ADVFN Morning London Market Report: Wednesday 5 May 2021

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London open: Stocks recover as mining sector rallies

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London stocks rose in early trade on Wednesday, having sold off in the previous session after US Treasury Secretary Janet Yellen said interest rates were likely to rise.

At 0910 BST, the FTSE 100 was up 1% at 6,991.97, underpinned by strength in the heavyweight mining sector.

Spreadex analyst Connor Campbell said: “A bait and switch from US Treasury Secretary Janet Yellen helped the European markets try and recover some of Tuesday’s losses after the bell.

“Yellen had said on Tuesday that ‘it may be that interest rates have to rise somewhat’ to prevent the post-covid economy from overheating. A statement, obviously, that didn’t go down well with investors, who were already fretting over the impact of the ongoing chip shortage on tech and car stocks.

“Such was the reaction that the former Fed chair issued a correction, of sorts, assuring the markets that a rate hike is neither something she is ‘predicting or recommending’.

“If Europe’s open is anything to go by, that has been enough to put the issue to bed – for now, anyway.”

In equity markets, miners were the standout gainers, with BHPGlencoreRio and Anglo American all higher amid rising metals prices.

Croda was also in the black after the speciality chemicals firm announced a strategic review of its Performance Technologies and Industrial Chemicals (PTIC) businesses.

Travel stocks were on the rise again, with Tui, cruise operator Carnival and Upper Crust owner SSP all higher as investors cheered the prospect of foreign travel opening up again.

On the downside, Just Eat Takeaway and online supermarket Ocado – both of which have benefited from lockdowns and restrictions – were the biggest fallers.

Virgin Money slumped despite saying that first-half profit more than doubled as Covid-19 impairment charges tumbled.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Crh Plc +3.45% +118.00 3,542.00
2 Glencore Plc +2.97% +8.80 305.00
3 Bhp Group Plc +2.91% +64.00 2,260.50
4 Anglo American Plc +2.79% +86.00 3,163.00
5 Croda International Plc +2.74% +182.00 6,836.00
6 Rio Tinto Plc +2.70% +165.00 6,283.00
7 Tui Ag +2.52% +10.70 435.50
8 Melrose Industries Plc +2.45% +3.90 163.00
9 Ferguson Plc +2.35% +214.00 9,304.00
10 Whitbread Plc +2.21% +71.00 3,280.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc -1.15% -23.00 1,981.00
2 Land Securities Group Plc -0.93% -6.80 724.40
3 British American Tobacco Plc -0.83% -22.50 2,692.50
4 Imperial Brands Plc -0.49% -7.50 1,529.50
5 Segro Plc -0.15% -1.50 1,007.00
6 Unilever Plc -0.12% -5.00 4,199.00
7 Admiral Group Plc -0.06% -2.00 3,110.00
8 Just Eat Plc -0.00% -0.00 861.00
9 Rsa Insurance Group Plc -0.00% -0.00 682.80
10 Nmc Health Plc -0.00% -0.00 938.40

 

Europe open: Stocks rally as miners enjoy copper price surge

European stocks rallied strongly at the opening on Wednesday, as a commodity price boost for miners offset the tech sell-off on Wall Street overnight.

The pan-European Stoxx 600 index rose 0.96% in early trading, with the German DAX outperforming, up 1.11%.

US markets had fallen overnight as Treasury Secretary Janet Yellen said “interest rates have to rise somewhat” to prevent the post-covid economy from overheating.

“A statement, obviously, that didn’t go down well with investors, who were already fretting over the impact of the ongoing chip shortage on tech and car stocks,” said Spreadex analyst Connor Campbell.

“Such was the reaction that the former Fed chair issued a correction, of sorts, assuring the markets that a rate hike is neither something she is ‘predicting or recommending’.”

“If Europe’s open is anything to go by, that has been enough to put the issue to bed – for now, anyway.”

Shares in major mining firms including Rio TintoBHP and Anglo American were all higher as copper prices moved beyond $10,000 a tonne, the highest level in a decade, on higher demand and lower inventories.

Car maker Stellantis edged up 0.8% as the company reported a better-than-expected quarterly revenue but warned that a global shortage of semiconductors would affect production in the current quarter.

German fashion house Hugo Boss rose 2.9% as it saw first-quarter sales almost double in mainland China, and its casual business returned to growth.

Danish facilities management firm ISS rose more than 5% as demand for its cleaning services during the pandemic helped an improved quarterly performance.

 

US close: Stocks mixed following sell-off in tech shares

Wall Street stocks put on a mixed performance on Tuesday, with the Dow Jones closing higher but the Nasdaq Composite suffering heavy losses on the back of a sell-off in tech stocks.

At the close, the Dow Jones Industrial Average was up 0.06% at 34,133.03, while the S&P 500 closed out the session 0.67% weaker at 4,164.66 and the Nasdaq Composite closed 1.88% lower at 13,633.50.

The Dow closed 19.80 points higher on Tuesday, narrowly extending gains recorded in the previous session.

SpreadEx‘s Connor Campbell said: “It’s a big week for the US markets, but one that takes a while to get to the good stuff, with little of true value to tide investors over until Friday’s potentially Fed-shifting nonfarm jobs report.”

In the corporate space, Pfizer posted first-quarter revenues of $14.58bn, ahead of expectations of $13.51bn, and upped its full-year sales forecast. Elsewhere, news broke that the US looked set to approve the drugmaker’s Covid-19 vaccine for 12-to-15-year-olds as early as next week.

CVS Health shares also traded higher after the pharmacy chain raised its full-year guidance, while tech giants like FacebookAmazonAppleNetflix and Google-parent Alphabet all traded lower.

On the macro front, the US trade balance came in at -$74.4bn in March, according to the Census Bureau, bigger than the -$74.3bn figure expected on the Street and a 5.6% widening to yet another new record.

Elsewhere, factory orders figures from the Census Bureau revealed a 1.1% increase in orders in March to $512.9bn following a 0.5% drop in February.

 

Wednesday newspaper round-up: AstraZeneca, tax avoidance, car industry

AstraZeneca is facing mounting opposition over its plans to award its chief executive, Pascal Soriot, a big increase in bonuses, with three investor advisory groups calling on shareholders to vote against the policy. Pirc, Glass Lewis and Institutional Shareholder Services (ISS) have all flagged concerns over moves to raise the maximum share bonus Soriot can receive under a long-term plan from 550% of his £1.3m base salary to 650%. AZ also plans to hoist Soriot’s maximum annual bonus to 250% of salary from 200%, depending on performance targets being hit. – Guardian

Boris Johnson’s government lacks public trust to tackle global tax avoidance despite mounting pressure for reform, at a time when US technology companies such as Amazon and Google have been reporting bumper profits during the Covid-19 pandemic. A poll of more than 2,000 adults in the UK found less than a third trust the prime minister and the chancellor, Rishi Sunak, to take on big business interests as part of a crackdown on tax avoidance. – Guardian

Rishi Sunak has suggested wealthy families will be spared from a US-style tax raid as he hailed the strength of Britain’s surging economic recovery. The Chancellor on Tuesday said that he is “cautiously optimistic” about an upswing in economic growth as a string of data pointed to a sharp bounceback. – Telegraph

Britain’s car industry will suffer a devastating blow if the country fails to build battery factories ahead of a 2030 ban on new petrol and diesel vehicles, experts have said. Factories could be forced to shut and new car prices will rise unless the UK urgently develops so-called gigafactories to power the electric models of the future, MPs on the Environmental Audit Committee heard as they opened an inquiry into the shift away from fossil fuels. – Telegraph

The British and Indian governments have committed to negotiate a free trade agreement as they seek to double the value of trade between the nations by 2030. The announcement came yesterday as the government unveiled a package of investment and trade deals with India that it said would create 6,500 jobs in the UK. – The Times

 

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