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ADVFN Morning London Market Report: Tuesday 6 April 2021

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London open: Stocks rally on strong US cues


London stocks rose in early trade on Tuesday, taking their cue from a record session on Wall Street.

At 0840 BST, the FTSE 100 was up 1.1% at 6,809.31.

Richard Hunter, head of markets at Interactive Investor, noted that Monday was the first chance for US markets to react to the bumper non-farm payrolls figures from Friday, “where a hugely better-than-expected 916,000 jobs were added”, while the unemployment rate declined to 6%.

“Coupled with a strong services activity report which also jumped to a record high, and with the vaccination rollout also advancing strongly, gains across the board reflected the renewed optimism,” he said.

“Alongside the impending effects of the major stimulus packages on spending and infrastructure, the strength of these economic data also raises hopes that any number of solid readings will now become the order of the day as the nascent US economic recovery moves into full growth mode.

“Today is the first chance for European markets to react to this fresh wave of optimism after an extended weekend, and indeed to the possibility that global economies will be lifted by a recovery which is expected to be led by the US in the first instance.

“For the UK, where a further easing of lockdown restrictions was confirmed by the government, prospects increased for sectors such as the miners, banks, retailers and hospitality to participate in a potential surge in economic activity.”

In equity markets, miners were among the biggest gainers as metals price rose, with Rio TintoAntofagastaAnglo American and Glencore all up.

Oil giant BP rose after saying it expects to hit its $35bn net debt target during the first quarter of 2021 after faster-than-expected progress on its disposals programme. The company had forecast raising $4bn to $6bn from disposals and said proceeds would now be at the upper end of this range.

Carnival was the top performer on the FTSE 250 after saying it plans to restart cruising from US ports in July.

Cineworld was also a high riser, with traders pointing to a strong performance from AMC Entertainment in the US on Monday after an analyst at B Riley said it was time to buy the shares. He noted an improving outlook for the balance sheet and a strong opening weekend for ‘Godzilla versus Kong’. The analyst also said that AMC was well-positioned to benefit from the return of film audiences post-pandemic and this has had positive read-across to Cineworld, traders said.

Tui advanced even after Prime Minister Boris Johnson said he was “hopeful” foreign travel could resume on 17 May but urged people not to book summer holidays yet as more data is needed before a decision can be made.

Tullow Oil gained after saying it has started a multi-year, multi-well drilling campaign offshore Ghana, drilling the first well at the Jubilee Field on Monday.

Elsewhere, Hikma Pharmaceuticals was boosted by an upgrade to ‘overweight’ at Morgan Stanley.

AstraZeneca was a little weaker following reports that the Medicines and Healthcare products Regulatory Agency (MHRA) is considering restricting use of the company’s Covid-19 vaccine for the under-30s due to blood clot concerns.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Carnival Plc +4.93% +80.20 1,706.00
2 Sse Plc +3.81% +55.50 1,512.50
3 Antofagasta Plc +3.63% +61.50 1,754.00
4 Rolls-royce Holdings Plc +3.51% +3.82 112.74
5 Rio Tinto Plc +3.39% +186.00 5,666.00
6 Glencore Plc +3.20% +9.15 294.80
7 Anglo American Plc +3.12% +90.50 2,989.00
8 Evraz Plc +3.04% +17.20 582.20
9 Bhp Group Plc +2.97% +61.50 2,129.50
10 Bp Plc +2.93% +8.50 298.30


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc -1.96% -41.00 2,051.00
2 Bunzl Plc -1.19% -28.00 2,332.00
3 Rentokil Initial Plc -0.98% -4.90 495.10
4 Experian Plc -0.82% -21.00 2,525.00
5 Bt Group Plc -0.70% -1.10 155.35
6 Ashtead Group Plc -0.69% -31.00 4,442.00
7 Croda International Plc -0.59% -38.00 6,380.00
8 Astrazeneca Plc -0.54% -39.00 7,133.00
9 Informa Plc -0.49% -2.80 569.20
10 Next Plc -0.47% -38.00 8,076.00


Europe open: Shares hit record highs on recovery optimism

European shares hit record highs at the opening on Tuesday, after a surge on Wall Street overnight driven by optimism over a global economic recovery from the Covid-19 crisis and US stimulus spending.

The pan-European Stoxx 600 index was 0.6% higher at 434 points on resumption from the Easter break, passing the previous record of 433.90 points set in February 2020. It has gained more than 40% year on year.

The German DAX rose 0.94%, France’s CAC 40 was up 0.53% and UK’s FTSE 100 jumped 1.09%.

US markets closed at record highs overnight as data indicated a strong labour market recovery and services sector activity.

“The recovery trade is at full throttle,” said Richard Hunter, head of markets at interactive investor.

“Monday was the first chance for markets to react to the bumper non-farm payrolls figure from Friday, where a hugely better than expected 916000 jobs were added, while the unemployment rate also declined to 6%.”

“Coupled with a strong services activity report which also jumped to a record high, and with the vaccination rollout also advancing strongly, gains across the board reflected the renewed optimism.”

Hunter said inflationary concerns, and worries over an early spike in interest rates, have subsided for the moment, with Treasury yields holding steady.

“In turn, today is the first chance for European markets to react to this fresh wave of optimism after an extended weekend, and indeed to the possibility that global economies will be lifted by a recovery which is expected to be led by the US in the first instance,” he added.

UK shares were higher as the government confirmed a further easing of lockdown restrictions with pubs and non-essential shops being given the green light to reopen from April 12.

In equity news, shares in Credit Suisse fell almost 1% as the bank warned of a SFR 4.4bn hit from the Archegos Capital affair when the US hedge fund was forced to liquidate billions of dollars worth of positions after being hit by margin calls just over a week ago.

Compounded by the Greensill Capital scandal, involving the collapse of the supply-chain financier with links to ex-UK prime minister David Cameron, Credit Suisse says is now facing a SFR 900m loss in the first quarter. It also announced at least two senior executives would be gone by May.


Tuesday newspaper round-up: Goldman, GameStop, Oxford Nanopore

Goldman Sachs is preparing for hundreds more staff to go back to its London office this week as it eyes a return to pre-pandemic working conditions. As many as 200 of the US investment bank’s workers could return to the main London office from Tuesday, joining several hundred staff who have been at their desks throughout several lockdowns. Goldman Sachs employs about 6,000 workers in London overall. – Guardian

Shares in GameStop fell on Monday after the video-game retailer said it may sell up to $1bn (£720m) worth of stock as it tries to make the best of the 900% surge in its shares from a Reddit-driven rally this year. The company said it would sell up to 3.5m shares and use the proceeds to speed up its shift to e-commerce in an overhaul being led by the billionaire Ryan Cohen, its biggest shareholder and a board member of GameStop. Shares in the company fell sharply in pre-market trading in New York but had recovered by the close to $186.95, a fall of 1.9%. – Guardian

Britain’s banks have not dipped into their capital buffers to lend to customers during the pandemic, despite being given the green light to do so. Most big banks have built up their capital strength over the past year, even as officials told them to deploy money built up in recent years to support businesses. Regulators said that it was in their own interests to do so to keep defaults down. – The Times

The chief executive of Oxford Nanopore, the biotechnology company planning one of the biggest flotations in London this year, was found by a judge in the United States to have misled regulators in a patent court case. Gordon Sanghera, when director of research and development for the diabetes business of Abbott Laboratories, an American healthcare company, was found guilty of inequitable conduct, along with Abbott’s in-house lawyer, after a patent dispute with rival multinational drug companies. – The Times

Businesses are preparing to ramp up capital spending after years of underinvestment, boosting hopes of a rapid economic bounce-back from the pandemic. The UK’s leading group of manufacturers found that over half of companies will either invest more cash as a result of the Government’s ‘super-deduction’ tax break, or bring forward their investment plans. – Telegraph


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