ADVFN Morning London Market Report: Thursday 25 February 2021

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London open: Stocks edge up amid earnings avalanche


London stocks edged higher in early trade on Thursday following positive US and Asian sessions, as investors set aside their concerns about inflation and waded through an avalanche of earnings reports.

At 0850 GMT, the FTSE 100 was up 0.3% at 6,679.51, while the pound was flat against the dollar at 1.4143.

Spreadex analyst Connor Campbell said: “The Dow Jones closed a whisker below 32,000 on Wednesday night, spurred on by Jerome Powell’s reassurances that the incoming stimulus package won’t over-juice inflation, and that the Federal Reserve is committed to giving the US economy the help it needs.

“The addition of more than 400 points puts the Dow in a primo position this Thursday – even a timid, 0.2% open, as forecast, will see it hit the 32,000 milestone. Unthinkable 11 months ago to the day, when it neared 18,000 in the aftermath of the first wave of pandemic panic.

“The European markets didn’t take the ball and run with it on Thursday. Nevertheless, it was a uniformly green, if meek, start to trading.”

In equity markets, paper and packaging group DS Smith was the top gainer on the FTSE 100 following reports that rival Mondi is considering a £5bn takeover.

Anglo American rallied as a boom in commodity prices and the easing of Covid curbs in the second half helped the miner to report better-than-expected annual profits and lift its dividend. Mining stocks more generally were on the rise as copper prices rallied.

FTSE 250 construction and regeneration group Morgan Sindall gained as it reported a decline in full-year profit as the Covid-19 crisis had an impact, but upgraded its expectations for 2021.

Aston MartinSerco and Grafton were also higher after full-year results.

On the downside, Standard Chartered fell after it said annual profits more than halved on bad loan impairments due to the coronavirus pandemic, as it resumed dividend payments and announced a share buyback. The Asia-focused bank said pre-tax profits fell 57% to $1.61bn, below the $1.85bn average of bank-compiled analyst forecasts. Credit impairments more than doubled to $2.3bn.

Hikma PharmaceuticalsCentricaGenusSpectris and Howden Joinery were also weaker after the release of their full-year numbers.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Smith (ds) Plc +7.97% +30.60 414.60
2 Anglo American Plc +4.08% +116.00 2,957.50
3 Hsbc Holdings Plc +3.75% +16.10 445.40
4 Rolls-royce Holdings Plc +3.04% +3.40 115.30
5 Micro Focus International Plc +3.03% +13.40 455.30
6 Burberry Group Plc +2.27% +42.00 1,893.50
7 Bp Plc +2.24% +6.70 305.50
8 Royal Dutch Shell Plc +2.20% +31.40 1,460.20
9 Pearson Plc +2.13% +16.00 768.60
10 Royal Dutch Shell Plc +2.11% +31.20 1,512.80


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Hikma Pharmaceuticals Plc -8.44% -204.00 2,213.00
2 Standard Chartered Plc -4.85% -24.70 484.70
3 Centrica Plc -3.55% -1.90 51.60
4 Berkeley Group Holdings (the) Plc -2.64% -114.00 4,203.00
5 Tui Ag -2.16% -9.70 439.30
6 Persimmon Plc -1.70% -47.00 2,717.00
7 Astrazeneca Plc -1.57% -112.00 7,008.00
8 Barratt Developments Plc -1.32% -9.20 685.60
9 Fresnillo Plc -1.28% -12.40 953.40
10 Ashtead Group Plc -1.26% -51.00 4,006.00


US close: Stocks finish higher as single-shot vaccine gets approved

Wall Street stocks closed in positive territory on Wednesday, as government bond yields continued to draw investor attention, and a single-shot Covid-19 vaccine received emergency use authorisation by the FDA.

At the close, the Dow Jones Industrial Average was up 1.35% at 31,961.86, as the S&P 500 added 1.14% to 3,925.43, and the Nasdaq Composite advanced 0.99% to 13,597.97.

The Dow closed 424.51 points higher on Wednesday, adding to the modest gains recorded a day earlier after Federal Reserve chairman Jerome Powell told the Senate Banking Committee that inflation was still “soft” and stated the US economy was “a long way” from its goals for both employment and inflation goals.

Powell’s testimony on Capitol Hill continued on Wednesday, with the Fed head addressing the House of Representatives Financial Services Committee.

Wednesday’s primary focus was the 10-year Treasury yield note, which ended the day at 1.38%, having earlier topped 1.4% to hit its highest level since February last year.

That was likely something that could prompt investors to rotate out of stocks and into bonds, while also hamstringing growth companies in the technology sector that had previously benefited from the low-rate environment.

Biden’s Covid-19 stimulus plan was also in focus on Wednesday, with the Democrat-led House likely to approve the stimulus package before the President looks to push the full package through the Senate.

On the macro front, mortgage applications fell 11.4% in the week ended 19 February, according to the Mortgage Bankers Association, as higher mortgage rates weighed on demand.0

“Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed-rate last week climbing above 3% to its highest level since September 2020,” said MBA‘s Joel Kan.

“As a result of these higher rates, overall refinance activity fell 11% to its lowest level since December 2020, but remained 50% higher than a year ago.”

Elsewhere, new home sales increased to 923,000 in January, according to the Department of Commerce, well ahead of both estimates for a reading of 856,000 and last month’s revised reading of 885,000.

In the corporate space, Tesla shares were in the green by 6.18% after word broke that Ark Invest‘s Cathie Wood raised her stake in the firm by more than $120m during Tuesday’s selloff.

Pharmaceuticals and consumer products giant Johnson & Johnson was ahead 1.34%, after the Food and Drug Administration approved its single-shot Covid-19 vaccine for emergency use.


Thursday newspaper round-up: Corporation tax, Mondi, Soho House, H&M

Keir Starmer is under pressure to back future rises in corporation tax after a backlash when the Labour leader said he would oppose any new tax on business in next week’s budget. Treasury officials are believed to be looking at increasing the tax on company profits from the current rate of 19% to up to 25% as the government tries to recoup some of the massive debts incurred during the pandemic, though the rise may be delayed until later in the parliament. – Guardian

Rishi Sunak has ruled out a rise in fuel duty after concluding that reliance on cars as a transport safety measure during the pandemic is still too great, Treasury sources have said. The chancellor is understood to have seriously considered an increase before his previous budget last March, keen to send a signal about the UK government’s green agenda. – Guardian

Packaging and paper group Mondi is considering a bid for rival DS Smith in what would be one of the largest deals in the UK this year. FTSE 100-listed Mondi has been speaking with advisers, reported Bloomberg. An acquisition of fellow blue-chip DS Smith, worth over £5bn, would add another 30,000 to Mondi’s 26,000- strong global workforce. – Telegraph

Soho House, the chain of private members’ clubs, is poised to join the flotation boom as it plans to list in New York with a valuation of as much as $3 billion. The company, which pulled a mooted $2 billion Wall Street float in 2018, has hired JP Morgan and Morgan Stanley for a second attempt, aiming to capitalise on America’s buoyant equity markets, new digital ventures and a membership that has proved resilient despite the impact of coronavirus. It intends to make its formal filing with the US Securities and Exchange Commission next month. – The Times

H&M is considering using more of its shops for repairing and renting clothes as well as selling more second-hand stock online as the pandemic has forced it to rethink its future. The Swedish fashion retailer has more than 5,000 shops in 700 countries through its main brand and sister outlets including Cos, Monki and Arket. – The Times


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