ADVFN Morning London Market Report: Thursday 6 May 2021

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London open


London stocks edged higher in early trade on Thursday as investors eyed the latest policy announcement from the Bank of England.

At 0840 BST, the FTSE 100 was up 0.2% at 7,056.31.

Spreadex analyst Connor Campbell said: “Following Wednesday’s super-surge the European markets entered Thursday’s trading at a light jog.”

Campbell said the muted start was understandable, with investors cautious of any potential tapering talk. “For today brings May’s Bank of England meeting, one that comes complete with a fresh set of economic forecasts for the UK.

“From expectations of 5% growth in 2021 back in February, Andrew Bailey and the rest of the MPC are set to announce that the country will instead see GDP at 7% this year. However, those revised forecasts come with a potential catch. Much like in the US, the increasing strength of the UK economy’s rebound will cause the central bank to mull over tapering its current stimulus support.

“Any hawkish signals could well send the FTSE back below 7,000 – it’s currently at 7,060 – while leaving the pound primed to build beyond $1.39 against the dollar.”

In equity marketsNext was a high riser after upgrading its guidance for annual pre-tax profit by £20m to £720m as sales beat expectations in the first quarter.

Housebuilder Barratt Developments gained after saying it expects full year results to be “modestly above” prior expectations following a strong start to the new year and that it was refunding £3.5m in Covid business rate relief.

Melrose Industries also rose after saying it was trading modestly above expectations, while Morgan Advanced Materials was in the black after it lifted its guidance for full-year organic constant currency sales growth.

Aston Martin rallied as it reported a narrowing of its first-quarter losses as revenues surged and the luxury car maker backed its full-year guidance.

Wealth manager Rathbone Brothers was trading up after it reported a rise in first-quarter funds under management and income as it hailed a strong performance from its funds business.

On the downside, Admiral and Croda were both weaker as they traded without entitlement to the dividend.

Trainline slumped as the online ticket platform said annual losses had widened as passenger demand plunged during the Covid-19 pandemic.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Next Plc +2.31% +188.00 8,314.00
2 Melrose Industries Plc +2.26% +3.70 167.40
3 Fresnillo Plc +2.20% +18.80 871.80
4 Tui Ag +1.93% +8.30 439.00
5 Rolls-royce Holdings Plc +1.87% +1.90 103.66
6 Itv Plc +1.69% +2.15 129.60
7 Pearson Plc +1.61% +13.00 820.40
8 Easyjet Plc +1.57% +16.00 1,033.50
9 Royal Dutch Shell Plc +1.56% +20.80 1,355.00
10 Direct Line Insurance Group Plc +1.54% +4.40 290.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Admiral Group Plc -3.63% -113.00 2,997.00
2 Mondi Plc -1.28% -25.50 1,963.00
3 Croda International Plc -1.28% -88.00 6,780.00
4 Smurfit Kappa Group Plc -0.98% -37.00 3,746.00
5 Bt Group Plc -0.91% -1.55 168.70
6 Intertek Group Plc -0.88% -54.00 6,072.00
7 Rightmove Plc -0.80% -4.80 596.80
8 Spirax-sarco Engineering Plc -0.75% -90.00 11,940.00
9 Kingfisher Plc -0.71% -2.60 365.10
10 Scottish Mortgage Investment Trust Plc -0.69% -8.50 1,227.50


Europe open: Shares higher as SocGen, UniCredit beat expectations

European markets edged ahead at the opening on Thursday as strong earnings from Societe Generale cheered investors who were also eyeing a policy decision from the Bank of England.

The pan-European Stoxx 600 index was up 0.18% with all major regional bourses higher.

In equity news, shares in Societe Generale rose 6% as the French bank recorded a higher than expected first quarter profit with its equities unit rebounding from to post its best performance in six years.

Italian bank UniCredit was also higher after posting better-than-expected first-quarter net profit thanks to higher revenues driven by fee and trading income and shrinking loan losses.

Net income for the first quarter came in at €814m. Analysts were expecting a net income of 204 million euros.

Shares in global nutrition group Glanbia were up 5% after the company said its first-quarter revenues were up 10.5% on a constant currency basis compared to 2020.

Anheuser-Busch InBev gained 3.8% after it reported first-quarter earnings ahead of expectations and said North America boss Michel Doukeris will replace Carlos Brito as chief executive officer.

Online ticket platform Trainline fell after the company reported wider losses as demand plunged during the Covid-19 pandemic.

Mondi shares were lower despite the company reporting strong demand for its packaging as online shopping surged and customers looked for more eco-friendly products in the first quarter.


US close: Stocks finish mixed amid more corporate earnings

Wall Street finished in a mixed state on Wednesday, with more corporate earnings and comments from Treasury Secretary Janet Yellen in focus.

At the close, the Dow Jones Industrial Average was up 0.29% at 34,230.34, while the S&P 500 eked out gains of 0.07% to 4,167.59, and the Nasdaq Composite slipped 0.37% to 13,582.42.

The Dow closed 97.31 points higher on Wednesday, reversing gains recorded yesterday in what was an otherwise losing session for major indices.

Comments from Treasury Secretary Janet Yellen that an interest rate hike was neither something she was “predicting or recommending” were lending some support to stocks after a previous statement that “it may be that interest rates have to rise somewhat” in order to stop the US’ post-covid economy from overheating had panicked investors.

On the macro front, weekly mortgage applications fell 0.9% in the seven days ended 30 April, according to the Mortgage Bankers’ Association, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances moved ever so slightly higher to 3.18% from 3.17%.

Elsewhere, US private payrolls grew by 742,000 in April, according to the ADP‘s national employment report, while data for March was revised higher to show 565,000 jobs being added – a further improvement on the initially reported figure of 517,000.

However, Wednesday’s number was still short of economists’ expectations for a print of 800,000.

The ISM‘s non-manufacturing PMI for April dropped to 62.7, down from 63.7 and below expectation for a print of 64.3, with business activity/production dropping 6.7 to 62.7 and new orders slipping 4.0 to 63.2 as employment rose 1.6 to 58.8 and prices increased 2.8 to 76.8.

Lastly, IHS Markit’s services purchasing managers index came in at 64.7 for April, ahead of the projected reading of 63.3.

In equities, earnings from Activision Blizzard and Lyft were in focus, with the video games developer stock jumping 1.57% after beating quarterly earnings expectations, while the ride-hailing firm slumped 6.34%% despite posting some better-than-expected earnings overnight.

Elsewhere, General Motors jumped 4.05% after saying it expected a “strong” first half despite flagging production disruptions as a result of a global shortage of semiconductor chips.

Hotel operator Hilton Worldwide was off 4.09%, meanwhile, after missing quarterly earnings per share and revenue estimates in its most recent set of results.


Thursday newspaper round-up: Covid contracts, Indivior, KPMG, Glaxo

The government has been urged to publish details of up to £2bn in Covid-19 contracts awarded to private healthcare companies, including some that have helped fund the Conservative party. Contracts to provide extra capacity during the pandemic have been handed to 17 firms since March 2020. – Guardian

Indivior faces the threat of a shareholder revolt over the drugmaker’s decision to maintain bonus payments for its British former chief executive, who was jailed last year in a case related to the US opioid crisis. Shaun Thaxter, 53, was sentenced to six months in federal prison in the US state of Virginia last October and agreed to pay $600,000 (£432,000) in fines and forfeiture, after pleading guilty in June to federal charges related to Indivior’s Suboxone Film, used to help reduce withdrawal symptoms in recovering opioid addicts. He is due to be released on 10 May. – Guardian

KPMG has told its 16,000 UK staff that they can knock off early one day a week over summer as the firm embraces flexible working in the wake of Covid. The Big Four consultant is giving employees two and a half hours off each week until the end of August to support their wellbeing and allow them to “re-energise” after working on intense and stressful projects during the pandemic. – Telegraph

Ministers are exploring the creation of a national stockpile of so-called rare earth metals amid rising fears that Britain’s efforts to adopt electric cars are at risk from a Chinese stranglehold on supplies. It is understood that officials at the Department for Business are discussing options to protect the UK’s access to vital materials including lithium and cobalt, which are essential for batteries and part of a global commodity prices boom as expectation rise for massive demand. – Telegraph

The chairman of GlaxoSmithKline has sought to ease the pressure on its chief executive by throwing his weight behind her in the face of investor unease about her strategy. Sir Jonathan Symonds used the pharmaceutical giant’s annual shareholder meeting yesterday to give a public show of support for Dame Emma Walmsley, who has faced questions about her overhaul of the company. He praised her “bold and courageous” leadership of the business and signalled that he expected the chief executive to stay in place for years to come. – The Times


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