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LONDON MARKET MIDDAY: FTSE 100 hits 14-month high ahead of US jobs

Fri, 7th May 2021 12:13

(Alliance News) - Stock prices in London were higher at midday on Friday with the FTSE 100 returning to pre-pandemic levels, as investor attention turns to the US jobs report.

The FTSE 100 index was up 48.10 points, or 0.7%, at 7,124.34 - trading at its highest level since late February 2020 and is on track to end the week 2.4% higher.

The mid-cap FTSE 250 index was up 221.03 points, or 1.0%, at 22,712.39. The AIM All-Share index was up 0.3% at 1,256.21.

The Cboe UK 100 index was up 0.8% at 709.10. The Cboe 250 was up 1.1% at 20,398.81 and the Cboe Small Companies up 0.7% at 14,940.26.

In mainland Europe, the CAC 40 in Paris was up 0.8%, while the DAX 30 in Frankfurt was up 1.2%.

In New York, the Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.

According to market consensus cited by FXStreet, the US economy is expected to have added 978,000 jobs in April, while the unemployment rate is forecast to have been reduced to 5.8% from 6.0% in March.

"European markets are looking to close out the week in positive fashion, with the FTSE 100 overcoming the 7,100 mark for the first time in 14 months. US markets helped lay the ground for today's European gains, with a welcome decline in jobless claims helping to lift spirits ahead of today's jobs report," IG Group's Josh Mahony said.

"Doubts over whether last month's payrolls figure of 916,000 was merely a temporary response to Joe Biden's USD1.9 trillion stimulus package will be answered today, with markets looking for another lofty number. Rising ADP payrolls and continued declines in the jobless claims figure does provide the basis for a possible push towards the one-million mark for today's [nonfarm payrolls] number," Mahony added.

In the FTSE 100, Barclays was up 2.6% after Sherborne Investors Management, the investment vehicle of activist investor Edward Bramson, said it has sold its entire 6.0% stake in the lender.

It ends a three-year battle between Sherborne and the London-based bank, during which the activist tried to force an exit from investment banking and the ouster of Chief Executive Jes Staley. Sherborne had called for Staley to be removed in April 2020 over his links to Jeffrey Epstein.

Based on the bank's share price on Friday, the stake is worth around GBP1.8 billion. Sherborne said it has started investing in a new target that offers a better return than Barclays. It did not identify the new target company.

InterContinental Hotels Group was up 1.0%. The Holiday Inn and Crowne Plaza owner said trading continued to improve during the first quarter of 2021.

For the three month to March 31, revenue per available room - a key metric in the hotel industry - was down 50.6% from the same time in 2019 and down 33.7% versus 2020.

IHG noted there was a notable pick-up in demand in March, particularly in the US and China, which continued into April. In Greater China, after temporary domestic travel restrictions were lifted, demand recovered quickly in March towards levels seen in the second half of 2020, IHG added.

International Consolidated Airlines Group was up 0.4%, overturning earlier declines. The British Airways parent posted a narrowed loss for the first quarter, but it still topped EUR1 billion.

IAG said its first quarter was badly hurt by the Covid-19 pandemic, as government restrictions and quarantine requirements grounded the travel sector. For the three months to March 31, IAG posted a pretax loss EUR1.22 billion, narrowed from EUR1.88 billion in the first quarter of 2020, as total revenue dropped 79% to EUR968 million from EUR4.59 billion.

Looking ahead, IAG said it won't be issuing profit guidance for 2021 due to uncertainty over travel restrictions.

IAG's hefty loss comes as holidaymakers from the UK will finally discover which destinations they can visit this summer without quarantining, with Portugal, Iceland and Malta among those expected to be on the travel green list.

Gibraltar and Israel could also make the cut when the list is published on Friday following weeks of speculation.

Quarantine and coronavirus testing requirements for people arriving in England once foreign holidays are permitted from May 17 will be based on a new traffic light system, with destinations placed on green, amber and red lists.

Jet engine maker Rolls-Royce was up 2.7%, ahead of the UK travel announcement. Airlines pay Rolls-Royce for engine services depending on how many hours their engines spend in the air. In addition, midcap airline and holiday stocks easyJet and Tui were up 1.7% and 2.2% respectively.

In the FTSE 250, St Modwen Properties was still the standout performer at midday, up 19% at 534.00 pence, after the property developer received a potential takeover offer worth GBP1.2 billion from US alternative asset investment firm Blackstone Group.

Blackstone has offered to acquire St Modwen for 542 pence per share in cash per share, reflecting a 21% premium to the company's closing price of 448p on Thursday, and a 24% premium to its net tangible assets per share of 437.7p as at November 30 last year.

St Modwen said it has considered the offer, and that it would be willing to recommend the offer unanimously to its shareholders should Blackstone make a firm offer. However the offer is subject to several pre-conditions, including the completion of due diligence which is currently underway.

Blackstone is required to make a firm offer by no later than the end of business on June 4.

Meggitt was the second best performer, up 8.3%, following a press report that US-based aircraft parts maker Woodward could be looking to buy its London-listed peer.

Fort Collins, Colorado-based Woodward is working with an investment bank as it mulls a potential acquisition, and Coventry, England-based Meggitt is a possible target, Reuters reported, citing an article in Dealreporter.

At the other end of the midcaps, Syncona was the worst performer, down 6.5%, after the investment firm said its portfolio company Gyroscope Therapeutics has postponed plans for its initial public offering in New York.

The pound was quoted at USD1.3924 at midday Friday, up from USD1.3876 at the London equities close Thursday, following positive UK economic data.

UK construction sector activity continued to expanded in April as easing restrictions led to a rise in new orders.

The IHS Markit-CIPS UK construction purchasing managers' index print was 61.6 points in April, little changed from 61.7 in March. The latest reading remained well above the 50.0 mark which separates expansion from contraction but missed the market forecast, cited by FXstreet, of 62.3.

On the political front, hopes of a Labour party revival under Keir Starmer suffered a blow on Friday after the Conservative party comfortably won the Hartlepool by-election for the UK Parliament.

The Leave-supporting North East constituency went blue for the first time in its 47-year-old history, as UK Prime Minister Boris Johnson demolished another brick in Labour's so-called "red wall".

Voters in the town backed Tory candidate Jill Mortimer to be their next member of Parliament over Labour's Paul Williams - an avid Remainer and second-referendum campaigner during his time as MP for Stockton South between 2017 to 2019 - in a rare by-election victory for a party in power for more than a decade.

The Conservative, who declared it a "truly historic result", secured a 6,940 majority winning 15,529 votes to Williams's 8,589.

Elsewhere, Scottish National Party leader Nicola Sturgeon's push for a second independence referendum means the stakes are high in the contest for the devolved Scottish Parliament. Results from the Holyrood election will come through later on Friday and Saturday.

The SNP is expected to emerge again as the largest party in the Scottish Parliament after the election, but it wants to win an overall majority of MSPs as it pushes for a second vote on splitting from the Union - something which polls suggest remains in the balance.

"UK breakup remains a tail risk underpriced by the market but one that can probably be confidently kicked down the road for at least eight years - the current Tory government won't grant a referendum. Today's Hartlepool by-election result underlines how far Labour still need to travel to mount any kind of challenge to Boris at the next election," commented analyst Neil Wilson.

The euro was priced at USD1.2065, up from USD1.2053. Against the yen, the dollar was trading at JPY109.08, flat from JPY109.09.

Brent oil was quoted at USD68.53 a barrel Friday at midday, up from USD68.39 late Thursday. Gold was quoted at USD1,819.25 an ounce, higher against USD1,813.85.

By Arvind Bhunjun;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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