ADVFN Morning London Market Report: Wednesday 10 February 2021

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London open: Stocks edge up as Smurfit, Dunelm results impress


London stocks edged a little higher in early trade on Wednesday as investors sifted through results from the likes of Smurfit Kappa and Dunelm.

At 0850 GMT, the FTSE 100 was 0.2% higher at 6,543.08, while sterling was 0.2% firmer against the dollar at 1.3842.

Spreadex analyst Connor Campbell said: “It was a timid to Wednesday’s trading, none of the European indices able to match the pace of gains seen in a record-setting Asian session.

“Once again the FTSE started the day by trying, and failing, to put some distance between it and the magnetic lure of 6,500.

“Nothing at the moment would suggest it has the momentum to break through that level, though a strong showing from the US could be enough.

“The FTSE’s biggest problem at the moment is sterling. While the currency got off to a tepid start, it doesn’t take a lot these days for the pound to hit fresh multi-year highs. A 0.2% rise against the dollar, for example, has pushed cable above $1.3835 for the first time since the very start of May 2018.

“The greenback’s weakness in the face of Biden’s stimulus plan, the UK’s robust vaccine rollout, and the receding likelihood of the Bank of England imposing negative interest rates have allowed sterling to have a stellar start to the year.”

In equity marketsSmurfit Kappa rallied after the packaging company reported forecast-beating final earnings, boosted by strong demand in Europe and America. Rival DS Smith also gained.

Dunelm pushed higher as the homewares retailer resumed dividend payments and posted a rise in first-half profits, driven by higher online sales as tougher Covid-19 lockdown restrictions closed its stores.

Lancashire Holdings rose after the insurer said full-year pre-tax profit fell to $5.9m from £$119.5m the year before, beating analysts’ expectations for a loss of $31.4m as its investment portfolio recovered.

On the downside, online supermarket Ocado was under the cosh as Barclays reiterated its ‘underweight’ rating on the stock. The bank said it was disappointed and surprised that “2020 did not see any new deals inked”.

Watches of Switzerland fell after Apollo Global Management placed 22m shares in the company.

Redrow lost ground even as the housebuilder reinstated dividends and posted an 11% rise in first-half profit, as customers rushed to buy homes before the end of government incentives next month.

Persimmon was also on the back foot after saying it has set aside £75m for the removal of cladding from 26 buildings it constructed ahead of a government announcement about the removal of potentially combustible materials following the Grenfell Tower fire.

BerkeleyBarratt DevelopmentsCrest Nicholson and Vistry were also trading lower.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Centrica Plc +2.22% +1.18 54.24
2 Glencore Plc +2.13% +5.60 269.00
3 United Utilities Group Plc +1.97% +18.00 930.00
4 Antofagasta Plc +1.94% +29.50 1,553.00
5 Rio Tinto Plc +1.85% +107.00 5,877.00
6 Severn Trent Plc +1.66% +38.00 2,330.00
7 Bt Group Plc +1.51% +1.85 124.00
8 National Grid Plc +1.47% +12.60 867.60
9 Smurfit Kappa Group Plc +1.41% +50.00 3,590.00
10 Sse Plc +1.32% +19.00 1,457.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc -2.94% -15.40 508.60
2 Compass Group Plc -2.04% -30.00 1,439.00
3 Ocado Group Plc -2.00% -54.00 2,646.00
4 Berkeley Group Holdings (the) Plc -1.84% -81.00 4,311.00
5 Barratt Developments Plc -1.63% -11.40 686.20
6 Next Plc -1.22% -96.00 7,752.00
7 Hiscox Ltd -1.10% -10.60 953.20
8 Diageo Plc -1.08% -32.50 2,978.50
9 Ashtead Group Plc -1.00% -39.00 3,850.00
10 Flutter Entertainment Plc -0.85% -120.00 14,080.00


Europe open: Shares make lacklustre start despite Asia gains

European shares made a lacklustre start to Wednesday’s session, despite strong showings in Asia and the US Nasdaq.

The pan-European Stoxx 600 index was flat in early trade with most major bourses dipping into the red. Investors and traders are looking for any new glimmer of an economic recovery as they hunt for equity bargains.

“Attention is now slowly turning towards beaten down stocks and sectors which could stage something of a recovery in the post-pandemic world,” said interactive investor analyst Richard Hunter.

“Particular focus will remain on the likes of the oil and banking sectors, tourism and travel including airlines and hotels, as well as leisure sectors such as pubs and restaurants.”

Eyes this afternoon will be on US inflation data, where the headline figure is expected to fall form 0.4% to 0.3% month-on-month.

This will be followed by an appearance from Federal Reserve chair Jerome Powell, with investors looking for a view on the Biden administration’s American Rescue Plan, and the implications for monetary policy going forwards.

In equity news, shares in paper and packaging giant Smurfit Kappa rose after it posted forecast-beating final earnings, boosted by strong demand in Europe and America.

Grenke shares gained 13% after the resignation of its chief operating officer on Monday.

Dutch Bank ABN Amro shares fell even as the company reported a better-than-expected fourth-quarter net profit.

German conglomerate Thyssenkrupp added 5.8% after it raised its full-year outlook on the back of higher demand.

Shipping line Maersk was down 5.6% despite forecasting a surge in demand for container shipping that would boost first quarter earnings.

Shares in Swedish sports product company Thule Group rose 9.23% as the company reported a rise in fourth quarter sales driven by higher demand.

Shares in drinks giant Heineken fell as the company announced plans to cut about 8,000 jobs, in an effort to restore operating margins to pre-pandemic levels after a sharp decline in profit because of coronavirus restrictions.


US close: Stocks mixed amid corporate earnings, impeachment trial

Wall Street stocks turned in a mixed performance on Tuesday amid more corporate earnings and Donald Trump’s second impeachment trial.

At the close, the Dow Jones Industrial Average was down 0.03% at 31,375.83, while the S&P 500 was 0.11% weaker at 3,911.23 and the Nasdaq Composite saw out the session 0.14% stronger at 14,007.70.

The Dow closed 9.93 points lower on Tuesday, cutting into gains recorded in the previous session.

Chemicals firm DuPont said sales in its electronics and imaging business had risen 9% to $1.02bn last quarter and pointed to a strong 2021 full-year performance on solid demand from smartphone makers and an automotive rebound, while Goodyear shares jumped early on in the session after the tire maker swung to a profit after topping sales estimates.

Also in focus, Trump’s second impeachment trial began in the Senate on Tuesday, with the former head of state charged with having incited an “insurrection” after his supporters breached the US Capitol, the very same building in which the trial will take place, leading to the deaths of five people.

Turning to the coronavirus pandemic itself, the US has now recorded more than 27.76m cases of Covid-19, claiming the lives of 478,490 Americans in the process.

Democrats also unveiled the details of a Covid-19 relief package on Monday that included direct checks of $1,400 to Americans, with faster phase-outs than previous bills.

On the macro front, small business confidence in the US dipped at the start of the year with many company owners downbeat after Democrats won the presidential election and new Covid-19 cases surged, the results of a closely-followed survey revealed. The National Federation of Independent Business‘ confidence index slipped from a reading of 95.9 for December to 95.0 in January. Economists had forecast a reading of 97.0.

Elsewhere, December’s JOLTS jobs report revealed openings had unexpectedly risen, led by increases in business services and retail trade – indicating that businesses were looking to adjust staffing levels as the US starts getting vaccinated against Covid-19. The Labor Department said the number of available positions increased to 6.65m during the month from a revised 6.57m in November, ahead of analyst estimates for a reading of 6.4m.

Lastly, Federal Reserve Bank of St Louis president James Bullard predicted some “very strong” economic growth for the US as the Covid-19 pandemic eases in 2021.


Wednesday newspaper round-up: Arcadia staff, Birkenstock, BASF

Hundreds of former Arcadia staff are lining up to claim compensation after being made redundant following the collapse of Sir Philip Green’s fashion empire. Two no-win no-fee legal firms say they have already gathered almost 200 potential claimants who they say may not have been properly consulted before losing their jobs. – Guardian

German sandal maker Birkenstock is at the centre of a €4bn (£3.5bn) takeover battle as the trend for casual footwear steps up during the pandemic. Private equity firm CVC Capital Partners, the owner of dozens of companies from motorway services firm Moto to luxury watchmaker Breitling, is vying to buy a majority stake in Birkenstock with L Catterton, a private equity firm part-owned by Louis Vuitton and Christian Dior owner LVMH. L Catterton already owns fashion brands including Ganni, Seafolly and Pepe Jeans. – Guardian

Sadiq Khan is demanding that Boris Johnson hands over £500m in “road tax” paid by Londoners after ministers shot down his plan to charge drivers up to £5.50 to enter greater London. The Mayor’s proposal, revealed last month and intended to help balance the books at Transport for London, was branded “taxation without representation” by Grant Shapps, Transport Secretary. – Telegraph

The former Court of Appeal judge behind a highly critical report into the City regulator’s mishandling of the London Capital & Finance scandal has questioned evidence given by the governor of the Bank of England to MPs. It emerged yesterday that Dame Elizabeth Gloster had written to Mel Stride, chairman of the Treasury select committee, to voice her disagreement with some of the testimony that Andrew Bailey gave to MPs on Monday. – The Times

The government and a German industrial giant have been sharply criticised over the closure of a factory in the northeast of England, with the loss of hundreds of jobs, despite a £1 billion loan from the Bank of England during the Covid-19 crisis. BASF, the world’s largest chemicals producer, took the loan last April as part of the UK’s covid corporate financing facility (CCFF) aimed at helping employers in the UK get through the crisis. – The Times


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