ADVFN Morning London Market Report: Monday 18 January 2021

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London open: FTSE little changed but travel, leisure stocks hit by Covid worries

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London stocks were little changed in early trade on Monday, with travel and leisure shares under the cosh amid concerns about the Covid-19 crisis, as investors mulled the latest data out of China.

At 0830 GMT, the FTSE 100 was down 0.1% at 6,726.85.

CMC Markets analyst Michael Hewson said: “Over the weekend reports out of Germany suggested the prospect of a night time curfew was being considered, after France imposed its own lockdown curfew from 6pm in the evening last week. The UK government also tightened its own lockdown rules, closing all travel corridors into the country starting at 4am this morning, and imposing strict testing and quarantine restrictions on anyone entering the country.”

He added that concerns over the levels of US vaccine reserves, along with reports on Friday that vaccine deliveries in Europe were being pared back due to short term supply constraints also weren’t helping.

Investors were digesting the latest data out of China, which showed the economy grew by 2.3% in 2020 in a sharp rebound from the coronavirus pandemic which tore through the country in the early part of the year.

The annual growth rate was the lowest since the Chinese economy shrank by 1.6% at the end of the Cultural Revolution in 1976, but was in stark contrast to the performance of other major economies, all of which have reported contractions as they struggle to battle the crisis.

Growth accelerated in the final quarter, with the economy expanding 6.5% year on year ahead of analysts’ forecasts of 6.2%, the National Bureau of Statistics (NBS) said.

It was also a marked change from the first quarter of 2020, when the economy shrank by 6.8%, in the first quarterly contraction since records began.

NBS chief Ning Jizhe said that “the main targets of economic and social development [in 2020] have been completed better than expected”.

“China is expected to become the only one major economy in the world to achieve positive economic growth throughout the year,” said Ning, adding that quarterly GDP growth “have returned to the normal level”.

Retail sales grew 4.6% on the year in December, down from 5% growth in November. Meanwhile, industrial production was up 7.3% in December versus 7% growth the month before. Analysts had been expecting a 5.5% jump in retail sales and a 6.9% increase in industrial production.

In equity markets, travel and leisure stocks were the biggest fallers amid worries about the impact of the Covid-19 pandemic and related restrictions after the UK closed all travel corridors until at least 15 February. British Airways parent IAG, budget airlines easyJet and Wizz Air, travel company TUI and cruise operator Carnival were all sharply lower.

Elsewhere, BT was in the red following reports over the weekend that it is facing a class action lawsuit over claims it failed to compensate elderly customers overcharged for landlines.

Centrica lost ground after it said chief financial officer Johnathan Ford has quit in the middle of a turnaround plan for the energy supplier. Ford has stepped down with immediate effect for personal reasons.

On the upside, Just Eat Takeaway and Ocado – both of which have benefited from lockdowns and restrictions – were among the top risers.

Animal genetics company Genus rallied as it said profit growth for the year ending 30 June 2021 is set to be ahead of its previous expectations following a strong first-half trading performance.

Chemring was boosted by an upgrade to ‘overweight’ at Barclays.

Telecommunications testing firm Spirent ticked just a touch higher after it said full-year profits were set to be in line with expectations after a strong fourth quarter driven by work on 5G infrastructure.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 British Land Company Plc +1.78% +8.00 457.80
2 Ocado Group Plc +1.55% +39.00 2,552.00
3 Rentokil Initial Plc +1.42% +7.40 528.20
4 Land Securities Group Plc +1.35% +8.90 666.60
5 Auto Trader Group Plc +1.24% +7.00 573.00
6 Evraz Plc +1.20% +6.00 506.80
7 Persimmon Plc +1.12% +30.00 2,720.00
8 3i Group Plc +1.05% +12.00 1,154.00
9 Barclays Plc +1.02% +1.52 150.32
10 Mondi Plc +0.94% +17.00 1,826.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Easyjet Plc -2.79% -23.20 808.80
2 Micro Focus International Plc -2.53% -10.80 415.80
3 Bt Group Plc -1.99% -2.80 138.05
4 Centrica Plc -1.94% -0.98 49.64
5 Hikma Pharmaceuticals Plc -1.65% -42.00 2,498.00
6 Bae Systems Plc -1.49% -7.40 488.20
7 International Consolidated Airlines Group S.a. -1.39% -2.25 160.00
8 Bhp Group Plc -1.19% -25.50 2,109.50
9 Marks And Spencer Group Plc -1.11% -1.55 138.05
10 Carnival Plc -1.07% -14.00 1,298.00

 

Europe open: Shares slip as French govt scuppers Carrefour merger talks

European stocks started the week lower with investors ignoring positive China GDP data, while the termination of merger talks between French retailer Carrefour and Canada’s Alimentation Couche-Tard also hitting sentiment.

The pan-European STOXX 600 index was down 0.13%, with France’s CAC 40 0.35% lower.

Carrefour shares fell 6% after announcing on the weekend that talks with Couche-Tard had been terminated and the two sides would instead work on partnership opportunities. The planned deal went under after French government opposition, citing a threat to the country’s “food sovereignty”.

Investors were also concerned about tighter lockdown curbs in Europe’s major economies with reports that Germany was considering a night curfew to stem the rising number of Covid-19 cases. France last week imposed a similar measure, while Britain closed all travel corridors into the country starting at 4am on Monday with strict testing and quarantine restrictions on anyone entering the country.

The latest data out of China showed the economy grew by 2.3% in 2020 in a sharp rebound from the coronavirus pandemic which tore through the country in the early part of the year.

The annual growth rate was the lowest since the Chinese economy shrank by 1.6% at the end of the Cultural Revolution in 1976, but was in stark contrast to the performance of other major economies, all of which have reported contractions as they struggle to battle the crisis.

In other equity news, shares in carmaker Stellantis rose almost 3% in its first day of trading in the Paris stock market on the completion of merger between Fiat Chrysler and PSA.

Centrica lost ground after it said chief financial officer Johnathan Ford has quit in the middle of a turnaround plan for the energy supplier. Ford has stepped down with immediate effect for personal reasons.

On the upside, Just Eat Takeaway, Ocado and meal kit company Hello Fresh – all of which have benefited from lockdowns and restrictions – were among the top risers.

Animal genetics company Genus rose 4.45% as it said profit growth for the year ending 30 June 2021 is set to be ahead of its previous expectations following a strong first-half trading performance.

 

Monday newspaper round-up: Home buyers, Eurostar, Perenna

Thousands of home buyers could be hit with an unexpected tax bill of up to £15,000 each if the stamp duty holiday ends as planned on 31 March, Rightmove has warned. The property website said that with the stamp duty deadline approaching, some sellers who had put their property on the market during the last few weeks were hoping to tempt buyers with a competitive price in an attempt to squeeze in a sale before the holiday ends. – Guardian

Eurostar has said it is facing an existential threat, as business leaders pleaded with the government to step in and save the “vital link” with Europe. A 95% drop in passenger numbers has brought the cross-Channel train service to its knees, and the company reiterated on Sunday that while government loans had been extended to aviation, international high-speed rail had also been severely affected by the pandemic. – Guardian

Italy is set to pay the UK £140m to avoid being kicked off Britain’s railways – despite running the nation’s most punctual train service. State-owned Trenitalia, which operates the c2c network linking Essex and the City, is understood to have struck a deal in principle with the UK Government. It will pay the penalties to “stay in the game” as a curtain falls on 25 years of rail franchising. – Telegraph

A new bank that hopes to sell mortgages impervious to base rate changes aims to sign up its first borrowers by October after it secured $10 million of start-up finance. Perenna, which is seeking a banking licence from the Prudential Regulation Authority, said that it aimed to issue its first 30-year fixed-rate mortgages in the third quarter and had a target of lending £100 million a month. – The Times

One of the country’s best-performing technology companies says that it may need to tap the stock market in the United States for more capital. Jason Kingdon, chief executive of Blue Prism, which develops automation software, said that it may need extra funds to grasp the “enormous” opportunity ahead of it. The company, which is listed in London, is looking across the Atlantic because American investors value subscription software companies more highly, Mr Kingdon said. – The Times

 

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