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LONDON MARKET CLOSE: FTSE 100 perks up on Powell reappointment news

Mon, 22nd Nov 2021 17:03

(Alliance News) - London's FTSE 100 recovered from a midday wobble to end Monday's session higher on news that US Federal Reserve Chair Jerome Powell has been nominated for a second term.

Also bolstering the blue-chip index were share price gains for telecommunications firms and a weaker pound.

The FTSE 100 closed up 31.89 points, or 0.4%, at 7,255.46. The FTSE 250 ended down 62.79 points, or 0.3%, at 23,429.70, and the AIM All-Share closed down 11.91 points or 1.0%, at 1,220.23.

The Cboe UK 100 ended up 0.5% at 719.87, the Cboe UK 250 closed down 0.4% at 20,857.88, and the Cboe Small Companies ended down 0.3% at 15,334.81.

Stocks in mainland Europe underperformed on Covid-19 worries as Austria shut its shops, restaurants and festive markets Monday.

This has led to fears the rest of Europe could follow suit with coronavirus rates soaring across the continent.

In European equities on Monday, the CAC 40 in Paris ended down 0.1%, while the DAX 40 in Frankfurt ended down 0.3%.

The FTSE 100 staged an impressive rally in the afternoon on news that US President Joe Biden plans to nominate Federal Reserve Chair Jerome Powell for a second term.

Powell has provided "steady leadership" during the economic uncertainty caused by the pandemic, the White House said, as well as through "attacks on the independence of the Federal Reserve".

Powell's four-year term had been set to expire in February 2022, but he is now set to preside over the US central bank until 2026.

"The reappointment of Jerome Powell marks the return of the approach pursued by new US presidents since 1980, namely reappointing the incumbent Fed chair in order to provide the continuity that markets crave," said IG chief market analyst Chris Beauchamp.

Stocks in New York were rallying at the London equities close, with the Dow Jones up 0.9%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 0.2%.

"With US markets losing interest in the situation from Wednesday on as the US looks toward Thanksgiving, and the reappointment of the Fed chairman out of the way, the week is in many ways already over," said Beauchamp.

Alongside lifting stock markets, the Powell news also gave the dollar a boost. The pound was quoted at USD1.3412 at the London equities close Monday, down compared to USD1.3460 at the close on Friday.

The euro stood at USD1.1263 at the European equities close Monday, falling from USD1.1320 at the same time on Friday.

Against the yen, the dollar rose to JPY114.74 compared to JPY113.86 late Friday.

The dollar's ascent hammered gold prices. Gold was quoted at USD1,818.94 an ounce at the London equities close Monday against USD1,859.72 at the close on Friday.

Precious metals miner Polymetal was the worst performer in London's FTSE 100 index on Monday, ending down 4.4%, while peer Fresnillo shed 0.7%.

Also denting sentiment towards the gold mining sector on Monday was an update from mid-cap Hochschild Mining. The stock dived 27% after it warned of a regulatory threat to its mines in Peru.

Hochschild said it had become aware that the Peruvian head of Cabinet is potentially looking to close some mining projects in southern Ayacucho, including Hochschild's Pallancata and Inmaculada mines, due to "alleged environmental complaints".

"The company believes this conduct by the Peruvian head of Cabinet is not in accordance with Peruvian law and is wholly without merit," the company said. "Accordingly, Hochschild will vigorously defend its position and take all action necessary to ensure that the rights of the company and its wholly-owned subsidiaries under Peruvian and international law are respected."

Shares in fellow gold miners Centamin and Petropavlovsk ended down 4.7% and 5.5% respectively.

Elsewhere in the commodity space, Brent oil was quoted at USD79.86 a barrel at the London equities close Monday, up from USD79.05 late Friday.

Industrial miners had a good session, with Antofagasta ending up 5.0%, BHP up 3.1% and Rio Tinto up 1.9%.

BHP on Monday finalised a merger of its oil and gas arm with Sydney-listed Woodside Petroleum. Woodside will absorb BHP's oil and gas assets.

Vodafone shares closed up 3.2% and BT gained 2.3%. The telecommunications firms advanced after a EUR10.8 billion takeover approach by KKR for peer Telecom Italia.

Telecom Italia said the offer would be for an initial EUR0.505 a share. Italy's economy ministry saluted the interest by KKR as "positive news for the country" in a statement Sunday and said a working group would be formed to study the matter.

Shares in Telecom Italia soared 30% to EUR0.45 in Milan.

In the FTSE 250, Diploma shares jumped 8.0% after the seal and cables maker reiterated its full-year guidance for next year after posting a strong annual profit rise driven by organic growth initiatives and better demand.

For the financial year that ended September 30, Diploma reported that pretax profit jumped 45% to GBP96.6 million from GBP66.7 million the year before. Operating profit was up 49% to GBP104.3 million from GBP69.8 million.

Chief Executive Johnny Thomson said: "We have delivered strong results, including underlying growth and margin well ahead of our financial model."

Elsewhere in London, shares in Frontier Developments sank 32% after the video games developer company cautioned that early PC sales of an eagerly-anticipated video game disappointed. Sales of Jurassic World Evolution 2 on the PC platform "have been lower than expected" over the initial period following its release.

The company lowered its full-year revenue guidance to GBP100 million and GBP130 million from GBP130 million and GBP150 million. Revenue in the previous financial year amounted to GBP90.7 million.

Tuesday's UK corporate calendar has full-year results from contract caterer Compass and Avon Protection, while online electricals retailer AO World and pet products seller Pets at Home put out interim results.

The economic calendar on Tuesday has PMIs from Germany, the eurozone and the UK at 0830 GMT, 0900 GMT and 0930 GMT respectively. A PMI from the US is out at 1445 GMT.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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