LONDON MARKET MIDDAY: Biden infrastructure spend eyed; DAX record high

Tue, 30th Mar 2021 12:05

(Alliance News) -Â A sunny day in London extended to stocks on Tuesday as markets were brightened by the prospect of further fiscal stimulus from US President Joe Biden.

Banks and miners were leading the way in London's FTSE 100, while Volkswagen and BASF helped Germany's DAX 30 hit an all-time high.

The FTSE 100 index was up 24.59 points, or 0.4%, at 6,760.76 midday Tuesday. The mid-cap FTSE 250 index was up 97.99 points, or 0.5%, at 21,533.53. The AIM All-Share index was down 0.1% at 1,192.80.

The Cboe UK 100 index was up 0.3% at 674.36. The Cboe 250 was up 0.5% at 19,261.80, and the Cboe Small Companies flat at 13,881.67

"Two recent worries for the market seemed to have eased on Tuesday with the Suez Canal finally unblocked and concern over the Archegos family office saga beginning to die down," said AJ Bell investment director Russ Mould.

"This is allowing markets to focus on President Biden's latest plan to revive the US economy â€“ a massive wad of infrastructure spending," said Mould. "The FTSE 100 was certainly putting on its happy face, driven by resources and financial stocks."

Lender Barclays was the top performer in the FTSE 100 at midday, up 2.9%, while HSBC advanced 2.4%. Miner Antofagasta rose 2.8% and peer Rio Tinto gained 1.9%.

US President Joe Biden is set to unveil his infrastructure proposal on Wednesday, which could cost around USD3 trillion and be split into two bills. The measures are aimed at fixing roads, bridges and airports that are decades old and in need of repair, as well as expanding education and paid leave. It follows hot on the heels of Biden's USD1.9 trillion stimulus package already passed.

Ahead of the US open, the Dow Jones was called up 0.2%, the S&P 500 was seen flat, and the Nasdaq 100 pointed down 0.4%.

The dollar was buoyant on Tuesday as markets await Biden's latest fiscal boost to the US economy.

Against the yen, the dollar rose to JPY110.27 on Tuesday in London versus JPY109.77 at the London equities close on Monday - trading above the JPY110 mark for the first time in a year.

"The dollar's strength in the last couple of months results from investors pricing in a potential rise in inflation as a collateral effect of the gargantuan monetary and fiscal stimulus being deployed in the United States," commented Ricardo Evangelista, senior analyst at ActivTrades.

Sterling was quoted at USD1.3762, down from USD1.3790 late Monday, while the euro traded at soft at USD1.1741 versus USD1.1761.

The single currency has been held back in recent weeks by the bloc's stuttering vaccination campaign, though European Commission figures on Tuesday showed eurozone consumer confidence improved in March.

The European Commission's consumer confidence index came in at minus 10.8 points, improved by 4.0 points from February. The figure came in better than the long-term average of minus 11.1 points.

"In the EU, the ESI's increase in March was driven by improving confidence in all surveyed business sectors (i.e. industry, services, retail trade, construction) and among consumers. The increases were of a magnitude not seen since last summer's steep recovery following the first phase of the pandemic," the European Commission said.

To come on Tuesday is German inflation at 1300 BST.

In mainland Europe, aided by the weaker euro, the CAC 40 in Paris was up 0.7% in early afternoon trade while the DAX 30 in Frankfurt likewise rose 0.7%, to 14,921.55 - hitting an all-time high of 14,926.12 earlier in the day.

In London, Fresnillo was the worst blue-chip performer at midday, the precious metals miner down 2.4% as it tracked the price of gold lower.

Gold was quoted at USD1,695.43 an ounce, falling from USD1,711.45 late Monday as a stronger dollar and risk-on investment mood heaped pressure on the safe-haven metal.

Brent oil fared better, trading at USD64.73 a barrel on Tuesday, up from USD63.85 late Monday in London.

SSE fell 1.4%. The energy supplier held its full-year earnings per share guidance, but the UK Competition & Markets Authority has rejected SSE's appeal of changes to the calculation of charges paid by electricity generators, including SSE, for use of the electricity transmission system.

SSE said earlier this month it planned to appeal "certain elements" of Ofgem's changes, arguing they could have led to transmission charges being outside the range allowed under the relevant law.

The CMA decided that Ofgem was not wrong to have approved the changes, explaining that the changes make a breach of the law in 2021 to 2022 to be much less likely and that further changes are expected to take effect by April 1, 2022.

The Perth, Scotland-based gas & electricity company said it still expects adjusted earnings per share for the financial year ending on Wednesday in a range of 85 pence to 90p, which it first guided for last month. In financial 2020, SSE recorded adjusted EPS of 83.6p, meaning its financial 2021 results will be up by between 1.7% and 7.7%.

In the FTSE 250, Victrex rose 4.7% after Citigroup raised the polymer supplier to Neutral from Sell.

Pennon Group fell 2.8%. The water firm said it is considering potential investments or a payout to shareholders with the proceeds from the GBP3.7 billion sale of Viridor.

The Exeter-based water utility said it is narrowing down a review of growth opportunities in the UK water sector, which presents "significant value potential". If no "major value-accretive investment opportunity" is available, Pennon will make a "substantial" payout to shareholders.

Pennon added that it is on track to deliver results in line with its expectations for the financial year ending March 31. Revenue increased in the second half as higher household demand offset lower business demand, although operational costs increased as well.

Elsewhere in London, Ryanair shares gained 3.8% after Berenberg upgraded the budget airline to Buy from Hold.

By Lucy Heming;Â lucyheming@alliancenews.com