overnight saw the two technology giants head in opposite directions.

Shares in Amazon ended the session down 2%, while those in Alphabet were up 7.4%.

Following the stock’s absurd run last week, GameStop was in the green again, managing to rise 2.12% by the end of trading.

Quarterly results from Biogen saw its shares sink 5.21% after it revealed it had fallen short of earnings estimates, leading it to issue some weak guidance.

Boston Scientific, meanwhile, was 2.24% stronger, even after it posted earnings shy of analyst expectations.

 

Thursday newspaper round-up: KPMG, car sales, Ryanair

The government is under mounting pressure to plug gaps in its emergency coronavirus wage subsidy schemes at the March budget to support millions of self-employed people and other workers excluded from furlough. MPs and campaign groups said the chancellor, Rishi Sunak, had repeatedly ducked opportunities to fix gaps in furlough and the self-employed income support scheme (SEISS) for almost a year since the Covid-19 pandemic began. – Guardian

The accounting giant KPMG has paid its 582 UK partners an average of £572,000 each in the middle of the Covid crisis. Thesubstantial payouts are just 11% lower than the £640,000 average pay for each partner in 2019. KPMG’s UK chairman, Bill Michael, collected £1.7m, down 14% from the near-£2m he was granted a year earlier.- Guardian

Sales of new cars plunged 40pc in January to mark the worst performance in half a century, according to preliminary data. Roughly 90,000 new cars were registered in the first month of the year, the lowest level since 1970, according to the Society of Motor Manufacturers and Traders (SMMT). – Telegraph

Ryanair’s spat with the Civil Aviation Authority escalated on Wednesday night as plans emerged to axe all domestic routes and all services from Britain to non-EU countries. The budget carrier will only operate out of London Stansted airport and will cull 13 routes to Morocco, Ukraine, Montenegro, and Norway. – Telegraph

Amateur day traders who triggered wild stock market gyrations by taking on short-sellling suspect that fake accounts are inundating their online forum. Retail investors have described a “large amount” of posts from bots – inauthentic social media users – on Wallstreetbets, the Reddit chatroom at the heart of efforts to attack hedge funds and other financial institutions. – The Times

 

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