LONDON MARKET CLOSE: Strong US data, Wall Street earnings lift stocks

Thu, 15th Apr 2021 16:56

(Alliance News) - Stock prices in London ended higher on Thursday, with miners helping to lift the FTSE 100 and GlaxoSmithKline posting hefty share price gains, though Deliveroo failed to inspire with its maiden trading update as a listed company.

Across the Atlantic, focus was on strong US retail sales numbers and falling jobless claims figures, while the Wall Street corporate earnings calendar continued with updates from Citigroup, Bank of America and PepsiCo.

The FTSE 100 index rose 43.92 points, or 0.6%, to close at 6,983.50. The mid-cap FTSE 250 ended the session 116.59 points, or 0.5%, higher at 22,472.04.

The mid-cap index hit another record closing high, while the blue-chip counterpart edges closer to 7,000 points, levels last seen in February 2020.

The AIM All-Share index closed up 4.22 points, 0.3%, at 1,248.13 on Thursday.

The Cboe UK 100 index ended up 0.7% at 695.73. The Cboe 250 closed up 0.6% at 20,096.78. The Cboe Small Companies closed up 1.0% at 14,567.33.

"European stocks are charging higher after the US earning season kicked off on the right foot. US banks are often considered a proxy for the broader economy. As a result, their earnings are strong drivers of sentiment," OANDA analyst Sophie Griffiths noted.

On Wall Street, the Dow Jones Industrial Average was up 0.8% shortly before the market close in London. The S&P 500 rose 0.9% and the Nasdaq Composite jumped 1.0%.

Bank of America said it expects an accelerated recovery going forward as its income increased in the first quarter of 2021. In addition, the North Carolina, US-based bank said it will repurchase up to USD25 billion of stock over time.

Revenue in the three months to the end of March slipped to USD8.07 billion from USD9.13 billion the year before, but pretax income rose to USD871 million versus USD582 million the year prior.

BofA lowered its provision for credit losses by a massive USD6.6 billion to a benefit of USD1.9 billion.

Citigroup reported growth in earnings in the first quarter - thanks to credit releases - and has set out to restructure its underperforming Global Consumer Banking unit by "doubling down" on its wealth business.

In the three months to March 31, the New York-headquartered universal bank saw net income more than triple to USD7.94 billion from USD2.54 billion.

In New York, BofA shares were down 4.2%, while Citi lost 1.5%.

"The upbeat numbers served to reinforce expectations of a strong US economic recovery. If the world's largest economy is performing well, this is good news for the global economy and risk sentiment," Griffiths added.

Adding to the positive sentiment, US retail sales growth surged in March as government stimulus payments made their way to households. On a monthly basis, US retail sales jumped 9.8% in March, rebounding from a 2.7% fall in February. The figure was well above the market estimate, cited by FXStreet, of 5.9%.

Elsewhere, the Department of Labor said in the week ending April 10, the advance figure for seasonally adjusted initial claims was 576,000, down sharply from 769,000 claims the week before. The latest reading was well below market expectations of 700,000.

In Frankfurt, the DAX 30 ended 0.3% higher, while the CAC 40 rose 0.4%.

The EU said Wednesday that it is expecting 50 million Pfizer coronavirus vaccine doses earlier than expected, as the US said it would continue a pause in vaccinations using the Johnson & Johnson shot for at least another week so regulators can assess possible blood clot links.

The EU's vaccination campaign has picked up speed recently after a difficult beginning.

In London, GlaxoSmithKline ended as one of the best blue-chip performers, up 5.0%.

Activist investor Elliot Management has taken a multi-billion-pound stake in pharmaceutical giant, the Financial Times reported on Thursday.

The FT said Elliot's stake was confirmed by people with knowledge of the investment and is a "significant" position, according to one of them. The newspaper reported that Elliot's investment comes as GSK shareholders have become disillusioned with the leadership of Chief Executive Emma Walmsley.

Miners also rose. Antofagasta added 3.4%, BHP climbed 1.5% and Rio Tinto rose 2.3%.

Metal prices were on the up as the dollar's strength waned and amid expectations of strong economic growth in China.

Gross domestic product data from China is reported overnight on Friday.

Gold was trading at USD1,766.35 an ounce at the London equity market close Thursday, up from USD1,736.27 on Wednesday.

The pound was quoted at USD1.3788 at the London equities close on Thursday, down slightly from USD1.3793 on Wednesday. The euro was priced at USD1.1965, down from USD1.1975. Against the Japanese yen, the dollar was quoted at JPY108.71, down from JPY108.96.

Back in London, Unilever rose 1.1% and in Zurich, Nestle also climbed 0.5%. The duo ended higher after Pepsi reported a sharp rise in income in the first quarter and guided for further growth in the second quarter on vaccination efforts expected to boost the food and beverages industry, especially when people start to travel again.

Pepsi was up 0.5% in New York.

In the three months to March 31, the food, snack, and beverage giant recorded net income of USD1.72 billion, up 27% from USD1.35 billion the year before.

Deliveroo shares fell 3.2% and now sit about a third lower than the IPO price of 390 pence.

Deliveroo maintained its full-year guidance after a sharp acceleration in orders in the first quarter, though cautiously eyed a relaxation of lockdown rules ahead.

In its maiden trading update as a London-listed company, Deliveroo said it made "significant progress" in the first quarter ended March 31, with total orders more than doubling to 71 million from 33 million.

IG Markets analyst Chris Beauchamp commented: "Those hoping for a rebound in Deliveroo shares after the Q1 update this morning have been disappointed afresh, with the shares taking another turn lower despite the anticipated bounce in order volumes.

"Crucially, fears about a changing environment thanks to the end of lockdown restrictions appear to be justified, with the firm leaving guidance unchanged and noting that the end of 'special circumstances' would make it hard to issue accurate forecasts for the coming few months."

Brent oil was trading at USD66.58 a barrel late Thursday, up from USD66.32 late Wednesday.

Friday's economic calendar has a spate of data from China overnight, including the GDP reading, retail sales and industrial output.

Friday's local corporate calendar has a trading statement from emerging markets-focused asset manager Ashmore Group and private hospital operator Mediclinic International. In the US, Morgan Stanley reports first-quarter results.

By Eric Cunha; ericcunha@alliancenews.com