LONDON MARKET CLOSE: Bond market calm, positive data lifts stocks

(Alliance News) - Stock prices in Europe kicked off the new week in positive territory, racking up determined gains as data showed an improving manufacturing industry across the continent and as bond yields stabilised, offering respite to equities.

The FTSE 100 index closed up 105.10 points, or 1.6%, at 6,588.53 on Monday. The FTSE 250 ended up 311.09 points, or 1.5%, at 21,221.46 and the AIM All-Share climbed 8.92 points, or 0.8%, at 1,192.17.

The Cboe UK 100 ended up 1.7% at 655.60, the Cboe UK 250 closed up 1.1%, at 18,836.04, and the Cboe Small Companies ended 1.0% higher at 13,278.59.

"Vaccine optimism, a calmer tone in the bond markets and a return of the US Covid stimulus bill to the spotlight are all helping to underpin the risk on mood, in addition to upbeat manufacturing PMIs in Europe," OANDA analyst Sophie Griffiths commented.

In Paris the CAC 40 and the DAX 30 in Frankfurt both ended 1.6% higher.

The eurozone's manufacturing economy performed strongly in February, according to IHS Markit.

IHS Markit said the seasonally adjusted headline purchasing managers' index rose to 57.9 in February from 54.8 in January and better than the earlier flash reading. The index was above the 50.0 no-change mark that separates growth from contraction for an eighth successive month.

The UK's seasonally adjusted IHS Markit-CIPS manufacturing purchasing managers' index rose to 55.1 points in February, up slightly from 54.1 in January and above the flash estimate of 54.9.

The positive sentiment on Monday was also evident in New York equities, with the Dow Jones Industrial Average rising by almost 700 points in morning trade, Spreadex analyst Connor Campbell noted.

"The Dow Jones whole-heartedly joined in with Monday's post-bond tantrum rebound, determinedly climbing back towards last week's record peak," Campbell commented.

"The index couldn't quite reclaim all of its February-closing losses. However, it's not a bad start at all, especially when the week is still full of potential for the US markets."

The DJIA was up 2.1% at the time of the closing bell in London. The S&P 500 was 2.2% higher and the Nasdaq Composite rose 2.3%.

Pharmaceutical firm Johnson & Johnson was 0.9% higher in New York, after the US on Saturday authorised its Covid-19 vaccine for emergency use.

The latest approval adds a third jab to the nation's arsenal in its bid to fight the outbreak that has killed more than 500,000 Americans. Four million doses of the latest vaccine to get US approval will be delivered across the country as early as Tuesday, a senior administration official said.

Against the yen, the dollar was trading at JPY106.62 at the time of the London stock market close on Monday, unchanged from Friday.

The euro stood at USD1.2055 at the European equities close Monday, down from USD1.2111 on Friday.

The pound was quoted at USD1.3953 at the London equity market close on Monday, improving from USD1.3940 at the same time on Friday. Sterling recovered from an intra-day low of USD1.3904 but was unable to breach the USD1.40 mark once again.

The muted pound meant London's blue-chip FTSE 100 index had "no challenge" to its surge on Monday, Spreadex's Campbell noted.

British American Tobacco, Imperial Brands and Diageo ended up 2.5%, 2.6% and 2.2%. The trio are among the FTSE's international earners.

More domestic-focused blue-chip stocks, including housebuilders, were also among those making sizeable gains on Monday.

Investors were hopeful UK Chancellor of the Exchequer Rishi Sunak will on Wednesday unveil a mortgage guarantee scheme to help first-time buyers with small deposits get on the property ladder.

Taylor Wimpey rose 5.7%, Berkeley Group was up 5.2% and Persimmon climbed 5.4%.

Sunak delivers his budget on Wednesday.

British Airways parent International Consolidated Airlines Group rose 7.0%, the best large-cap performer. Airlines benefitted from the risk-on mood on Monday. In addition, Peel Hunt upped IAG to Buy from Hold.

Ryanair ended 2.4% higher, while jet engine maker Rolls-Royce rose 3.4%. Melrose Industries, which like Rolls-Royce has exposure to the aviation sector, climbed 2.6%.

Elsewhere in London, Halfords ended up 7.3% as it said trading has been "volatile" but stronger than expected. The provider of motoring and cycling products and services guided to a sharp jump in annual profit.

"Although we have continued to experience a volatile trading environment across the first seven weeks of Q4, overall trading has been stronger than we initially anticipated across the business," said Halfords.

As a result, the retailer expects full-year underlying pretax profit to be around GBP90 million to GBP100 million, even after deciding to repay in full GBP10.7 million of furlough income received. For the financial year that ended April 3, 2020, underlying pretax profit amounted to GBP55.9 million.

Gold mounted a recovery of its own on Monday after being hurt by rising bond yields. An ounce of the precious metal fetched USD1,737.01 at the London market close on Monday, up from USD1,728.20 at the same time on Friday.

Brent oil was quoted at USD64.94 a barrel, down from USD66.10.

Tuesday's local corporate calendar has annual results from Taylor Wimpey, Paddy Power owner Flutter Entertainment and gold miner Fresnillo.

The data calendar has the UK's Nationwide house price index at 0700 GMT, before German unemployment figures at 0855 GMT and eurozone inflation data at 1000 GMT.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.