LONDON MARKET CLOSE: Red End To Glum Week As Biden Unveils US Aid Plan

(Alliance News) - Equities in London ended the week on a sour note as markets eyed US President-Elect Joe Biden's bumper stimulus plans with trepidation.

Friday's risk-off mood lifted the dollar, hurting the blue-chip FTSE 100's raft of miners, while shares in Petrofac and Babcock International tumbled in the mid-cap FTSE 250 index.

The FTSE 100 index closed down 66.25 points or 1.0%, at 6,735.71 - closing the week 2.0% lower.

The FTSE 250 ended down 160.16 points, or 0.8%, at 20,615.59, falling 2.1% since the start of the week. The AIM All-Share closed down 10.50 points, or 0.9%, at 1,173.12, and finished the week 0.6% lower.

The Cboe UK 100 ended down 1.0% at 669.91, the Cboe UK 250 closed down 0.6% at 17877.10, and the Cboe Small Companies ended down 0.4% at 12287.65.

In European equities on Friday, the CAC 40 in Paris shed 1.2% and the DAX 30 in Frankfurt ended down 1.4%.

"The markets suffered a sophomore slump in the second week of the year, culminating in some rather ugly losses this Friday afternoon," said Connor Campbell at Spreadex.

Campbell said: "Conscious of the difficulties in getting anything done in the American political system, let alone when you are trying to impeach the outgoing President, investors greeted Joe Biden's USD1.9 trillion covid-19 stimulus plan with a 'we'll see'."

Biden promised "a new chapter" for the nation on the day after Donald Trump became the first US president to ever be impeached twice, as the incoming Democrat sought to seize the narrative in a primetime address and get Americans looking forward again.

Biden's USD1.9 billion package includes raising the minimum wage to USD15 an hour, aiding struggling state and local governments, safely reopening schools, rolling out a massive Covid-19 vaccination campaign, extending unemployment benefits and boosting the size of stimulus checks Congress approved last month.

The massive spending plan will raise stimulus checks provided under an earlier measure passed last month to a total of USD2,000.

Biden's aid plans come as figures on Friday showed US retail sales fell in December amid renewed measures to slow the spread of Covid-19.

On a monthly basis, US retail sales fell 0.7% in December following a revised 1.4% decline in November. The print missed market expectations for a flat reading.

Stocks in New York were in the red at the London equities close, with the Dow Jones, S&P 500 index and Nasdaq Composite all 0.5% lower.

Friday's risk-off move across global markets lifted the dollar.

The pound was quoted at USD1.3597 at the London equities close Friday, down compared to USD1.3681 at the close on Thursday after data showed UK gross domestic product shrank 2.6% in November amid tighter virus restrictions after posting 0.6% growth in October.

The euro stood at USD1.2098 at the European equities close Friday, slipping from USD1.2145 at the same time on Thursday.

Against the yen, the dollar was trading at JPY103.79 compared to JPY103.72 late Thursday.

"The dollar's rise today has made itself felt across a host of other markets, including FX, commodities and equities. Losses for gold, oil and raw materials have then prompted sharp drops for miners and energy firms, dragging the FTSE 100 deep into the red," said Chris Beauchamp, chief market analyst at IG.

Miner Anglo American ended as the worst performer in the FTSE 10, shedding 5.3%, while peers Antofagsta and BHP closed down 3.7% and 3.3% respectively. Shares in oil major BP ended 2.2% lower, while Royal Dutch Shell 'A' and 'B' shares both closed down 1.4% and 1.6% respectively.

Brent oil was quoted at USD54.87 a barrel at the London equities close Friday, down from USD55.69 late Thursday. Gold fell to be quoted at USD1,832.20 an ounce at the London equities close Friday against USD1,847.36 at the close on Thursday.

Ending in the green amongst London's blue-chips, though, was Aveva, advancing 7.0%. In the three months to December 31, the industrial software company's organic constant currency revenue grew by over 26%.

Following a "strong quarter of renewals", Aveva's revenue in the nine months ended December grew 1.5% annually, on an organic constant currency basis. Its order pipeline for the remainder of the financial year is also "solid" and the company now has its largest digital meet to date, the World Digital customer event, to look forward to before the end of January.

Indivior shares gained 9.8% after the drug manufacturer upped its revenue guidance for last year amid good performance from an opioid addiction treatment drug.

Indivior raised its 2020 revenue guidance to a range between USD645 million and GBP650 million from a previous guided range of USD595 million to GBP620 million. The guidance upgrade came as the FTSE 250-listed firm lifted its annual net revenue guidance for opioid addiction treatment Sublocade to between USD128 million to GBP130 million from its previous forecast of USD120 million to GBP125 million.

Petrofac shares slumped 28% after the UK's Serious Fraud Office late Thursday said a former executive of the oilfield services company pleaded guilty to three counts of bribery.

The company noted on Friday that no charges were brought against Petrofac or any other officers and employees.

In connection with the SFO's ongoing investigation into Petrofac, David Lufkin, its former global head of sales, on Thursday pleaded guilty at Westminster Magistrates' Court to three counts of bribery. The offences relate to corrupt offers and payments made between 2012 and 2018 to influence the award of contracts to Petrofac in the United Arab Emirates worth approximately USD3.3 billion, the SFO said in a statement on Thursday.

These charges are in addition to eleven charges of bribery already brought by the SFO, to which Lufkin pleaded guilty in February 2019.

Babcock tumbled 16% as the aerospace and defence firm cautioned on possible write-downs.

"Trading in the third quarter saw a continuation of trends in the first half of the year, with weakness in our civil aviation businesses and a negative impact from Covid-19," Babcock said.

Underlying revenue for the nine months to December 31 was GBP3.40 billion, down 4.9% from GBP3.57 billion a year earlier. Underlying operating profit for the nine months was down 37% annually to GBP202 million from GBP320 million, or down 34% excluding forex and disposals.

Babcock added that its contract profitability and balance sheet probe, conducted alongside an "independent accountancy firm", will be reviewed by its board and auditor PricewaterhouseCoopers before its publishes its annual results in May.

"We have recently started a detailed review of our balance sheet and contract profitability. Early indications suggest that there may be negative impacts on the balance sheet and/or income statement for current and/or future years," the company cautioned.

In Monday's economic calendar are Rightmove UK house prices at 0001 GMT and Chinese GDP at 0200 GMT, with Japanese industrial production at 0430 GMT. Markets in the US will be closed for Martin Luther King day.

By Lucy Heming; lucyheming@alliancenews.com

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