ADVFN Morning London Market Report: Wednesday 28 April 2021

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London open: Stocks slightly higher ahead of Fed decision


Stocks are modestly higher in early trading even as investors wait on the US central bank’s policy announcement later in the day.

Helping to bolster sentiment, overnight US technology giant Alphabet posted record quarterly profits on the back of strong ad sales, boosting its share price by 5% in pre-market trading.

As for the Fed, no actual changes on policy settings are anticipated, but some economists are hoping that policymakers will offer more details on just how long it might be until they start shifting towards reducing bond purchases or so-called ‘tapering’.

Nevertheless, any rise in interest rates was not expected to materialise until 2021 – if then.

Against that backdrop, as of 0911 BST the FTSE 100 was up 0.19% or 12.9 points at 6,957.87, while the second-tier index was gaining 0.42% or 94.62 points to 22,519.5.

Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA, told clients: “Investors continue to reshuffle exposure ahead of today’s US FOMC meeting, with equities trading sideways, the US Dollar rising modestly, and the long end of the US yield curve steepening.

“The scale of the shuffle, though, hints at caution and not panic. Assuming that the FOMC stays resolutely “on message,” I expect buy everything business as usual to return shortly thereafter.”

No major economic reports are scheduled for release in the UK.

A reading on GfK‘s German consumer confidence index for May underwhelmed analysts, coming in at -8.8 which was down from -6.1 in April and below forecasts for an improvement -4.2.

In France, INSEE reported that its confidence index as unchanged in April from the month before at 94.0 (consensus: 93.0).

Pantheon Macroeconomics‘s Claus Vistesen labeled the reading on the French index as “decent, but still far away from pre-virus levels”.

LSE Group reports “good” trading, Lloyds reverses credit provisions

London Stock Exchange Group said it had a good first quarter as it reported a 4% increase in its favoured profit measure driven by growth in data and analytics and capital markets transactions. Gross profit excluding currency fluctuations and a deferred revenue adjustment rose 4% to £1.54bn in the three months to the end of March from a year earlier as total income excluding recoveries rose 3.9% to £1.68bn. Reported gross profit fell 0.5% and reported income fell 1.2%. All the figures exclude the acquisition of Refinitiv in January.

Lloyds Bank reported better than expected first quarter profits after releasing £459m set aside for potential Covid-related bad loans, reflecting an improved economic outlook, in the last set of results for outgoing chief executive António Horta-Osório. The bank said pre-tax profits came in at £1.9bn compared with £74m a year ago and against analysts forecasts of £1.1bn. Results were helped by a net impairment credit of £323m in the quarter, as Lloyds released £459m previously set aside to deal with the coronavirus pandemic.

British American Tobacco said it was confident about hitting its 2021 targets after a good start to the year for the cigarette and smoking alternatives company. The FTSE 100 company said its new categories business had strong growth in new customers, sales volumes and market share so far in 2021. In a statement for its annual general meeting BAT said it was confident the division would achieve its target of £5bn revenue by 2025. Combustible tobacco products, including cigarettes, had good revenue growth with strong pricing partly offset by geographic mix as emerging markets recover from Covid-19.

Reckitt Benckiser reported group like-for-like net revenue growth of 4.1% to £3.51bn in its first quarter on Wednesday, with like-for-like growth in its hygiene division standing at 28.5%. The FTSE 100 consumer products giant said its health operations saw a like-for-like decline of 13%, meanwhile, as its nutrition unit turned in a like-for-like decline of 7.4%. It left its outlook for 2021 unchanged, with the board saying the company remained on track with its medium-term goals.

Advertising giant WPP posted organic first quarter sales growth on a comparable basis of 3.1%, easily outpacing analysts’ estimates for a dip of 0.37%. First quarter revenues on the other hand printed a tad below forecasts, coming in at £2.9bn (consensus: £2.98bn).

Homebuilder Persimmon said on Wednesday that its year-to-date forward sales position had improved 23% year-on-year to £3.0bn, despite the impacts of the Covid-19 pandemic. That compared to roughly £2.4bn at the same time a year ago. The FTSE 100-listed group’s average selling price for homes sold to private owner-occupiers in the forward order book came to £252,000, up from £244,500 twelve months earlier, with Persimmon stating customer inquiry levels remained “encouraging” throughout the year-to-date as its average private sales rate came in “well ahead” of 2020.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Itv Plc +3.52% +4.10 120.65
2 Lloyds Banking Group Plc +3.27% +1.43 45.00
3 Wpp Plc +3.05% +29.00 980.00
4 Tui Ag +2.17% +9.40 442.70
5 Persimmon Plc +1.84% +58.00 3,205.00
6 Barratt Developments Plc +1.77% +13.60 783.00
7 Associated British Foods Plc +1.69% +39.00 2,342.00
8 Berkeley Group Holdings (the) Plc +1.62% +74.00 4,648.00
9 Micro Focus International Plc +1.57% +8.00 518.00
10 Bp Plc +1.47% +4.35 299.65


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Fresnillo Plc -2.91% -25.80 860.80
2 Sainsbury (j) Plc -2.48% -6.00 236.10
3 Flutter Entertainment Plc -1.05% -165.00 15,480.00
4 Spirax-sarco Engineering Plc -1.02% -125.00 12,075.00
5 Croda International Plc -1.02% -70.00 6,794.00
6 Smith (ds) Plc -1.01% -4.20 411.20
7 Admiral Group Plc -1.01% -32.00 3,138.00
8 Hikma Pharmaceuticals Plc -0.99% -23.00 2,298.00
9 Ashtead Group Plc -0.85% -40.00 4,651.00
10 Bunzl Plc -0.81% -19.00 2,322.00


Europe open: Shares subdued despite solid regional bank earnings

European stocks struggled for direction at the opening on Wednesday with strong results from Deutsche BankLloyds Banking Group and Santander boosting local markets.

The pan-European STOXX 600 index was down 0.4% in early trading. UK, German and French markets all modestly outperformed the benchmark.

Deutsche Bank shares jumped 6.1% to the top of the Stoxx as strength at its investment bank helped offset headwinds from restructuring and the pandemic. Lloyds rose 4.2% after reporting a better-than-expected profit and lower Covid-19 bad debt provisions. Sweden’s SEB and Spain’s Santander were also higher after quarterly results, while Commerzbank also gained.

Reckitt Benckiser fell despite the company maintaining full-year guidance.

Shares in building supplies group Travis Perkins slumped more than 10% after its shareholders approved the demerger of Wickes Group.

The spinoff plans were originally unveiled by Travis Perkins in December 2018 with a view to focusing on its advantaged trade businesses and simplifying the group to enable a more streamlined cost structure. However, the plans were put on hold in March 2020 when the Covid pandemic took hold.


US close: Stocks mixed ahead of major tech earnings

Wall Street stocks turned a mixed performance on Tuesday ahead of a big batch of tech earnings after the close.

At the close, the Dow Jones Industrial Average was up 0.01% at 33,984.93, while the S&P 500 was 0.02% weaker at 4,186.72 and the Nasdaq Composite saw out the session 0.34% softer at 14,090.22.

The Dow closed just 3.36 points higher on Tuesday.

Tesla shares were in the red despite the electric carmaker posting record quarterly net incomes of $438.0m, while UPS shares soared after smashing Wall Street estimates with first-quarter revenue growth of 27%.

Alphabet posted a first-quarter profit twice as high as the same time a year earlier, driven by a surge in Google ad sales, while Microsoft reported a surge in sales amid demand for cloud services and PCs amid the Covid-19 pandemic.

On the macro front, S&P/Case-Shiller‘s home price index revealed home prices had seen their biggest gain in 15 years in February, rising 12% year-on-year, up from 11.2% in January, as tight supply and strong demand led to bidding wars.

Elsewhere, consumer confidence surged to a 14-month high in April, with rising vaccinations, falling Covid-19 cases and a resurgent US economy easing anxieties. According to the Conference Board, consumer confidence climbed to 121.7 in April from a revised print of 109 for March – the highest level seen since February 2020.

Lastly, the Richmond Federal Reserve’s April manufacturing index came in at 17, flat month-on-month and versus expectations for a reading of 22.

Also in focus, the Federal Reserve kicked off its two-day policy meeting today, with the central bank not expected to take any action.


Wednesday newspaper round-up: Banking scandals, OneWeb, Alphabet, Archegos, IAG

A scheme set up to provide compensation to victims of banking scandals has cost more than £23 million to establish, but is yet to issue a penny in redress to small business owners. The Business Banking Resolution Service, formed in 2019 after calls for small business lending to be regulated were rejected, has run up an “eye watering” bill for staff and third-party advisers, adding to pressure on it to start delivering compensation. – The Times

Motorists could legally allow their cars to “self-drive” on British motorways later this year – but only slowly, the government has announced. Drivers could soon be allowed to read a newspaper or watch a film via the car’s built-in screen in periods of slow-moving traffic, using automated lane-keeping system (Alks) technology that makes the car stay in lane and a safe distance from other vehicles. – Guardian

A French state-backed satellite company has allied itself with Britain against Elon Musk’s SpaceX by taking a stake in the space internet company OneWebEutelsat is paying $550m (£395m) for a 24pc stake in OneWeb, which was rescued by the UK last year in a joint venture with Indian telecoms giant Bharti. – Telegraph

Profits at Alphabet more than doubled after companies splashed out on digital advertising to reach people working and playing online during the pandemic. The owner of Google and YouTube said that it had been boosted by “elevated consumer activity online” as it again beat Wall Street’s expectations. – The Times

Bank losses linked to the collapse of Archegos Capital Management have topped $10bn, after Nomura and UBS became the latest global banks to reveal the true impact of the hedge fund’s failure on their finances. Some of the world’s largest investment banks have been left nursing billions of pounds worth of losses as a result of their exposure to Archegos, the personal hedge fund of the New York-based billionaire Bill Hwang. – Guardian

The owner of British Airways is considering legal action after Heathrow Airport was given permission to sting passengers for hundreds of millions of pounds to cover pandemic losses. Bosses at IAG, the FTSE 100 company that also owns Aer Lingus and Iberia, are furious that regulators are allowing Heathrow to raise an extra £300m through increased passenger charges. – Telegraph


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