LONDON MARKET CLOSE: Stocks rise on Biden infrastructure-led recovery

(Alliance News) - Stocks in London on Thursday ended a holiday-shortened week higher as market participants digested US President Joe Biden's proposed USD2 trillion infrastructure and jobs plan.

Biden late on Wednesday said the plan would modernise America's public works and make its energy system greener. But the proposal faces major hurdles in Congress amid criticism from Republicans and business lobbies who oppose the higher corporate taxes that would pay the bill.

The FTSE 100 index closed up 23.67 points, or 0.4%, at 6,737.30. The FTSE 250 ended up 213.96 points, or 1.0%, at 21,732.67. The AIM All-Share closed up 11.53 points, or 1.0%, at 1,209.40.

The Cboe UK 100 ended up 0.1% at 671.64, the Cboe UK 250 closed up 0.8% at 19,422.48, and the Cboe Small Companies ended up 0.4% at 13,943.31.

In Paris the CAC 40 ended up 0.6%, while the DAX 30 in Frankfurt ended up 0.7%.

"European markets are closing out in positive fashion, with the prospect of another USD2 trillion worth of US stimulus helping to lift hopes of a rapid recovery in the months ahead," said IG Group's Josh Mahony.

In the FTSE 100, travel and travel-related stocks ended among the best performers, with British Airways parent International Consolidated Airlines up 5.7%, while aftermarket aerospace services providers Rolls-Royce and Melrose closed up 3.4% and 4.0% respectively.

Midcap budget carrier easyJet closed up 3.3%, while Ireland's Ryanair finished 2.4% higher.

UK Prime Minister Boris Johnson has earmarked early next week to reveal more information about plans to resume travel overseas, as the country gradually eases lockdown restrictions.

Next closed up 3.2% after the clothing and homewares retailer raised its forecast, said it met annual profit guidance and "optimistically" ruled out any more store closures as the UK's vaccine rollout continues.

The high street chain also took note of the "battle" its bricks and mortar arm faces as the retail sector's shift to online was accelerated by the Covid-19 pandemic. It also decided against making a final payout but did say it will review its dividend once visibility improves.

In the financial year ended January 30, total revenue fell 17% to GBP3.53 billion from GBP4.27 billion. Full price sales were down 15%. Pretax profit dropped 54% to GBP342.4 million from GBP748.5 million, though it did meet the latest guidance. Online sales rose 10% to GBP2.37 billion, while retail sales dropped 48% to GBP954.5 million.

"We expect the shift in consumer behaviour towards online sales to continue for some time and one of our priorities during the year has been to continue the development of our online platform," Next said, adding: "There remains a big question mark over the level of sales our stores will achieve when they reopen. The pandemic has served to accelerate a pre-existing social trend - the move to more online shopping. History has been given a shove and, having moved forward, seems unlikely to reverse."

JD Sports Fashion ended 3.1% higher after the athletic apparel retailer said it formally completed the USD495 million purchase of DTLR Villa.

JD in February had said the acquisition of DTLR would enhance its presence in the north and east of the US and complements its existing JD and Finish Line brands alongside the recent acquisition of Shoe Palace, based on the west coast.

At the other end of the large-caps Phoenix Group ended the worst performer, down 2.9% and Smith & Nephew finished 1.3% lower. The stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

The pound was quoted at USD1.3830 at the London equities close, up sharply from USD1.3785 at the close Wednesday, after UK manufacturing activity hit its best level in over a decade in March, figures showed on Thursday.

The IHS Markit/Chartered Institute of Procurement & Supply purchasing managers' index shot up to 58.9 in March - the best reading since February 2011 - from 55.1 in February. The figure beat the flash estimate of 57.9.

Any reading over the no-change mark of 50 signals sector growth, meaning UK manufacturing in March saw activity accelerate sharply.

The euro stood at USD1.1765 at the European equities close, higher from USD1.1742 late Wednesday, following positive PMI data from the continent.

The eurozone's manufacturing economy posted a strong end to the first quarter of the year, with numbers on Thursday showing growth in the sector was slightly higher than initially expected in March.

The final IHS Markit eurozone manufacturing PMI print came in at 62.5 points, beating the earlier flash estimate of 62.4. The March figure was up from February's tally of 57.9 points and well above the neutral mark of 50.0.

It was the ninth month in-a-row that the PMI has registered above 50 points, meaning growth. Markit noted a "record" increase in output, new orders, exports and buying activity.

Against the yen, the dollar was trading at JPY110.60, firm against JPY110.50 late Wednesday.

Stocks in New York were higher at the London equities close, with the benchmark S&P 500 index breaching the 4,000 mark for the first time.

The DJIA was up 0.3%, the S&P 500 index up 0.8% and the Nasdaq Composite up 1.6%.

Investors are looking ahead to first-quarter earnings season later this month with optimism after Congress approved Biden's economic massive pandemic relief package and as US vaccinations accelerate raising hopes the economy can fully reopen.

On the economic front, US manufacturing activity surged in March driven by strong growth in new order, IHS Markit said.

The IHS Markit manufacturing purchasing managers' index registered 59.1 points in March, up from 58.6 in February. The latest reading was revised slightly higher from a preliminary of 59.0, pointing to the second-highest growth in factory activity on record.

Elsewhere, the ISM manufacturing PMI score jumped to 64.7 points in March from 60.8 in February, well above market forecasts of 61.3. It is the highest reading since December of 1983, the latest figures from the Institute for Supply Management showed.

Brent oil was quoted at USD63.63 a barrel at the equities close, lower from USD64.00 at the close Wednesday.

Oil producing countries grouped together under the OPEC+ alliance led by Saudi Arabia and Russia met on Thursday and were expected to agree an extension to their current output cuts.

Their third ministerial meeting of 2021, being held via videoconference, got underway around 1300 GMT.

Saudi Energy Minister Abdulaziz bin Salman, the head of the alliance, laid the groundwork for remaining cautious and not increasing output in his opening remarks.

"The reality remains that the global picture is far from even, and the recovery is far from complete," he said as quoted in a statement from his ministry.

Gold was quoted at USD1,728.70 an ounce at the London equities close, higher against USD1,704.21 late Wednesday.

Financial markets in the UK will be closed on Friday and Monday for the long Easter holiday weekend.

The economic events calendar on Friday has the US jobs report for March due at 1330 BST, despite financial markets in the US being closed for Good Friday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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