ADVFN Morning London Market Report: Friday 16 April 2021

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London open: FTSE 100 breaches 7,000 for first time since pandemic


London stocks rose in early trade on Friday, with the top-flight index breaching the 7,000 level for the first time since February 2020 as investors mulled encouraging Chinese growth figures.

At 0900 BST, the FTSE 100 was up 0.5% at 7,018.13.

Figures released earlier by the National Bureau of Statistics showed China’s economy bounced back from the pandemic in the first quarter.

GDP growth jumped to a record 18.3% in the first quarter from 6.5% in the final quarter of last year. The figures came in below expectations for 18.5% growth but marked the best year-on-year growth since records began in 1992.

On a quarter-on-quarter basis, growth was 0.6% in the first quarter, down from an upwardly revised 3.2% in the fourth quarter of 2020 and below consensus expectations of 1.4% growth.

“The national economy made a good start,” the NBS said. However, it cautioned: “We must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities.”

Capital Economics said flattering base effects were masking a sharp slowdown.

“China’s GDP growth jumped to a record high in y/y terms last quarter. But this was entirely due to a weaker base for comparison from last year’s historic downturn. In q/q terms, growth dropped back sharply and, with the exception of Q1 last year, was slower than at any other time during the past decade.”

Other figures from the NBS showed that retail spending rose 34.2% in March, up from 33.8% in February and above consensus expectations of a 28% increase.

Industrial production growth slowed to 14.1% in March from 35.1% in February, coming in below expectations of 18.0%. Meanwhile, fixed asset investment growth slowed to 25.6% in March from 35% the month before and versus consensus of 26% growth.

In equity markets, miners were among the top performers after the Chinese data, with Antofagasta and Anglo American both up.

Ashmore was trading higher even as it said funds under management fell 3% in the first quarter as negative investment performance outweighed extra funds from investors.

Man Group gained a little after it said funds under management increased to $127bn (£92.3bn) in the three months to the end of March from $123.6bn at the end of December.

WHSmith was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, but Dixons Carphone was knocked lower by a downgrade to ‘sector perform’ by the same outfit.

Kainos slumped even as the IT provider said results for the year to the end of March 2021 are set to be at the upper end of consensus after the momentum outlined in its trading update in January was maintained.

Shore Capital said: “In the absence of a further upgrade today, and after the strong run up the shares had of late, there may be a ‘pause for breath’ moment at this juncture with the potential for some downside pressure (better to travel than to arrive?).”

TI Fluid Systems slumped after its largest shareholder, Bain Capital, and outgoing chief executive Bill Kozyra placed 52.4m shares in the company in an accelerated bookbuild to institutional investors. The shares were placed at 280p each, versus Thursday’s closing price of 308p. Bain placed 52m, while Kozyra placed the rest.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Bt Group Plc +2.72% +4.10 154.65
2 Evraz Plc +2.54% +15.60 629.60
3 International Consolidated Airlines Group S.a. +2.54% +5.25 212.20
4 Ocado Group Plc +2.43% +52.00 2,193.00
5 Easyjet Plc +2.42% +24.00 1,014.00
6 Experian Plc +2.21% +59.00 2,725.00
7 Barclays Plc +2.18% +4.02 188.66
8 Lloyds Banking Group Plc +1.66% +0.71 43.52
9 Flutter Entertainment Plc +1.63% +250.00 15,565.00
10 Anglo American Plc +1.62% +51.00 3,200.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Barratt Developments Plc -1.31% -10.40 784.40
2 Admiral Group Plc -0.78% -25.00 3,182.00
3 Rightmove Plc -0.61% -3.80 614.20
4 United Utilities Group Plc -0.56% -5.40 961.00
5 Prudential Plc -0.54% -8.50 1,562.00
6 Hikma Pharmaceuticals Plc -0.46% -11.00 2,397.00
7 Fresnillo Plc -0.45% -4.20 923.60
8 Direct Line Insurance Group Plc -0.40% -1.20 302.20
9 Taylor Wimpey Plc -0.29% -0.55 191.15
10 Severn Trent Plc -0.29% -7.00 2,435.00


Europe open: Stocks tracking gains on Wall Street, cyclicals in the lead

Stocks on the Continent have started the day higher, taking their cue from another very strong finish to trading on Wall Street overnight.

Of key importance were the far stronger-than-expected readings on jobless claims and retail sales published the day before in the US, which was feeding expectations for a big rebound in activity in 2021.

As of 0920 GMT, the pan-European benchmark Stoxx 600 was ahead by 0.27% to 439.72, alongside a 0.59% advance for Germany’s Dax to 15,345.46 while the FTSE Mibtel was up 0.21% to 24,582.31.

Not surprisingly, cyclical names were doing best, with the Stoxx 600s gauge for Autos and Parts companies ahead by 1.63% and that for Banks 1.05% higher.

The sector index for Basic Resources meanwhile was adding 0.5%, despite a slate of modestly weaker-than-expected activity data out of China for last month.

Nonetheless, analysts at Pantheon Macroeconomics said that Chinese economic growth should remain “elevated” in 2021, despite the “blemish” from soft fixed asset investment in March.

Back in European news, German Chancellor, Angela Merkel, is pushing for greater powers from lawmakers that would allow her to impose coronavirus lockdowns and curfews where needed in her country.

Euro area finance ministers are scheduled to meet via videolink at the end of the week.

The ongoing work to complete the bloc’s Banking Union expected to be one of the main subjects under discussion at that gathering.

European Union Finance ministers will also meet on Friday, but to discuss the EU’s economic recovery plan, including as regards the economic situation and outlook.


US close: Stocks higher as jobless claims beat expectations

Wall Street stocks were in positive territory at the close on Thursday, thanks to some better-than-expected jobless claims data and corporate results.

At the end of the session, the Dow Jones Industrial Average was up 0.9% at 34,035.99, as the S&P 500 added 1.11% to 4,170.42 and the Nasdaq Composite advanced 1.31% to 14,038.76.

The Dow closed 305.1 points higher on Thursday, extending gains recorded in what turned out to be a mixed session for major indices on Wednesday as market participants rifled through some strong earnings from several of the nation’s largest banks.

Traders were digesting news that the number of Americans signing up for unemployment benefits fell to 576,000 in the week ended 10 April, the lowest number recorded since the beginning of the Covid-19 pandemic.

According to the Labor Department, applications crashed 193,000 from last week’s revised print of 769,000, with the weekly print now remaining sharply below early January’s peak of 900,000.

Continuing jobless claims came in at 3.73m, broadly flat on the prior week’s print of 3.72m.

Elsewhere on the macro front, the Philadelphia Fed manufacturing current index rose from 44.5 to 50.2 in April to its highest level in nearly 50 years, while the Empire State Manufacturing Index of general business conditions rose to 26.3 in April.

That was up from 17.4 and well above expectations for a print of 18.2 to a multi-year high, well past levels seen prior to the Covid-19 pandemic.

Still on data, production at US factories jumped the most it has in eight months during March, with manufacturing returning to a path of solid growth following weather-related setbacks in February.

According to the Federal Reserve, the 2.7% increase in output followed a downwardly revised 3.7% decline in February, while total industrial production, which also includes mining and utility output, rose 1.4% in March after a revised 2.6% decrease in the previous month.

The NAHB‘s housing market index for April showed that sentiment amongst builders rose one point to 83, with builders facing strong demand from potential buyers due to the existing home market continuing to suffer from record low numbers of listings.

Corporate earnings were firmly in focus on Thursday, with Bank of America falling 2.86% even after it posted earnings that came in well ahead of expectations on the Street thanks to a solid performance from its trading and investment units and the release of loan-loss reserves.

PepsiCo shares were up 0.14% after the drinks and snacks maker posted a 7% jump in quarterly sales, topping estimates.

Dow constituent UnitedHealth advanced 3.83% after its quarterly results topped analysts’ expectations, and the insurer raised its full-year 2021 guidance.


Friday newspaper round-up: Gambling firms, rail tickets, Entain, chip shortage

Gambling firms behind more than £30m in football shirt sponsorship deals have been accused of making “insulting” contributions to the industry-funded addiction charity, with one giving just £250. An annual list of donors to GambleAware, which is funded by online casinos and bookmakers, details how much individual firms have given. – Guardian

Ministers and rail chiefs are putting the finishing touches to a new system of flexible rail season tickets designed to entice commuters back to city centres as they split their time between home and the office. Concerns over costs mean the discounts on offer will be much less generous than for a traditional season ticket, with mandarins attempting to spare the taxpayer from further expense after handing over £10bn in subsidies to keep services running, the Telegraph can reveal. – Telegraph

Dublin has emerged as an early winner in the battle for City jobs post-Brexit after it was picked by a quarter of firms forced to move business to an EU hub, new research shows. New Financial, a think tank, has identified 135 firms that have relocated business to Dublin as a result of Brexit. Some 102 firms picked Paris, 95 opted for Luxembourg, 63 Frankfurt and 48 Amsterdam. – Telegraph

The world’s biggest contract chipmaker has warned that tight chip supplies will probably continue into next year amid a global shortage that has disrupted production across the technology and automotive sectors. Taiwan Semiconductor Manufacturing Company said that it was expanding capacity and would keep pricing in check to alleviate the pressure. – The Times

The betting group that owns the Ladbrokes and Coral chains said yesterday that it was keeping the issue of furlough payments “under review”, but it refused to commit to returning the cash as online profits soar. Entain is under pressure to clarify its position after William Hill handed back £24.5 million of payments last year and after Flutter opted not to claim £25 million from the British and Irish governments for employees of its Paddy Power shops. – The Times


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