LONDON MARKET CLOSE: FTSE 100 bounces back, led by miners and CRH

Wed, 05th May 2021 17:02

(Alliance News) - Miners helped the FTSE 100 in its zealous rebound on Wednesday, with data helping to turn market focus away from interest rate jitters to the global economy's brightening outlook.

The FTSE 100 index closed up 116.13 points, or 1.7%, at 7,039.30, a healthy recovery after Tuesday's 0.7% fall.

The FTSE 250 ended up 55.86 points, or 0.3%, at 22,385.90 on Wednesday, and the AIM All-Share closed down 0.63 of a point, or 0.1%, at 1,261.04.

The Cboe UK 100 ended up 1.9% at 701.69, the Cboe UK 250 closed up 0.3% at 20,074.08, and the Cboe Small Companies ended up 0.1% at 14,702.33.

In European equities on Wednesday, the CAC 40 in Paris ended up 1.4%, while the DAX 30 in Frankfurt surged 2.1%.

Focus returned to a brighter economic outlook in the US and Europe as countries ease lockdown restrictions.

"Markets appear to have recovered some of their mojo," said Michael Hewson, chief market analyst at CMC Markets.

"Basic resource stocks are leading the way today with the likes of Anglo American, BHP and Rio Tinto benefitting from the continued rise in copper prices, while Irish construction giant CRH has seen its share trade up at new record highs as optimism over the upcoming US infrastructure stimulus plan helped to underpin the shares," said Hewson.

Anglo American shares advanced 6.3%, while BHP bounced 5.0% and Rio Tinto rallied 4.7%. CRH ended as the second best blue-chip performer, rising 5.3%.

Croda International shares climbed 3.2% after the chemicals maker unveiled a strategic review of its Performance Technologies and Industrial Chemicals units, as it looks to prioritise faster-growing markets. The review will focus on the activities in PTIC that do not directly support its other two units - Consumer Care and Life Sciences.

The review will consider whether PTIC should continue to be owned by Croda as a standalone business, or whether the units should be fully or partially sold.

At the bottom of the blue-chips were lockdown winners Ocado and Just Eat Takeaway.com, both in the business of online food delivery. Grocer Ocado dipped 3.7% and takeaway platform Just Eat fell 1.5%.

Bolstering confidence in the economic rebound from the pandemic was some largely upbeat data on Wednesday.

"While ADP numbers fell short of some of the loftier expectations today, a 742,000 increase in job numbers is welcome news, and when coupled with strong Markit and ISM services PMI readings it is clear that the world's largest economy is well on the way to a recovery," said Chris Beauchamp, chief market analyst at IG.

The US economy added 742,000 private sector workers in April, payrolls processor ADP showed, up from the 565,000 increase in March. However, the print missed market consensus, cited by FXStreet, for a 800,000 rise.

Meanwhile, the US service sector last month continued its recovery from the Covid-19 pandemic but the pace slowed slightly as companies faced supply chain complications.

The Institute for Supply Management said its service sector index dipped to 62.7 in April, below expectations and one point lower than March. However, the index remained well above the 50 level indicating expansion.

Stocks in New York stabilised on Wednesday after getting slammed by comments from former Federal Reserve chair Janet Yellen over US interest rates in the previous session. The DJIA was up 0.2% at the London equities close, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.5%.

US interest rates may have to increase "somewhat" to keep a lid on the economy if President Joe Biden's latest spending proposals are enacted, Treasury Secretary Janet Yellen said on Tuesday. This prompted the S&P 500 to slide 0.7% on Tuesday and the tech-heavy Nasdaq Composite to slump 1.9%, while the Dow Jones recovered in the afternoon to end largely flat.

In Europe, the IHS Markit eurozone purchasing services business activity index registered 50.5 points in April, up from 49.6 in March, and back above the 50.0 mark which separates expansion from contraction. April's reading signalled the first expansion of business activity since last August.

The eurozone composite PMI index print was 53.8 points in April, up from 53.2 in March. Markit noted that there were some notable divergences in performance by countries. Spain registered a marked rise in activity, while Germany and Italy experienced contractions. Marginal growth was seen in France.

The euro stood at USD1.2000 at the European equities close Wednesday, down against USD1.2015 at the same time on Tuesday.

A services PMI is due from the UK at 0930 BST on Thursday, ahead of an interest rate decision from the Bank of England at midday.

The pound was quoted at USD1.3910 at the London equities close Wednesday as traders eyed the interest rate call, up compared to USD1.3871 at the close on Tuesday.

Against the yen, the dollar was trading at JPY109.26, down compared to JPY109.33 late Tuesday.

Brent oil was quoted at USD69.89 a barrel at the London equities close Wednesday, up from USD68.46 late Tuesday. Gold was quoted at USD1,781.79 an ounce at the London equities close against USD1,782.51 at the close on Tuesday.

Besides the BoE, Thursday's economic calendar has minutes from the Bank of Japan's meeting minutes at 0050 BST, German factory orders at 0700 BST, eurozone retail sales at 1000 BST and US jobless claims at 1330 BST.

Back in London on Wednesday, Playtech shares closed up 2.8% after signing a long-term agreement with Holland Casino. Describing it as a "new, expanded long-term strategic software and services agreement", Playtech said the deal would build on its track record of developing online markets.

ITV rose 2.3% as revenue rose in the first quarter of 2021 despite the continued impact of the pandemic.

Revenue for the three months to March 31 rose a modest 2% to GBP856 million from GBP842 million at the start of 2020, a period when Covid restrictions "only had a limited impact". Total external revenue was up 2% at GBP709 million from GBP694 million in the first quarter of 2020.

The broadcaster said that while there is uncertainty, the macro environment continues to improve, and it was encouraged by the outlook for total advertising in the first half, which it forecasts will be up around 26%, compared to the same period in 2020.

Virgin Money UK fell 1.6% as it reported a swing to profit for the first half of its financial year, due to a reduction in credit loss provisions and despite a decline in income due restrictions on customer activity.

For the six months ended March 31, Virgin Money posted a pretax profit of GBP72 million, swinging from a loss of GBP7 million in the same period a year before. Meanwhile, underlying profit more than doubled year-on-year to GBP245 million from GBP120 million.

AIM-listed boohoo fell 2.1%. The online clothing retailer said it delivered "another set of record results" as it shrugged off the challenges posed by the pandemic.

For the year ended February 28, revenue was up 41% to GBP1.75 billion from GBP1.23 billion the year before, while pretax profit jumped 35% year-on-year to GBP124.7 million from GBP92.2 million.

Looking ahead, Boohoo said revenue growth for the full year to February 2022 is expected to be around 25% at a group level, with newly acquired brands such as the Debenhams online business, Dorothy Perkins, Wallis and Burton all expected to deliver five percentage points of this growth. The company is already seeing benefits from the lifting of lockdown restrictions, it said.

The UK corporate calendar for Thursday has trading statements from housebuilder Barratt Developments, clothing retailer Next, packaging firm Mondi and transport ticketing platform Trainline.

By Lucy Heming; lucyheming@alliancenews.com