LONDON MARKET MIDDAY: FTSE 100 dragged down by miners ahead of US CPI

Wed, 10th Mar 2021 12:04

(Alliance News) -Â The FTSE 100 was bogged down on Wednesday by its heavyweight mining sector, while stock indices in mainland Europe edged cautiously higher ahead of a crucial US inflation print.

The FTSE 100 index was down 21.77 points, or 0.3%, at 6,708.57 on Wednesday at midday. The mid-cap FTSE 250 index was down 62.36 points, or 0.3%, at 21,320.11. The AIM All-Share index was down 0.2% at 1,180.29.

The Cboe UK 100 index was down 0.5% at 668.38. The Cboe 250 was down 0.7% at 18,990.71, and the Cboe Small Companies up 0.1% at 13,774.72.

"The FTSE is treading water in early trade today, with mainland European market marginally outperforming thus far," said Joshua Mahony, senior market analyst at IG.

The CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.4% and 0.2% respectively on Wednesday afternoon.

"The FTSE 100 over-reliance upon mining names is providing a particular drag today, with fears over a withdrawal in Chinese stimulus driving base metal prices lower," Mahony noted.

BHP Group was the worst performer in the FTSE 100, down 3.5% at midday, while Rio Tinto fell 2.9% and Antofagasta slipped 1.7%.

Moves in European markets generally on Wednesday were muted ahead of a key US inflation print due before the New York open.

Wall Street is set for a mixed start ahead of the data. The Dow Jones is called up 0.3% and the S&P 500 0.1% higher. The tech-laden Nasdaq Composite set to fall 0.2% after a bumper 3.7% surge on Tuesday.

The US inflation rate, due at 1330 GMT, is seen picking up to 1.7% year-on-year in February from 1.4% in January, according to FXStreet.

The data comes as US President Joe Biden's massive relief plan is on the brink of clearing Congress with a final vote scheduled for Wednesday.

Democratic leaders said the USD1.9 trillion package, broadly popular with Americans and approved by the Senate at the weekend, heads to the House for likely passage days before a crucial deadline, and culminating a weeks-long negotiation over the cost and scope of the measure.

"While traders have been looking for this package as a means to turbocharge the US economic recovery, there are plenty of questions over the impact it could have upon inflation," said IG's Mahony. This adds further weight to Wednesday's inflation reading.

The dollar was broadly stronger ahead of the consumer price index release. Against the yen, the dollar rose to JPY108.81 versus JPY108.70.

Sterling was quoted at USD1.3884 midday Wednesday, falling from USD1.3900 at the London equities close on Tuesday. The euro traded at USD1.1886 on Wednesday, flat on USD1.1888 late Tuesday.

Gold was quoted at USD1,709.19 an ounce, soft on USD1,713.01 on Tuesday. Brent oil was trading at USD67.65 a barrel, slipping from USD68.20 late Tuesday.

While miners were gathered at the bottom of the FTSE 100, Just Eat Takeaway.com topped the index, up 3.8%, as revenue surged in 2020.

In 2020, Just Eat Takeaway.com's revenue multiplied almost five-fold to EUR2.04 billion from the EUR416 million Takeaway.com alone registered in 2019. Just Eat and Takeaway.com merged in 2020.

Revenue was largely boosted by the merger, though Just Eat Takeaway.com also saw increased demand for its services as lockdowns meant restaurants, pubs and bars were unable to provide in-person dining for much of 2020.

The company posted a widened loss, however. Its pretax loss stretched to EUR147 million from the EUR88 million incurred by Takeaway.com in 2019.

Combined revenue - adjusted to assume the merger was sealed at the start of 2019 - was up 54% to EUR2.40 billion and its adjusted earnings before interest, tax, depreciation and amortisation rose 18% to EUR256 million.

"Just Eat Takeaway.com is currently sacrificing profitability in order to scale its UK delivery capabilities. Expansion may be coming at a considerable cost, but it remains a vital route to new customers in a fierce marketplace, where Deliveroo is poised to IPO," said Dan Thomas at Third Bridge.

At the start of the week, rival Deliveroo set out plans to join London's Main Market and posted an improved annual performance in 2020, though it also was loss-making. The IPO is expected to value the takeaway food delivery service at up to GBP7.5 billion, compared with Just Eat Takeaway's valuation of GBP9.4 billion.

Spirax-Sarco Engineering rose 3.5% as it reported full-year profit growth and lifted its dividend.

Revenue for 2020 fell 4% to GBP1.19 billion from GBP1.24 billion a year earlier. Pretax profit edged up 1% to GBP240.1 million, as the thermal energy management and pumping firm's operating profit margin improved to 20.9% from 19.7%.

"Following a stronger-than-anticipated fourth quarter, we are very pleased with the group's performance in 2020, given the unprecedented circumstances caused by the Covid-19 pandemic," said Chief Executive Nicholas Anderson.

Spirax-Sarco raised its dividend for the year by 7% to 118.0 pence.

The best mid-cap performer in London was Quilter, rising 7.2% on a swing to annual profit.

The London-based wealth management company swung to a pretax profit in 2020 of GBP50 million, from a GBP53 million loss in the year prior, on the back of reduced investment contract liabilities. Assets under management at December 31 climbed 6.7% to GBP117.8 billion from GBP110.4 billion the year before.

By Lucy Heming;Â lucyheming@alliancenews.com