LONDON MARKET CLOSE: Markets Rally On High Hopes For Biden's Stimulus

(Alliance News) - Hopes of a bumper US stimulus package from incoming president Joe Biden gave markets across the globe a boost on Thursday.

The FTSE 100 index closed up 56.44 points, or 0.8%, at 6,801.96. The FTSE 250 ended up 159.44 points, or 0.8%, at 20,775.75, and the AIM All-Share closed down 1.94 points, or 0.2%, at 1,183.62.

The Cboe UK 100 ended up 0.7% at 676.42, the Cboe UK 250 closed up 0.6% at 17990.40, and the Cboe Small Companies ended up 0.5% at 12330.39.

In European equities on Thursday, the CAC 40 in Paris ended up 0.3%, while the DAX 30 in Frankfurt ended up 0.4%.

"Global markets are on the rise as traders look ahead to the long awaited stimulus unveiling from Joe Biden," said Joshua Mahony, senior market analyst at IG.

With his fellow Democrats narrowly controlling both houses of Congress, President-Elect Biden - who takes office next Wednesday - appears to have a good shot at passing a third massive rescue package that could include everything from another round of stimulus payments to an increase in the minimum wage.

"We need more direct relief flowing to families (and) small businesses, including finishing the job of getting people the USD2,000 in relief," Biden said last week, referring to the last package that provided USD600 in direct payments.

Biden will unveil his plan on Thursday to revive the US economy.

His stimulus will build on the two massive relief packages Congress approved in 2020, and likely include an extension of unemployment benefits that have helped tens of millions of people pay their bills after losing their jobs during the pandemic.

The strain placed on the labour market by the pandemic was emphasised in figures released on Thursday, which showed US initial jobless claims rose to a five-month high.

The number of workers filing for unemployment benefits increased to 965,000 in the week ended January 9, up from the previous week's level of 784,000 claims. The latest figure was well above market expectations cited by FXStreet, of 795,000 and was the highest number since mid August.

Stocks in New York were higher at the London equities close as Wall Street looked to fresh US stimulus, with the DJIA up 0.4%, the S&P 500 index up 0.1%, and the Nasdaq Composite rising 0.4%.

The pound was quoted at USD1.3681 at the London equities close Thursday, higher compared to USD1.3621 at the close on Wednesday.

The euro stood at USD1.2145 at the European equities close Thursday, soft against USD1.2157 at the same time on Wednesday.

Against the yen, the dollar was trading at JPY103.72, lower compared to JPY104.18 late Wednesday.

Brent oil was quoted at USD55.69 a barrel at the London equities close Thursday from USD56.61 late Wednesday. Gold was quoted at USD1,847.36 an ounce at the London equities close Thursday against USD1,844.07 at the close on Wednesday.

In London, International Consolidated Airlines ended as the top performer in the FTSE 100, soaring 6.4%.

IG's Mahony commented: "Airlines are enjoying a welcome boost today, as the news that Norwegian Air is cancelling its long-haul routes ensures lower competition from one of the most aggressive firms in the industry."

Norwegian Air - known for its low-cost long-haul flights - on Thursday said it would drop long distance routes and focus on Europe as it tries to restructure and avoid bankruptcy. In the red since 2017, the company's woes deteriorated further with the Covid-19 pandemic which paralysed global air travel last year.

easyJet shares rallied 8.1% and Jet2 rose 4.9%.

Turning back to the blue-chips, Whitbread shares rose 4.3% as the Premier Inn owner looked ahead to a relaxation of virus rules brought on by vaccination programmes after a tough third quarter.

The Dunstable, England-based hospitality firm said during the third quarter to November 26, total like-for-like sales growth were down 56% and year-to-date sales were down 70%. Premier Inn UK total sales were down 55% in the third quarter. This reflects the ongoing UK government restrictions on the operation of hotels and restaurants, which have forced closures of non-essential businesses, Whitbread said.

"We expect the current travel restrictions in the UK and Germany to remain until at the very least the end of our financial year. With the vaccination programme underway, we look forward to the potential gradual relaxation of restrictions from the Spring, business and leisure confidence returning, and our market recovering over the rest of the year," said Chief Executive Alison Brittain.

Just Eat Takeaway.com closed down 4.6% after Sky News reported rival food delivery firm Deliveroo has hired a who's who of investment banks to help prepare for its London Stock Exchange float.

Citing market sources, Sky News reported that the banks are preparing for Deliveroo to be valued at over GBP5 billion and potentially even as high as GBP8 billion.

FTSE 250-listed Just Group surged 19% after the retirement products firm hailed its "pleasing" 2020 performance, shaking off Covid-19 worries.

Retirement income sales rose 12% to GBP2.15 billion from GBP1.92 billion in 2020, helped by a 22% surge in defined benefit de-risking premiums to GBP1.51 billion.

On the company's 2020 trading, Chief Executive David Richardson said: "This performance is particularly pleasing against the challenging and uncertain backdrop of Covid-19 that we faced during 2020."

Dunelm slid 8.3% as the home furnishing firm posted a healthy second-quarter sales rise, though like-for-like growth slowed from the first-quarter's 36% surge.

In the second quarter ended December 26, Dunelm's sales rose 12% year-on-year to GBP360.4 million from GBP322.4 million. Digital accounted for 40% of sales during the period, compared to 21% a year earlier. Digital sales include Dunelm's home delivery and click & collect services.

On a like-for-like basis, second quarter sales rose 11%, slowed from the first quarter's 36% growth.

Boohoo closed down 4.9% despite the fast fashion firm delivering a hefty sales jumps across the board in the final four months of 2020 and bumping up its annual revenue growth guidance.

In the four months to December 31, a period which includes the crucial Christmas trading stretch, boohoo's total revenue jumped 40% to GBP660.8 million from GBP473.7 million a year earlier. For the ten months to December 31, group revenue was 42% higher at GBP1.48 billion from GBP1.04 billion a year earlier.

For financial 2021, boohoo now expects revenue to rise by between 36% and 38%, raising its forecast from growth between 28% and 32%.

"Taken purely at face value the latest trading update from online retailer Boohoo looks good with full year revenue guidance increased after 40% growth in the third quarter, ahead of consensus forecasts. However, context is key, and sales growth has actually decelerated slightly from the first half of its financial year," highlighted Russ Mould, investment director at AJ Bell.

The UK corporate calendar for Friday has trading statements from low-cost gym chain Gym Group and emerging markets asset manager Ashmore Group.

Friday's economic calendar has UK GDP at 0700 GMT and US retail sales at 1330 GMT followed by industrial production at 1415 GMT.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.