ADVFN Morning London Market Report: Wednesday 14 April 2021

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London open: Stocks steady but Tesco slumps after results


London stocks were steady in early trade on Wednesday, held back by a stronger pound and disappointing results from Tesco, as investors awaited further news on the Johnson & Johnson Covid-19 vaccine that has been paused amid blood clot concerns.

At 0900 BST, the FTSE 100 was flat at 6,892.23.

Spreadex analyst Connor Campbell said: “Easing bond yields didn’t do much for Europe, with the markets eerily quiet at Wednesday’s open.

“The index’s hopes of rebuilding momentum were in part harmed by Tesco, which fell more than 3% following its full year update.

“In many ways it was a banner 12-months for Britain’s biggest supermarket, its pandemic offerings wooing customers away from its rivals and leading group sales 8.8% higher to £53.4bn. Yet Covid-related costs were an unavoidable factor, causing profits to plummet.”

The top-flight index was also hampered by a rebounding pound, which added 0.3% against the dollar. A stronger pound tends to dent the FTSE 100 as around 70% of its constituents derive most of their earnings from overseas.

In equity marketsTesco was in the red after it reported an unchanged annual dividend and a 20% drop in annual profit after Covid-19 costs outweighed higher revenue.

Airtel Africa tumbled after an unnamed institutional seller sold a 1.3% stake in the telecommunications company in a placing. The seller placed 50m shares in Airtel at 75p each.

On the upside, QinetiQ surged after saying its annual results are set to beat market expectations after a strong fourth quarter.

EasyJet was also a high riser after it said headline pre-tax losses for the first half will be slightly better than analysts’ expectations thanks to cost-cutting, and that it anticipates a pick-up in passenger numbers from late May.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Easyjet Plc +2.66% +24.60 948.60
2 Glencore Plc +2.58% +7.40 294.30
3 Antofagasta Plc +2.14% +37.00 1,762.50
4 Anglo American Plc +2.13% +65.00 3,116.00
5 Burberry Group Plc +1.89% +39.00 2,100.00
6 Tui Ag +1.89% +7.10 383.70
7 Bae Systems Plc +1.43% +7.20 509.80
8 Evraz Plc +1.37% +8.40 619.80
9 Scottish Mortgage Investment Trust Plc +1.25% +15.00 1,218.00
10 Bhp Group Plc +1.22% +26.00 2,163.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Tesco Plc -1.87% -4.35 227.75
2 Sainsbury (j) Plc -1.57% -3.80 239.00
3 Ferguson Plc -1.48% -136.00 9,074.00
4 Bt Group Plc -1.23% -1.85 148.95
5 Hargreaves Lansdown Plc -1.17% -19.50 1,651.50
6 Centrica Plc -1.16% -0.66 56.34
7 Kingfisher Plc -1.09% -3.70 336.90
8 Crh Plc -1.03% -36.00 3,469.00
9 Morrison (wm) Supermarkets Plc -0.77% -1.40 180.10
10 Flutter Entertainment Plc -0.75% -115.00 15,120.00


Europe open: Stocks move a tad higher ahead of ECB’s Lagarde and US earnings

Stocks across the Continent were slightly higher in early trades, tracking overnight gains on the US S&P 500 and Nasdaq Composite.

As Michael Hewson, chief market analyst at CMC Markets UK put it: “It’s been a slow start to the week for European stocks with little in the way of volume or direction, and it looks set to be a similar pattern today.”

As of 0959 GMT, the benchmark Stoxx 600 was up by 0.21% to 436.68, alongside a 0.46% advance for the Cac-40 to 6,212.82, while the Dax was hugging the flatline and barely changed at 15,237.21.

In the background, investors were waiting for the US quarterly corporate earnings season to get underway while they waited for European Central Bank chief Christine Lagarde, who was due to appear at a Reuters Newsmaker event.

At the sector level, technology issues were faring best within the Stoxx 600, with shares of software maker SAP topping the leaderboard.

Luxury stocks were also wanted, including the likes of Christian Dior and LVMH.

Going the other way, the Stoxx 600 Telecommunications gauge was down 0.63%, dragged down by Telefonica DeutschlandElisa Oyj and Telefon AB LM Ericsson.

Tesco was another top faller following the release of its latest full-year numbers.


US close: S&P ends session at fresh record high following CPI data

Wall Street stocks turned in a mixed performance on Tuesday after the Food and Drug Administration and the Centers for Disease Control recommended the use of Johnson & Johnson‘s single-dose Covid-19 vaccine be temporarily halted after six people out of the 7.0m who received the jab developed blood clots.

At the close, the Dow Jones Industrial Average was down 0.20% a 33,677.27, while the S&P 500 was 0.33% firmer at 4,141.59 and the Nasdaq Composite saw out the session 1.05% stronger at 13,996.10.

The Dow closed 68.13 points lower on Tuesday, extending losses recorded in the previous session, while the S&P 500 closed at another fresh record high.

America’s economic recovery from the Covid-19 pandemic was in throughout the session on Tuesday after the FDA’s recommendation that J&J’s vaccine be paused in order to observe “an abundance of caution” after six reported cases of a rare and severe type of blood clot following the vaccine’s administration.

The FDA said it would investigate the cases and until that process is complete, felt it was important to ensure that the health care provider community was aware of the potential for these adverse events and can plan due to the unique treatment required with the particular type of blood clot.

Acting FDA commissioner Janet Woodcock later said that she expects the pause to last only “a matter of days”, while Jeff Zients, the White House’s Covid-19 response coordinator, said that the FDA’s announcement should not have a material impact on vaccination efforts.

“Over the last few weeks, we have made available more than 25.0m doses of Pfizer and Moderna each week, and in fact this week we will make available 28.0m doses of these vaccines,” Zients said. “This is more than enough supply to continue the current pace of vaccinations of 3.0m shots per day, and meet the President’s goal of 200.0m shots by his 100th day in office.”

On the macro front, the US consumer price index increased 0.6% on a seasonally adjusted basis in March after rising 0.4% in February, according to the Bureau of Labor Statistics, marking the largest rise since a 0.6% jump in August 2012. Over the last 12 months, the all-items index increased 2.6% before seasonal adjustment, a much larger increase than the 1.7% reported for February.

Discussing the reading, Pantheon Macroeconomics‘ Ian Shepherdson said: “The Fed won’t be bothered by a few months of outsized core CPI gains, or the base effects which pushed up year-over-year core CPI inflation in March and will have a much bigger effect in April, driving the rate close to 2.5%. After years of undershooting, the Fed wants inflation above the target for a while.

“Officials will call the increase in inflation ‘transitory’ and will push back hard against the idea that any sort of policy reponse is needed. That idea will hold for a while, but if the increase in inflation persists, and – especially – if it is accompanied by faster wage growth, then the Fed’s line will become untenable. We continue to expect tapering by the end of this year and 50bp in hikes next year.”

Elsewhere on the data front, small business optimism hit a four-month high in March, according to the National Federation of Independent Business, coming in at 98.2 for the month, just shy of the 98.5 expected on the Street. The NFIB did also note that the uncertainty index did increase to 81 – a three-month high and up from 75 in February.

The NFIB said: “Main Street is doing better as state and local restrictions are eased, but finding qualified labour is a critical issue for small businesses nationwide. However, owners remain determined to hire workers and grow their business.”


Wednesday newspaper round-up: British Gas, pubs, Sainsbury’s

Hundreds of British Gas engineers will lose their jobs by midday on Wednesday after refusing to sign up to tougher employment terms imposed by the company’s controversial “fire and rehire” scheme. On 1 April Britain’s biggest energy supplier handed dismissal notices to close to 1,000 of its engineers, who install and repair boilers and heating systems for the company’snine million service customers. – Guardian

Celebration was in the air as England welcomed the return of outdoor drinking and dining on Monday, but the easing of lockdown was also met with concerns about a lack of social distancing, and a wider sense of nervousness within the hospitality sector as businesses tried to operate at significantly lower capacity and with some confusion over the rules. As people braved the inclement weather to enjoy their first night out in months, images circulated on social media showing packed streets and “very little” social distancing in Soho in London. – Guardian

A billionaire investor known as the “Czech sphinx” has launched a raid on Sainsbury’s – sparking speculation that Britain’s second-biggest supermarket could be targeted in a deal to take it private. Daniel Kretinsky’s firm Vesa Equity Investments has increased its stake in the grocer to almost 10pc by buying shares worth more than £300m from Qatar’s sovereign wealth fund. – Telegraph

A star stock picker has cemented his status as one of the highest-paid investors after it emerged that Terry Smith stood to earn as much as £125 million from his Fundsmith asset management business last year. The accounts for Fundsmith show that its boss took home £29.7 million of the £48.5 million in profits earned by the partnership in the 12 months to the end of March 2020. This was almost double the £16.2 million profit share he received a year earlier. – The Times

The financial watchdog will undertake a thorough post-Brexit review of Britain’s capital markets to help attract more foreign company listings, one of its senior regulators has said. The comments by Clare Cole, the Financial Conduct Authority’s director of market oversight, were reinforced by Nausicaa Delfas, head of the its international division, who said that Britain could use its freedom from European Union rules to regulate markets flexibly. – The Times


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