LONDON MARKET CLOSE: FTSE ends higher; Goldman up after record quarter

Wed, 14th Apr 2021 16:55

(Alliance News) - Stock prices in London ended largely higher on Wednesday, shrugging off vaccine rollout worries and US inflation fears, which have overshadowed markets recently.

In addition, traders took heart from the first batch of Wall Street banking earnings which topped expectations.

The FTSE 100 index rose 49.09 points, or 0.7%, to close at 6,939.58. The mid-cap FTSE 250 ended the session 86.99 points, or 0.4%, higher at 22,355.45. It was another record closing high for the mid-cap index. The AIM All-Share index closed down 1.70 points, 0.1%, at 1,243.91.

The Cboe UK 100 index ended up 0.7% at 690.90. The Cboe 250 closed up 0.6% at 19,981.15. The Cboe Small Companies closed up 0.9% at 14,419.01.

The DAX 30 in Frankfurt lost 0.2%, but the CAC 40 in Paris ended 0.4% higher.

"European stocks are broadly advancing on Wednesday after a largely positive hand over from Wall Street. A less-than-expected inflation overshoot in the US calmed inflation outlook expectations and is unlikely to prompt the Fed to tighten policy. Treasury yields fell as low as 1.61%," OANDA analyst Sophie Griffiths commented.

Griffiths added: "As inflation fears ease in the world's largest economy, the mood in the global market has improved, overshadowing Covid vaccine concerns. European markets are shrugging off worries that the vaccine rollout programme could be hindered further by blood clotting issues in the Johnson & Johnson drug."

Europe's medicines regulator said Wednesday it will make a recommendation on the safety of Johnson & Johnson's coronavirus jab next week after US health authorities recommended pausing vaccinations over blood clot fears.

The blood clot worries in J&J's jab follows similar problems with the AstraZeneca vaccine.

Denmark on Wednesday announced it would stop using the AstraZeneca vaccine altogether, becoming the first European country to do so over suspected rare, but serious, side effects.

In London, AstraZeneca shares closed 1.5% higher. Johnson & Johnson was marginally higher in New York.

On Wall Street, the Dow Jones Industrial Average was up 0.7%, the S&P 500 rose 0.1% and the Nasdaq Composite fell 0.4%.

JPMorgan Chase, Goldman Sachs and Wells Fargo kicked off the first-quarter Wall Street earnings season with impressive quarterly results.

JPMorgan reported a massive jump in earnings in the first quarter of 2021 after the bank was able to reverse large credit provisions put aside to cover bad loans during the pandemic.

Goldman Sachs reported a record first quarter as the bank benefited from a strong performance from all of its businesses, both consumer and institutional, and released credit reserves.

Wells Fargo was also boosted by credit release provisions and posted a jump in income. Wells Fargo said the credit release stems from its confidence in the improving US economy.

"JPM also released more than USD5 billion in reserves it had set aside for possible credit losses during the pandemic, and a lot of this flowed straight to the bottom line. This says something that goes way beyond JPM itself, mainly that the economy came out of the pandemic better than the big banks had expected, with less bad debt developing," TD Ameritrade Chief Market Strategist JJ Kinahan commented.

On Thursday, Bank of America and Citigroup post first-quarter results. Away from the banking space, Pepsi and UnitedHealth also posted first-quarter earnings.

JPMorgan shares were 0.4% lower in New York. Goldman was up 4.7% and Wells Fargo surged 5.4%.

Investment banks in Europe were largely higher. UBS rose 1.6% in Zurich, Deutsche Bank closed up 1.3% in Frankfurt and Barclays ended 0.4% higher in London.

Also ending higher on London's blue-chip index was miner and commodities broker Glencore, rising 5.1%. Goldman Sachs raised the stock to Buy from Neutral.

Tesco lied at the other end of the large-cap index, falling 2.0%. It reported a drop in annual profit despite "exceptionally strong" sales growth during the Covid-19 pandemic.

For the year that ended February 27, revenue including fuel was GBP57.9 billion, down 0.4% from GBP58.1 billion in financial 2020 and pretax profit was GBP825 million, down 20% from GBP1.03 billion.

"Tesco's results reflect the sometimes tricky position that supermarkets found themselves in over the last year. Although they have largely been able to trade through the last 12 months, this has come with significant extra costs; in Tesco's case, leading to profits dropping by around one-fifth," Brewin Dolphin Senior Investment Manager Donald Brown said.

The luxury goods sector got a boost on Wednesday. Burberry rose 1.2% and mid-cap Rolex seller Watches of Switzerland climbed 2.5%.

Late Tuesday, LVMH Moet Hennessey Louis Vuitton posted hefty first-quarter sales growth. Its stock rose 2.9% in Paris.

The pound was quoted at USD1.3793 at the London equities close on Wednesday, up from USD1.3738 on Tuesday.

The euro was priced at USD1.1975, up from USD1.1930. Against the Japanese yen, the dollar was quoted at JPY108.96, down from JPY109.25.

Brent oil was trading at USD66.32 a barrel late Wednesday, higher against USD63.84 at the London equities close on Tuesday. Gold was trading at USD1,736.27 an ounce, down from USD1,742.96.

Thursday's economic calendar has German inflation data at 0700 BST before the latest US jobless claims reading at 1330 BST.

Thursday's local corporate calendar has annual results from Hut Group owner THG PLC and trading statements from builders' merchant Travis Perkins and takeaway delivery firm Deliveroo. It will be Deliveroo's maiden trading statement as a listed company.

By Eric Cunha; ericcunha@alliancenews.com