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ADVFN Morning London Market Report: Friday 30 April 2021

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London open: Stocks edge higher despite profit-taking in Barclays

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Shares prices are continuing to grind higher at the end of the month against a backdrop of buoyant investor sentiment globally following the fresh record highs set on Wall Street the night before.

Risk appetite was also boosted by figures showing the biggest jump in UK house prices since 2004 and by US technology giant Amazon‘s better-than-expected quarterly update overnight.

As of 0842 BST, the FTSE 100 was up by 16.6 points to 6,978.29, while the second-tier index was adding 48.51 points or 0.22% to 22,441.45.

In parallel, futures on the S&P 500 were off by 8.5 points at 4,195.0.

Nationwide reported earlier that UK house prices jumped at a month-on-month pace of 2.1% in April to reach £238,831 – the biggest increase since February 2004.

That pushed the year-on-year rate of increase from 5.7% to 7.1% (consensus: 5.1%) and according to Nationwide’s chief economist, Richard Gardner, double-digit gains were possible in coming months.

However, a sharp drop in activity at the end of 2021 was a possibility should unemployment rise as many economists anticipated.

Dampening the mood on the other hand were mixed readings on China’s manufacturing sector for April.

The ‘official’ Chinese factory Purchasing Managers Index fell from 51.9 from March to 51.1 in April (consensus: 51.8), amid supply bottlenecks that forced firms to draw down their inventories to meet demand from the US.

Preliminary readings for first quarter gross domestic growth in German and Spain undershot forecasts, partially offset by a big beat in France.

A report for euro area level GDP was due out at 1000 BST.

In the US, investors were waiting on data releases including a reading on personal incomes and spending for March at 1330 BST.

It will be followed by reports on factory activity in the Chicago area (1445 BST) and consumer confidence (1600 BST), with both reports referencing the months of April.

Some profit-taking in Barclays shares on cautious outlook

UK bank Barclays on Friday said first quarter profits had more than doubled, but cautioned that its outlook remained uncertain due to the Coviud-19 pandemic. The lender posted a better-than-expected pre-tax profit before tax for the three months to March 31 of ended March 31 of £2.4bn, up from £923m pounds a year (consensus: £1.76bn). Unlike sector peers Lloyds and NatWest, Barclays did not release any cash set aside to cover potential bad loans from the pandemic. To take note of, Richard Hunter at Interactive Investor pointed out how Barclays shares had already run up 71% over the 12 months preceding Friday’s results.

AstraZeneca said it expected performance to improve as the drugs company reported “robust” revenue growth for the first quarter. Revenue increased 15% to $7.3bn in the three months to the end of March, or by 11% excluding currency movements. At constant currency and excluding the Covid-19 vaccine revenue rose 7% to $7.05bn. The company reiterated its full-year guidance and predicted a “performance acceleration” in the second half.

Smurfit Kappa said corrugated volumes grew around 7% in its first quarter on Friday, in both Europe and the Americas. Containerboard prices had increased in the first quarter and again at the start of the second quarter, as a result of strong demand and higher recovered fibre and other costs, with the company saying its was “progressively recovering” those costs through its corrugated box system. However, it said the industry was also experiencing supply disruptions and shortages of packaging papers globally.

Hikma Pharmaceuticals said it made a good start to 2021 and that annual revenue from generic treatments would be at the top of guidance. The drugs company said its injectables business was performing well with product launches and general demand in the US partly offsetting reduced demand for Covid-19 related products and the gradual return of elective surgeries.

Smurfit Kappa reported first quarter corrugated volume growth of around 7% in both Europe and the Americas in its first quarter on Friday. The packaging giant said containerboard prices had increased in the quarter, and again at the start of the second quarter, as a result of strong demand and higher recovered fibre and other costs.

Valve and instrumentation maker Rotork said first quarter performance continued to improve in line with expectations despite the impact of the Covid-19 pandemic. Revenue was up mid-single digits year-on-year on an organic constant currency basis, in part reflecting the weighting of first half 2020 sales to the second quarter.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Astrazeneca Plc +3.42% +253.00 7,651.00
2 Smurfit Kappa Group Plc +3.25% +116.00 3,680.00
3 Imperial Brands Plc +2.35% +34.50 1,504.50
4 British American Tobacco Plc +2.09% +55.00 2,681.00
5 Bae Systems Plc +2.07% +10.30 508.20
6 Johnson Matthey Plc +1.61% +52.00 3,279.00
7 Bp Plc +1.46% +4.40 306.40
8 Hikma Pharmaceuticals Plc +1.40% +33.00 2,398.00
9 Severn Trent Plc +1.16% +28.00 2,447.00
10 Crh Plc +0.96% +33.00 3,483.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Barclays Plc -5.34% -10.08 178.64
2 Flutter Entertainment Plc -1.53% -235.00 15,100.00
3 Carnival Plc -1.25% -21.20 1,678.80
4 Anglo American Plc -1.23% -38.50 3,103.00
5 Rio Tinto Plc -0.83% -51.00 6,105.00
6 Bhp Group Plc -0.75% -16.50 2,192.00
7 Next Plc -0.64% -50.00 7,808.00
8 Marks And Spencer Group Plc -0.60% -0.95 157.55
9 Glencore Plc -0.50% -1.50 298.50
10 Smith & Nephew Plc -0.48% -7.50 1,560.50

 

Europe open: Shares edge higher ahead of euro zone GDP

European stocks made small gains at the opening on Friday, boosted by another set of corporate earnings ahead of euro zone first quarter economic growth data.

The pan-European Stoxx 600 index was up 0.2%, just below its record high.

In equity news UK pharmaceutical giant and maker of one of the Covid-19 vaccines AstraZeneca saw its shares up after reporting better-than-expected results and sales growth forecasts.

Swedish Match rose 1.9% after the tobacco group reported a much higher first-quarter operating profit than expected.

Barclays failed to impress investors, with the shares down 6.2% despite reporting a quarterly profit that more than doubled, while France’s BNP Paribas slipped was also lower after better-than-expected profit.

 

US close: Stocks firmer after another day of earnings

Wall Street stocks closed in positive territory on Thursday, with market participants snapping up some profits after some better-than-expected big tech earnings overnight.

At the close, the Dow Jones Industrial Average was up 0.71% at 34,060.36, as the S&P 500 added 0.68% to 4,211.47 and the Nasdaq Composite was ahead 0.22% at 14,082.55.

The Dow opened 239.98 points higher on Thursday, following losses in the previous session that came despite the Federal Reserve announcing the continuation of its current easy policy, holding interest rates near zero, even while acknowledging that the US economy was accelerating.

On the macro front, an advance reading of the US’ first-quarter gross domestic product revealed economic activity had boomed at the beginning of 2021, with widespread vaccinations and government spending began to help the US economy claw back to where it was before the Covid-19 pandemic.

According to the Commerce Department, gross domestic product jumped 6.4% on an annualised basis in the first three months of 2021, which, outside of the reopening-fuelled third-quarter surge in 2021, was the best period for GDP since 2003.

Elsewhere, the much-watched weekly jobless claims report revealed that claims had fallen again in the week ended 24 April, hitting their lowest level since the Covid-19 pandemic hit in March 2020.

Initial unemployment claims fell 13,000 last week to a seasonally adjusted clip of 553,000, according to the Labor Department, marking a third straight week jobless claims were below 600,000, their lowest levels since early 2020.

The previous week’s figure was revised up to 566,000,

Lastly, pending home sales grew at a slower than forecast print in March, indicating that a lack of available properties was keeping buyers sidelined despite phenomenal demand.

According to the National Association of Realtors, pending home sales increased 1.9% month-on-month to 111.3, well and truly short of estimates for a 4.4% gain.

In equity markets, strong quarterly results from Apple and Facebook initially drove stocks higher on Thursday, although Apple ended the day down 0.07% even after reporting that sales had jumped 54% during the quarter, with each product category seeing double-digit growth.

Facebook, meanwhile, closed 7.3% firmer after revenues surged 48%, driven by higher-priced ads in the quarter.

Caterpillar shares were in the red by 2.08% despite blowing past expectations, while Comcast shares were 4.25% higher after it also beat earnings expectations with its latest quarterly figures.

Fast-food giant McDonald’s was ahead 1.2% after its quarterly revenues also topped pre-Covid levels, driven by the US’ vaccine rollout and a resulting strong economic recovery throughout the quarter.

Elsewhere in the corporate space, Carnival was down 2.12% while Norwegian Cruise Line managed gains of 0.26%, after the Centers for Disease Control stated sailings from US ports could recommence in mid-July.

 

Friday newspaper round-up: WPP, NatWest, Amazon, UK economy

WPP is withholding hundreds of thousands of pounds in share awards from Sir Martin Sorrell after alleging that its former boss leaked “confidential information” to the media. In its annual report, the advertising group accused Sorrell of disclosing sensitive information about the company and clients in an apparent breach of his employment contract. WPP has exercised “malus” powers to withhold share-based bonuses that he would have received this year and next. – The Times

Britain’s economy is building momentum and the Bank of England is expected to sharply upgrade its annual growth forecasts next week, as a Guardian analysis shows rapid progress rolling out the Covid vaccine is fuelling a boom in consumer spending. Activity has held up better than expected after businesses adapted to life under the third national lockdown, while the reopening of non-essential retail and hospitality venues outdoors in England and Wales has benefited from pent-up demand. – Guardian

NatWest will move its headquarters out of Scotland after 294 years if the country becomes independent, chief executive Alison Rose has said. Ms Rose said the bailed-out bank would be forced to act because it is simply too big for the Scottish economy to support. The lender – which last year changed its name from Royal Bank of Scotland – holds around £770bn of assets, almost five times Scotland’s GDP. – Telegraph

Amazon’s profits have more than tripled as homebound consumers continue to shop online, companies spend heavily on digital advertising and its powerhouse cloud computing division keeps growing. The ecommerce group beat expectations on Wall Street for its latest quarter after the pandemic bolstered the dominance of its technology. – The Times

The Co-operative Group is to stop selling plastic “bags for life” because, with many shoppers using them only once, they have become as big a problem as the single-use carriers they replaced. With more than 1.5 billion “bags for life” sold each year Jo Whitfield, the chief executive of Co-op Food, said plastic pollution was a “massive issue” for retailers. “Many shoppers are regularly buying so-called “bags for life” to use just once and it’s leading to a major hike in the amount of plastic being produced,” she explained. – Guardian

ITV is in talks to bring top-flight football back to free-to-air television as it explores taking a stake in BT Sport. The broadcaster has emerged as a contender to seal a television partnership with BT, alongside AmazonDisney and Dazn, a sports streaming challenger bankrolled by the billionaire Sir Leonard Blavatnik. – Telegraph

 

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