LONDON MARKET CLOSE: US Stimulus Hopes Continue To Prop Up Markets

Mon, 08th Feb 2021 17:01

(Alliance News) - Stocks in London ended higher on Monday on hopes of a substantial US financial aid package, while miners handed the FTSE 100 a boost.

Investors are betting that President Joe Biden will succeed in enacting most of aspects of his USD1.9 trillion fiscal relief package, analysts said.

The FTSE 100 index closed up 34.20 points, or 0.5%, at 6,523.53. The mid-cap FTSE 250 index ended up 19.68 points, or 0.1%, at 21,086.55. The AIM All-Share index finished flat at 1,210.60.

The Cboe UK 100 index closed up 0.6% at 649.25. The Cboe 250 closed up 0.3% at 18,551.86 and the Cboe Small Companies closed up 1.6% at 12,667.47.

In Paris the CAC 40 ended 0.5%, while the DAX 30 in Frankfurt ended flat.

"Global markets continue to advance on a broad front, and even the lacklustre FTSE 100 has managed to put its best foot forward in trading today. The positive atmosphere has been bolstered rather than hindered by the lack of any significant data today, helping markets to focus on the high level issues rather than get bogged down by any detail," said IG Group's Chris Beauchamp.

In the FTSE 100, commodity stocks led the charge with Evraz closing up 4.1%, Anglo American up 3.9%, Antofagasta up 3.4%, Rio Tinto up 2.5% and BHP up 2.4%.

Oil major BP ended up 3.9%, while shares in peer Royal Dutch Shell 'A' and 'B' closed up 1.5% and 2.0% respectively tracking spot oil prices higher.

The pound was quoted at USD1.3740 at the London equities close, up from USD1.3728 at the close Friday.

The euro stood at USD1.2050 at the European equities close, up from USD1.2025 late Friday. Against the yen, the dollar was trading at JPY105.17, down from JPY105.45 late Friday.

"Early gains for the US dollar have faded as the day has gone on, pointing towards a potential resumption of the dollar weakness that was such a feature towards the end of 2020. This in turn has made itself felt throughout global markets, pushing up commodity prices and bolstering currency pairs like EURUSD and GBPUSD. Further dollar weakness would be a welcome development indeed for the FTSE 100, supporting miners and oil firms and offsetting any negative impact from a stronger pound," Beauchamp added.

At the other end of the large caps, JD Sports Fashion ended the worst performer, down 2.9% amid fears of a tax on the domestic retail sector. JD Sports has both physical and online operations. Midcap online electric goods retailer AO World closed down 5.8%.

Tesco has called for a 1% online sales tax to be slapped on digital retail giants such as Amazon ahead of the spring Budget.

It comes as bosses at UK supermarkets, high street chains and retail property owners call on UK Chancellor Rishi Sunak for an overhaul of the current tax system to put them on a "level playing field" with online rivals.

Tesco Chief Executive Ken Murphy is among 18 bosses to sign a letter to Sunak calling for a permanent reduction in business rates in the March 3 Budget.

Retailers, leisure and hospitality firms have not had to pay rates for the current financial year after the government launched a rates holiday at the onset of the pandemic.

However, the property tax is currently set to restart in April for the new financial year despite non-essential retailers remaining shut due to lockdown restrictions.

A significant number of essential retailers, including the UK's six largest supermarket chains, handed their rates relief back to the state, in a move worth more than GBP2 billion.

Stocks in New York were higher at the London equities close, extending last week's rally on optimism about additional US stimulus spending and coronavirus vaccines.

Over the weekend, Treasury Secretary Janet Yellen predicted the US would get back to full employment next year if the package is enacted, and warned that hiring would lag if Congress does not come through.

The DJIA was up 0.5%, the S&P 500 index up 0.6% and the Nasdaq Composite up 0.7%.

Meanwhile, Bitcoin hit a record-high near USD45,000 after Elon Musk's electric carmaker Tesla invested USD1.5 billion in the digital currency. Shortly after news broke of Tesla's investment bitcoin hit USD44,795.20 before pulling back slightly.

The cryptocurrency is up by around 50% since the start of the year.

"Tesla is going to be a major player in the auto industry and if it starts accepting bitcoin as a form of payment, it will give the digital currency further legitimacy," noted Fawad Razaqzada, analyst at ThinkMarkets.

Gold was quoted at USD1,836.80 an ounce at the London equities close, higher against USD1,808.40 late Friday.

The economic events calendar on Tuesday has Germany trade data at 0700 GMT.

The UK corporate Tuesday has annual results from online grocer Ocado Group and from software firm Micro Focus International. Housebuilder Bellway will put out a trading statement.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com