ADVFN Morning London Market Report: Thursday 22 April 2021

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London open: ECB bond purchase programme in focus

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Stocks have started Thursday’s session higher ahead of the European Central Bank’s policy decision, the main risk event of the day, with investors especially focused on anything that it might have to say on the possible exit of its Pandemic Emergency Purchase Programme.

The ECB was set announce its policy decision at 1245 BST, followed by the press conference with its chief, Christine Lagarde, at 1330 BST.

Commenting on how markets were approaching the ECB meeting, Michael Hewson, chief market analyst at CMC Markets UK, said: “At the last meeting ECB President Lagarde said the bank would step up the weekly purchase program in an attempt to keep a lid on yields, however some members are already calling for the program to end by March 2022, and investors will be keen to see how she navigates any questions on the various diverging views on the governing council over when the program ends.”

As of 0809 BST, the FTSE 100 100 was adding 0.29% or 20.13 points to 6,915.57, alongside a 0.59% or 128.53 point advance on the FTSE 250 to 22,215.11.

Futures tracking the US S&P 500 were down by 1.75 points to 4,163.0.

Worth noting, Japan’s Nikkei-225 recouped the previous day’s losses in overnight trading, jumping 2.38% to finish at 29,188.17.

India’s Sensex dipped 0.21% to 47.605.69.

Neil Wilson, chief market analyst at Markets.com, was in a similar frame of mind to Hewson, but put more emphasis on the potential risks.

“This ought to be a quiet one for the ECB, but the propensity for miscommunication is strong,” he said.

“So we look rather to the risk that a hawkishness creeps in. The ECB will need to be careful about getting itself tied in knots about when and how it will exit PEPP just yet, and whether a PEPP taper coincides with raising traditional asset purchases […].”

To take note of, some other analysts were stressing that PEPP was directly tied to the Covid-19 pandemic, so perhaps after March 2022 it would by a matter of fact need to be replaced by something else.

Stateside meanwhile, the spotlight will be on weekly initial jobless claims data, with financial markets keen to see to what degree the sharp drop during the previous week reversed or not.

On home shores, the Confederation of British Industry is scheduled to release its Industrial Trends survey at 1100 BST.

Rentokil confirms good start to 2021, as expected

Rentokil Initial reported a good start to the year on Thursday, growing group ongoing revenue by 15.4% at constant currency to £711.3m in its first quarter. The FTSE 100 pest control and hygiene company said 9.4% of that was organic and 6% was from acquisitions. It said that despite the uncertain Covid-19 outlook in some parts of the world, it still expected 2021 to be a “year of transition” with its core services building momentum, and disinfection volumes and prices reducing materially from the start of the second quarter.

Informa swung to a £1.14bn pretax loss in the year to the end of December from a £319m profit a year earlier as revenue fell 42.5% to £1.66bn and the group wrote down £593m of assets because of Covid-19. Adjusted operating profit fell to £267.8m from £933.1m. The events and information group predicted revenue in 2021 would be at least £1.7bn.

House builder Taylor Wimpey maintained annual guidance and reported an increased order book despite the latest Covid lockdown as strong demand and government support schemes drove sales. The company on Thursday said its sales rate for the year to April 18 was 1.00 against 0.90 in the equivalent period last year. Its order book stood at around £2.8bn, representing 10,995 homes against £2.66bn a year ago.

Centamin maintained full year production as it reported higher quarter-on-quarter gold output driven by improved mining grades. The company on Thursday said gold production rose 53% to 104,047 ounces in the three months to March 31. Year-on-year the figure output was down 17%.

Anglo American reported higher first quarter copper production despite capacity constraints caused by Covid-19 restrictions as it continued to shift its focus towards “future enabling” metals and minerals. The mining giant on Thursday said copper production for the three months to March 31 increased by 9% to 160,300 tonnes, due to strong operational performance at its Los Bronces and Collahuasi operations in Chile.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Experian Plc +2.68% +72.00 2,761.00
2 Diageo Plc +1.67% +54.00 3,282.00
3 Segro Plc +1.63% +16.20 1,010.00
4 Scottish Mortgage Investment Trust Plc +1.62% +19.50 1,226.50
5 Johnson Matthey Plc +1.60% +51.00 3,238.00
6 Sse Plc +1.54% +22.50 1,481.00
7 Relx Plc +1.46% +28.00 1,947.50
8 Bunzl Plc +1.44% +35.00 2,459.00
9 Hargreaves Lansdown Plc +1.35% +22.50 1,692.50
10 Rightmove Plc +1.13% +6.80 606.60

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Bae Systems Plc -3.72% -19.60 506.80
2 Rentokil Initial Plc -2.62% -13.40 498.60
3 Antofagasta Plc -2.04% -37.50 1,803.50
4 Itv Plc -1.33% -1.55 114.90
5 Royal Dutch Shell Plc -1.01% -13.80 1,352.40
6 Royal Dutch Shell Plc -0.92% -12.00 1,294.60
7 Aviva Plc -0.88% -3.50 396.30
8 Glencore Plc -0.77% -2.25 290.65
9 Bp Plc -0.76% -2.25 293.45
10 Phoenix Group Holdings Plc -0.68% -5.00 726.00

 

Europe open: Share nudge record highs on strong earnings reports

European shares moved back towards record territory on Thursday as strong corporate earnings reports drove sentiment ahead of the European Central Bank’s policy decision later in the day.

The pan-European Stoxx 600 index rose 0.42% by 0728 GMT, with all major regional bourses higher after a retreat on Tuesday driven by fears of a new wave of Covid-19 cases from India.

“The European Central Bank isn’t expected to ruffle any feathers this Thursday, with analysts predicting that it will be another steady session from (bank chief) Christine Lagarde and co,” said Spreadex analyst Connor Campbell.

“But with a while until the next meeting – the central bank skips May – the ECB could use this opportunity to sharpen its forward guidance. There are also hawks lurking among the doves, meaning the get-together may not go as smoothly as forecast.”

In equity news, shares in Nestle rose 2.2% after the company reported its strongest quarterly sales growth in 10 years, helped by demand for coffee, dairy and petcare products.

AB Volvo shares were up as the Swedish truck maker beat market expectations for first-quarter core earnings on the back of surging demand.

Centamin shares rose as the miner maintained full year output and reported higher quarter-on-quarter gold production due to improved mining grades.

Credit Suisse fell 5.7% after it posted a 757 million Swiss franc pre-tax loss in the first quarter, as the Archegos hit wiped out trading gains.

 

US close: Reopening stocks lead indices higher

Wall Street stocks were in the green at the closing bell on Wednesday, with all three main indices enjoying a positive session.

At the close, the Dow Jones Industrial Average and the S&P 500 were both up 0.93%, at 34,137.31 and 4,173.42 respectively, while the Nasdaq Composite was 1.19% firmer at 13,950.22.

The Dow closed 316.01 points higher, reclaiming some of the losses recorded in the previous session.

On the macro front, total mortgage applications surged 8.6% week-on-week, according to the Mortgage Bankers Association, marking the first overall increase in weekly applications since the tail end of February.

The increase was mostly driven by a drop in the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances to 3.20% from 3.27%.

In equity markets, Netflix shares slumped 7.4% after the video streaming giant posted quarterly subscriber additions that fell well and truly short of estimates on the Street, as the pandemic-fuelled demand seemingly began to fade away.

Elsewhere on the corporate front, Verizon stock reversed earlier gains to close down 0.43% even after it topped first-quarter earnings and revenue expectations, while fast-food chain Chipotle was 1.6% weaker at the end of the session ahead of its post-close earnings report.

A handful of stocks tied to an economic reopening were also performing well, with United Airlines up about 3.1% after plunging 8.5% on Tuesday, while Norwegian Cruise Line jumped 10.32%, Carnival added 6.26% and Royal Caribbean advanced 4.47%.

 

Thursday newspaper round-up: GDP forecasts, GFG Alliance, Aggreko, Ryanair, Irish tax rates

Britain is set for its sharpest economic growth since 1988 this year as the easing of Covid-19 restrictions encourages consumers to start spending, according to a monthly survey of independent economists by the Treasury. City analysts have upgraded their GDP projections for 2021 amid signs that households are itching to get out and spend the “accidental” savings they have built up during lockdown. – The Times

Ireland’s finance minister has signalled the country will resist attempts to rebalance the global tax system if they affect Dublin’s ability to undercut its rivals. Under new tax proposals led by the US, Ireland could lose 20% of its tax revenues, according to Paschal Donohoe. – Guardian

Sanjeev Gupta’s business empire is being sued over a flagship £100m deal that made him one of Britain’s biggest steel magnates. A commercial court claim has been filed against Mr Gupta’s GFG Alliance of companies by fellow steel firm Tata. The case relates to alleged missed ­payments linked to the sale of Tata’s Rotherham-based speciality steel division to Mr Gupta in 2017, sources said. – Telegraph

A multibillion-pound takeover of a FTSE 250 temporary power supplier was thrown into doubt last night after the company’s biggest shareholder indicated that it intended to oppose it. Liontrust Asset Management, which holds a 12 per cent stake in Aggreko, has decided to vote against the £2.3 billion deal, according to Sky News. If confirmed, the decision could cast doubt on the company’s 880p-a-share acquisition by a consortium comprising TDR Capital, the private equity firm, and I Squared Capital, an infrastructure investor. – The Times

A slower than anticipated global vaccine rollout and wider failure to get Covid under control will cost airlines $10bn (£7.2bn) more than previously predicted, according to the organisation that represents global airlines. The warning from the International Air Transport Association came as Ryanair chief executive Michael O’Leary warned on Wednesday there would be “seismic” cut in capacity across the industry due to the pandemic, including up to 25% fewer flights in Europe. O’Leary said travel from the UK to the EU would become more expensive and cumbersome as a result of Brexit, while leisure travel would not return to normal until 2023. – Guardian

Towns and cities in northern England are recovering faster than many parts of London and the south east, with some hotspots advertising more jobs than they did before the pandemic. Barnsley, Mansfield and Stoke each have around 20pc more positions advertised now than in February 2020, according to jobs site Indeed and analysts at the Centre for Cities. – Telegraph

 

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