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London open: Stocks rally on positive US cues; miners in the black
London stocks kicked off February on the front foot on Tuesday, taking their cue from a positive session on Wall Street.
At 0855 GMT, the FTSE 100 was up 0.9% at 7,529.03.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets are making a fresh start in February, attempting to put the January gyrations to one side as all major bourses trade in the green with financials and basic recourses leading the gains. The DAX is leading the charge up by 1% while the FTSE 100 stages convincing gains pushing away from support at 7,500 with 7,550 the near-term resistance level to eye.
“Amid the market turmoil in January with the S&P 500 logging its worst month since March 2020 and with Europe’s Stoxx 600 suffering its sharpest decline since October 2020, the FTSE 100 managed to buck the downtrend, eking out a modest 1.1% monthly gain. Having fallen out of favour since Brexit, the rotation away from US tech has provided an opportunity for the FTSE 100 to play catch up, thanks to the indices in vogue leaning towards energy and financials and its attractive valuations.
“There is also a sense among investors that despite the naysayers, the City of London has upheld its position as a leading global financial hub post Brexit, with international flows returning to the UK market.”
On the macro front, net lending, consumer credit and Markit’s manufacturing PMI are all due at 0930 GMT.
Before that, though, investors were mulling over the latest survey from Nationwide, which showed that the housing market had its strongest start to the year for nearly two decades in January as supply failed to keep up with “robust” demand.
According to the latest Nationwide house price index, annual house price growth rose to 11.2% in January, compared to 10.4% in December. The above-consensus rise was the highest since June 2021, and the strongest start to the year for 17 years. Analysts had been expecting growth closer to 10.9%.
Month-on-month, prices rose by 0.8% which, once seasonal effects were accounted for, was the sixth consecutive monthly increase. It was below December’s rise of 1.1% but ahead of forecasts; most analysts had been expecting a rise of around 0.6%.
The average price of a property now stands at £255,556, compared to £254,822 a month previously. Nationwide attributed the growth to strong demand and limited supply.
Robert Gardner, Nationwide chief economist, said: “Housing demand has remained robust. Mortgage approvals for house purchase have continued to run slightly above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.
“At the same time, the stock of homes on estate agents’ books has remained extremely low, which is contributing to the continued pace of house price growth.”
In equity markets, miners were among the standout gainers as metals prices rose, with Rio Tinto, Anglo American and Glencore all higher.
Elsewhere, lender Virgin Money was trading up after it lifted guidance for its net interest margin – the difference between borrowing and savings rates – as the economy recovered from the Covid pandemic and inflation pushed up the cost of loans.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Scottish Mortgage Investment Trust Plc | +3.89% | +42.00 | 1,121.00 |
| 2 |  |
Carnival Plc | +2.99% | +39.60 | 1,365.60 |
| 3 |  |
Rio Tinto Plc | +2.95% | +153.00 | 5,338.00 |
| 4 |  |
Anglo American Plc | +2.83% | +91.50 | 3,319.50 |
| 5 |  |
Glencore Plc | +2.81% | +10.75 | 393.75 |
| 6 |  |
Antofagasta Plc | +2.78% | +37.00 | 1,369.50 |
| 7 |  |
Experian Plc | +2.76% | +85.00 | 3,166.00 |
| 8 |  |
Crh Plc | +2.61% | +97.00 | 3,810.00 |
| 9 |  |
Micro Focus International Plc | +2.59% | +11.70 | 464.30 |
| 10 |  |
Melrose Industries Plc | +2.42% | +3.60 | 152.60 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Astrazeneca Plc | -1.94% | -167.00 | 8,450.00 |
| 2 |  |
Vodafone Group Plc | -1.80% | -2.34 | 127.68 |
| 3 |  |
Ocado Group Plc | -1.16% | -17.50 | 1,486.50 |
| 4 |  |
Imperial Brands Plc | -1.11% | -19.50 | 1,732.00 |
| 5 |  |
Sainsbury (j) Plc | -1.00% | -2.90 | 287.80 |
| 6 |  |
British American Tobacco Plc | -0.79% | -25.00 | 3,138.50 |
| 7 |  |
Bt Group Plc | -0.46% | -0.90 | 194.65 |
| 8 |  |
Johnson Matthey Plc | -0.28% | -5.50 | 1,934.50 |
| 9 |  |
Glaxosmithkline Plc | -0.12% | -2.00 | 1,641.00 |
| 10 |  |
Hikma Pharmaceuticals Plc | -0.05% | -1.00 | 2,077.00 |
Europe open: Shares surge after Wall Street rally; UBS results please
European shares made a strong start at the opening on Tuesday following a rally in US tech stocks overnight.
The pan-European Stoxx 600 index was up 1% in early deals with all regional bourses higher.
Wall Street shares closed higher after Assistant Secretary for Economic Policy Ben Harris said US inflationary pressures should ease in 2022 due to weaker demand for goods, easing supply bottlenecks and a receding pandemic.
In the UK, industry data showed the housing market had its strongest start to the year for nearly two decades in January, as supply failed to keep up with “robust” demand.
According to the latest Nationwide House Price Index, annual house price growth rose to 11.2% in January, compared to 10.4% in December. The above-consensus rise was the highest since June 2021, and the strongest start to the year for 17 years. Analysts had been expecting growth closer to 10.9%.
In equity news, Swiss banking giant UBS rose to the top of the Stoxx with a 7% rise after posting its best annual profit since the global financial crisis of 2008, as it increased share buybacks and profit guidance.
HeidelbergCement shares were up after, better-than-expected rise in fourth-quarter sales and earnings prompted the German cement maker to release results ahead of schedule on Monday.
Automaker Stellantis advanced 2% after union sources said the company could cut up to 1,400 jobs in France this year.
US close: Stocks end final session of wild month on a positive note
Wall Street stocks recorded gains on Monday but the S&P 500 failed to avoid delivering its worst monthly performance since the beginning of the Covid-19 pandemic in March 2020.
At the close, the Dow Jones Industrial Average was up 1.17% at 35,131.86, while the S&P 500 was 1.89% stronger at 4,515.55 and the Nasdaq Composite saw out the session 3.41% firmer at 14,239.88.
The Dow closed 406.39 points higher on Monday, building upon solid gains for the major indices recorded on Friday as a rollercoaster week drew to a close on a positive note.
While the day was fairly quiet in terms of market-moving headlines, Monday’s moves come ahead of a stacked week for both economic data and earnings reports from a number of the US’ largest names in tech.
December’s nonfarm payrolls report, which the Biden administration previously cautioned could be heavily impacted by surging Covid-19 cases on account of the Omicron variant, will be published on Friday, while Alphabet, Starbucks, Meta Platforms, Amazon and more will all report earnings before the week is out.
In focus throughout the session, the yield on the benchmark 10-year Treasury note ticked slightly higher to 1.780%.
On the macro front, the Chicago purchasing manager’s index increased to 63.1 in December from 61.8 a month earlier to beat market expectations of 62, according to the Institute for Supply Management. Production increased to its highest reading since July 2021, while new orders rebounded and inventories hit a four-year high as firms created buffers for longer lead times, while prices paid fell to a seven-month low.
Elsewhere, the Dallas Fed‘s January manufacturing index moderated in January, with the index falling to 16.6 on the month versus 26.0 in December.
In the corporate space, US software maker Citrix has agreed to be bought by affiliates of Elliott Investment Management and Vista Equity Partners for $16.5bn in cash. Under the terms of the deal, Citrix shareholders will receive $104.00 per share. This is a 30% premium to the price on 7 December, which was the last trading day before speculation about a deal and a 24% premium to the price on 20 December, which was the last trading day prior to media reports about a potential bid from Vista and Evergreen.
Tech darlings Netflix and Spotify shares both recorded double-digit gains after being on the receiving end of upgrades from analysts Citi.
Tuesday newspaper round-up: Tesco, Sony, Klarna
Treasury officials have quietly introduced a new “super tax” to deter energy company owners from cashing out lucrative contracts for gas bought in advance before leaving their supply business to go under. The government quickly pushed through the new laws late last week to counter industry concerns that Stephen Fitzpatrick, the founder of Ovo Energy, could use his almost two-thirds stake in the company to liquidate its long-term gas contracts and exit the supply market with a hefty profit. – Guardian
Tesco is closing its Jack’s discount chain, created to win back shoppers from Aldi and Lidl, less than four years after it was launched. Britain’s biggest grocer opened the first Jack’s stores – named after the supermarket’s founder, Jack Cohen – in September 2018, in Chatteris in Cambridgeshire and Immingham in Lincolnshire, with a promise to be “the cheapest in town”. – Guardian
Sony is to buy Bungie, a leading American video games developer, for $3.6 billion amid the flurry of dealmaking across the sector. The Japanese conglomerate — one of the global gaming industry’s dominant players — has agreed to acquire the creator of the Halo and Destiny franchises in an attempt to expand the reach of its PlayStation console. – The Times
The founder of Games Workshop is launching a special purpose acquisition vehicle in London as he looks to buy a company in the video games or “metaverse” industries. Sir Ian Livingstone, who was also the chairman of the games developer Sumo Group before it was sold to Tencent for £1 billion last month, is asking investors to back him with £115 million. Through his Hiro Metaverse Acquisitions I vehicle, he wants to find and buy a video games studio, an esports platform, a digital sports business, a health app or virtual reality company. – The Times
Downing Street has launched an audacious bid to lure the $45bn (£34bn) payments behemoth Klarna to the London Stock Exchange amid fears that high-growth companies are snubbing the City for New York. Ministers courted the Swedish business at a Number 10 meeting in which they encouraged some of Europe’s largest tech companies to float in the City by touting the opportunities for post-Brexit reform. – Telegraph
