ADVFN Morning London Market Report: Tuesday 9 February 2021

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London open: Stocks little changed; Ocado slumps after results

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London stocks were little changed in early trade on Tuesday following gains in the previous session on the back of US stimulus optimism.

At 0845 GMT, the FTSE 100 was down 0.1% at 6,519.76.

Spreadex analyst Connor Campbell said: “Tuesday showed early signs of a post-splurge hangover, the markets at best holding fire following yesterday’s record highs.

“The FTSE cannot escape the orbit of 6,500. Missing out on the various short-term and all-time highs struck by its peers on Monday, the UK index moodily slipped back towards that key level.”

In equity markets, online supermarket Ocado slumped despite reporting a 68.8% rise in full-year core earnings.

Campbell said “it appears investors have potentially been put off by Ocado’s planned £700m in capital expenditure, and a subdued outlook for UK retail growth in the coming 12 months”.

Richard Hunter, head of markets at Interactive Investor, said: “While the combination of a grocer benefiting from the current pandemic and a high tech business gives investors two bites at the cherry, the stratospheric rise of the share price may have prompted some to take profits, with the market consensus of the shares having recently slipped to a sell as new developments are awaited.”

TUI ticked higher even as the travel company slumped to a €699m first-quarter loss as Covid-19 lockdowns continued to hammer demand.

Micro Focus gained after the software firm reinstated its dividend, despite a near $3bn impairment charge pushing it deep into the red.

Electrocomponents rallied after an upgrade to ‘overweight’ at JPMorgan, while Bellway rose after the housebuilder hailed record first-half completions amid “robust” demand.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +3.11% +15.30 507.00
2 Royal Dutch Shell Plc +2.42% +33.00 1,398.60
3 Royal Dutch Shell Plc +2.16% +28.20 1,333.40
4 Bp Plc +2.08% +5.45 267.40
5 Whitbread Plc +1.97% +63.00 3,264.00
6 Hiscox Ltd +1.49% +14.20 966.00
7 Glencore Plc +1.38% +3.65 268.30
8 Compass Group Plc +1.34% +19.50 1,478.50
9 Hsbc Holdings Plc +1.13% +4.40 394.80
10 Intercontinental Hotels Group Plc +0.99% +50.00 5,076.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc -2.55% -70.00 2,676.00
2 Kingfisher Plc -2.09% -5.80 271.20
3 Evraz Plc -1.60% -8.40 515.20
4 Sse Plc -1.49% -21.50 1,423.50
5 Sage Group Plc -1.49% -8.80 583.60
6 Easyjet Plc -1.16% -9.60 815.60
7 International Consolidated Airlines Group S.a. -1.07% -1.70 157.50
8 Mondi Plc -1.03% -18.50 1,778.50
9 Auto Trader Group Plc -1.01% -5.80 570.00
10 Experian Plc -0.99% -26.00 2,594.00

 

Europe open: Shares lower as rally runs out of steam

European shares were slightly lower on Tuesday as the rally of recent days ran out of steam.

The benchmark pan-European Stoxx 600 index fell 0.10%, after gains driven by vaccine roll-outs and hopes the US Covid-19 relief package would make swift progress through Congress. Germany’s DAX index was down 0.13%, despite official data showing German exports rose in December.

In equity news, shares in Danish hearing aid maker Demant topped the gainers. The company said it expected to return to strong growth in 2021 as Covid-19 lockdowns were lifted and reported earnings for the second half of 2020 above expectations.

Shares in German leasing firm Grenke rebounded after Monday’s slump, gaining 7% after chief operating officer Mark Kindermann, resigned. He told the firm’s supervisory board that it would be necessary to revise “preliminary assessments” of the firm’s financial performance once audits had been completed.

UK online supermarket and logistics provider Ocado slumped despite reporting a 68.8% rise in full-year core earnings.

Spreadex analyst Connor Campbell said “it appears investors have potentially been put off by Ocado’s planned £700m in capital expenditure, and a subdued outlook for UK retail growth in the coming 12 months”.

TUI ticked higher even as the travel company slumped to a €699m first-quarter loss as Covid-19 lockdowns continued to hammer demand.

Total SE rose 1.1% after the company said earnings recovered in the fourth quarter as oil prices recovered, although a hit from writedowns on assets due to the Covid-19 pandemic saw it plunge to a $7.2bn net loss for fiscal 2020.

 

US close: Stocks continue to rally amid stimulus optimism

Wall Street stocks extended last week’s rally on Monday as the Dow Jones secured its longest daily winning streak since August as market participants remained optimistic about further Covid-19 stimulus.

At the close, the Dow Jones Industrial Average was up 0.76% at 31,385.76, while the S&P 500 was 0.74% firmer at 3,915.59 and the Nasdaq Composite saw out the session 0.95% stronger at 13,987.64.

The Dow closed 237.52 points higher on Monday, extending gains recorded in Friday’s session that also saw the S&P 500 closed at a record high.

Corporate earnings will be in focus again this week, with the likes of CiscoTwitterYelpUberMGMMattelGMCoca-Cola and Disney all set to report over the next five days.

Loews said on Monday that it had swung to a full-year loss of $931.0m, while toymaker Hasbro reported $1.0bn in e-commerce sales for 2020 as a whole.

After the close, video games publisher Take-Two Interactive beat earnings per share estimates by $0.30 and came in ahead of expectations for net bookings throughout its most recent quarter.

Turning to the Covid-19 pandemic itself, the US has now recorded more than 27.67m total cases of the coronavirus, claiming the lives of more than 475,890 Americans in the process.

Treasury Secretary Janet Yellen implored Congress to pass President Joe Biden’s Covid-19 stimulus package over the weekend, stating the US could return to full employment by 2022 if it did so. Both the Senate and House passed a budget resolution on Friday, starting a reconciliation process that would allow the President’s $1.9trn rescue package to be pushed through the Democratic-held Senate thanks to an easy majority.

Bitcoin was also drawing an amount of investor attention as the cryptocurrency’s price shot up to an all-time high of more than $44,000 after Tesla revealed it had bought $1.5bn worth of the digital asset and vowed to shortly accept it as a payment method for its vehicles.

On the macro front, the January Survey of Consumer Expectations showed median inflation expectations were unchanged at 3% at both the one- and three-year horizons, while median year-ahead expectations for home price changes rose 0.4% to 4.0%, the highest reading since May 2014.

Elsehwere, Federal Reserve Bank of Cleveland president Loretta Mester said US monetary policy would stay accommodative for a “very long time” given the economy’s way to go before hitting the Central Bank’s targets of maximum employment and price stability.

 

Tuesday newspaper round-up: Napster, border controls, Notonthehighstreet

Britain’s tough new lockdown measures have dented consumer confidence and reduced spending to levels not seen since last spring, according to two separate surveys. Both the British Retail Consortium and Barclaycard said spending in January was at its weakest since May as booming online activity failed to compensate fully for the closure of stores. – Guardian

Napster is to make its debut on the London stock market later this month, marking the first time the music streaming pioneer has had its own public listing in a chequered 22-year history. Napster, which will start trading on the Alternative Investment Market from 26 February, is listing in London as a result of the company’s $70m (£53m) reverse takeover by a British music tech startup last summer. – Guardian

Consultants netted £17m from the Government’s border controls last year, as ports were forced to prepare for the end of the Brexit transition period. Over eighty payments were made to six consultants last year for work with either the Border Delivery Group, the committee responsible for plans, or for other related contracts, HMRC data shows. – Telegraph

Notonthehighstreet has been bought by Great Hill Partners, an American investment firm. The online gifts retailer, which sells personalised gifts such as books, jewellery and toys, has reaped the benefits of a boom in online shopping during the pandemic. Over the past year, company revenues have risen by more than 50 per cent as the business attracted almost a million new customers and brought on 500 new small business partners. – The Times

 

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