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London open: Stocks fall as sterling rallies; Lloyds in focus
London stocks fell in early trade on Wednesday, underperforming their European peers as sterling rallied.
At 0920 GMT, the FTSE 100 was 0.5% lower at 6,591.42, while sterling rose 0.5% against the dollar to 1.4181, having earlier hit $1.42 for the first time since April 2018.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Spreadex analyst Connor Campbell said: “While it failed to react much to the announcement at the start of the week, the idea that the UK could be back to ‘normal’ by the summer seems to have finally sunk in for sterling.
“All this spelled disaster for the FTSE. With its many multinational constituents uncomfortably eyeing the pound’s blockbuster performance, the index tumbled half a percent to fall the wrong side of 6,600.”
In equity markets, banks – with the exception of Lloyds – were under the cosh, with HSBC, NatWest and Standard Chartered all weaker.
Dollar-earners were also under pressure, with Experian, British American Tobacco, Unilever, Imperial Brands and AstraZeneca all weaker.
Aviva lost ground as it said it was exiting its Turkish business, a day after announcing the sale of its French unit.
On the upside, Lloyds rose as it reported a 72% slump in annual profits, reflecting the impact of the Covid-19 pandemic, but reinstated dividend payments.
Consumer goods giant Reckitt Benckiser gained after the company posted a surge in full-year revenues as demand for cleaning and hygiene products spiked during the pandemic.
Housebuilders Barratt, Taylor Wimpey and Persimmon were all up amid reports the stamp duty holiday will be extended until the end of June.
Travel & leisure stocks were on the rise again amid the prospect of easing restrictions, with British Airways owner IAG, Tui, Carnival and easyJet all higher.
Tesco was boosted by an upgrade to ‘outperform’ at Credit Suisse, while Irish convenience food company Greencore rallied after an upgrade to ‘buy’ at HSBC.
Gamesys and 888 pushed higher after initiations at ‘buy’ by Jefferies.
Top 10 FTSE 100 Risers
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| 76.4% of retail CFD accounts lose money. | |
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +6.15% | +24.50 | 422.60 |
| 2 |  |
Carnival Plc | +5.24% | +78.00 | 1,567.50 |
| 3 |  |
Easyjet Plc | +3.82% | +35.60 | 968.00 |
| 4 |  |
Lloyds Banking Group Plc | +3.06% | +1.20 | 40.42 |
| 5 |  |
International Consolidated Airlines Group S.a. | +2.97% | +5.40 | 187.00 |
| 6 |  |
Barratt Developments Plc | +1.93% | +13.20 | 697.20 |
| 7 |  |
Bp Plc | +1.55% | +4.40 | 287.90 |
| 8 |  |
Taylor Wimpey Plc | +1.46% | +2.40 | 166.35 |
| 9 |  |
Tesco Plc | +1.38% | +3.10 | 227.60 |
| 10 |  |
Centrica Plc | +1.23% | +0.64 | 52.80 |
Top 10 FTSE 100 Fallers
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| 76.4% of retail CFD accounts lose money. | |
| # | Name | Change Pct | Change | Cur Price | |
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| 1 |  |
Hsbc Holdings Plc | -2.36% | -10.10 | 417.90 |
| 2 |  |
Experian Plc | -2.31% | -55.00 | 2,328.00 |
| 3 |  |
Ocado Group Plc | -1.84% | -43.00 | 2,292.00 |
| 4 |  |
United Utilities Group Plc | -1.60% | -14.40 | 886.60 |
| 5 |  |
Unilever Plc | -1.58% | -62.00 | 3,858.00 |
| 6 |  |
Glencore Plc | -1.56% | -4.75 | 298.80 |
| 7 |  |
Astrazeneca Plc | -1.51% | -108.00 | 7,028.00 |
| 8 |  |
Bt Group Plc | -1.51% | -2.00 | 130.30 |
| 9 |  |
Associated British Foods Plc | -1.47% | -36.00 | 2,418.00 |
| 10 |  |
Standard Chartered Plc | -1.46% | -7.40 | 500.00 |
US close: Mixed session following Powell testimony
Wall Street stocks turned in a mixed performance on Tuesday as losses in tech shares dragged down the Nasdaq Composite.
At the close, the Dow Jones Industrial Average was up 0.05% at 31,537.35 and the S&P 500 was 0.13% firmer at 3,881.37, while the Nasdaq Composite saw out the session 0.50% weaker at 13,465.20.
The Dow closed 15.66 points lower on Thursday, narrowly extending modest gains recorded on Monday.
Rapidly rising Treasury yields were again in focus on Tuesday amid concerns that they could hurt high-growth companies reliant on easy borrowing – the same stocks that have so far thrived in the Covid-19 pandemic.
The 10-year Treasury yield rose to around 1.35% on Monday after jumping 14 basis points last week to hit its highest level since February 2020.
However, today’s primary focus was the Federal Reserve chairman Jerome Powell telling the Senate Banking Committee that inflation and employment remained well below the central bank’s targets, meaning easy monetary policy was likely to stay in place.
“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” said the Federal Reserve chief.
He also said the Fed was “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible”.
On the macro front, home-price growth accelerated in December, with the S&P CoreLogic Case-Shiller National Home Price Index rising 10.4% in the twelve months ended 31 December, up from a 9.5% annual rate the prior month to the highest annual rate of growth since January 2014.
Elsewhere, February’s Conference Board consumer confidence survey rose to a three-month high of 91.3 from a revised 88.9 reading in January.
Lastly, the Richmond Fed manufacturing index for February came in at an unchanged reading of 14, shy of estimates for a print of 15.
Real estate firm CBRE posted an all-time high quarterly adjusted earnings per share and a 9% jump in adjusted underlying earnings, while Crocs reported a record annual revenue of $1.4bn.
Home Depot topped estimates on a 25% surge in quarterly sales, while Macy’s said holiday sales had helped the retailer record its first profitable quarter in a year.
Wednesday newspaper round-up: Female directors, Oatly, accounting watchdog
London has overtaken New York as home to the highest concentration of dollar millionaires in the world, according to a report that reveals how much money the very richest people in the world have made during the coronavirus pandemic. Nearly 875,000 Londoners are dollar millionaires (denoting assets worth more than £720,000), according to an annual study of the fortunes of the world’s wealthiest people by the property consultants Knight Frank. – Guardian
The number of female directors at FTSE-100 firms has increased by 50% in the last five years, and women now hold more than a third of roles in the boardrooms of Britain’s top 350 companies, according to the final report of a review into female representation at the top of business. Although men still dominate the top ranks of business, the government-backed Hampton-Alexander review has achieved its target of 33% of board positions at FTSE 100 and FTSE 250 firms being held by women by the end of 2020. – Guardian
Oatly, the Swedish non-dairy milk maker backed by Oprah Winfrey, is set to go public with a New York listing that could value it at up to $10bn (£7.1bn). The company, whose products are sold in more than 20 countries, said it had submitted plans to go public less than a year after securing investment from celebrities including Oprah Winfrey and Jay-Z in a funding round led by buyout firm Blackstone. – Telegraph
Britain’s accounting watchdog has announced new rules to separate further the audit and consulting arms of the Big Four firms. KPMG, EY, Deloitte and PWC are in the process of building walls between their audit and advisory teams on the orders of the Financial Reporting Council (FRC). The FRC announced the planned operational separation of the firms in July. The measures, which must be in place by June 2024, are aimed at preventing a repeat of accounting scandals in recent years at companies including Carillion and Patisserie Valerie. – The Times
FTSE 350 companies that are not doing enough to improve diversity on their boards could face a shareholder revolt at their annual meetings this year. The Investment Association, which runs IVIS, a paid-for information service on listed companies, said that for this year’s AGM season it would issue an “amber-top” tag for companies that do not disclose the ethnic diversity of their board, or do not have a credible action plan to achieve targets of having at least one director from an ethnic minority background by 2021. – The Times
