LONDON MARKET MIDDAY: Miners Rise, Builders Fall; Pound Mounts USD1.38

Wed, 10th Feb 2021 12:14

(Alliance News) - London were mixed midday Wednesday, with the FTSE 100 index outperforming European peers, as traders eye the next meaningful breakthrough in US stimulus talks.

The large-cap FTSE 100 index was up 20.75 points, or 0.3%, at 6,552.31.

The blue-chip index got a boost from the mining sector and from share price gains for Smurfit Kappa and its peers after the packaging firm posted promising annual earnings.

The mid-cap FTSE 250 index fell 50.22 points, or 0.2%, to 21,062.72. The AIM All-Share index was down 0.88 of a point, or 0.1%, at 1,210.94.

The Cboe UK 100 index was up 0.3% at 651.21. The Cboe 250 was down 0.2% at 18,534.84 and the Cboe Small Companies was flat at 12,687.60.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt both were up just 0.1%.

"European markets appear to be set for another day of contemplation, with the gains of last week giving way to a period of consolidation. Despite notable market drivers in the form of the US stimulus plans and ongoing coronavirus vaccination programme, the gains seen last week appear to have captured much of that initial improvement in sentiment," IG Markets Senior Market Analyst Joshua Mahony commented.

"Instead we appear to be in a holding pattern as markets await a breakthrough in stimulus talks."

US President Joe Biden met Tuesday with a handful of top business leaders, hammering home the need to "move big" on his USD1.9 trillion stimulus bill while receiving input on a proposal to raise the minimum wage.

"We're approaching this issue to see if we can find some common ground," Biden said ahead of a White House meeting.

Biden said he was "optimistic" bipartisan compromise was possible before the gathering that included Walmart Chief Executive Doug McMillon and JPMorgan Chase CEO Jamie Dimon.

US futures were higher on Wednesday. The Nasdaq Composite and the S&P 500 are called up 0.4% and the Dow Jones Industrial Average 0.3% higher.

Back in London, miners Anglo American, Rio Tinto and BHP were up 2.9%, 2.6% and 1.6%, respectively.

"The optimism over an economic rebound has been reflected in the rise that weâ€™ve seen in copper and crude oil prices over the past few weeks, with the price of copper hitting its highest level in eight years. Platinum prices have also hit six-year highs on a similarly optimistic outlook about future global demand, as well as expectations over a transition to a greener global energy platform in the longer term," commented Michael Hewson, UK chief market analyst for CMC Markets.

In addition, economic data on Wednesday showed factory prices rose in China for the first time in a year last month as the country's vast industrial sector leads the recovery from the virus pandemic.

Smurfit Kappa rose 2.9% after the paper-based packaging firm's profit improved in 2020.

Revenue declined, however, amid "the adverse impact of currency and the fall in box prices".

Smurfit Kappa's revenue in the year ended December 31 fell 5.8% to EUR8.53 billion from EUR9.05 billion. However, profit rose as finance costs were reduced. Smurfit posted pretax profit of EUR748 million, up 10% from EUR677 million. Finance costs fell 28% to EUR179 million from EUR247 million.

Peer Mondi rose 1.3% and DS Smith was 1.5% higher.

Housebuilders were sitting towards the negative end of the large-cap list, with Barratt falling 2.2% and Berkeley down 1.3%.

Among the mid-caps, Redrow fell 1.9%, despite reporting positive interim results. It said revenue in the six months ended December 27 soared 20% to GBP1.04 billion from GBP870 million. Pretax profit rose 11% to GBP174 million from GBP157 million.

"Housebuilders are at the forefront of FTSE selling pressure today, despite the surge in profits from Redrow," IG's Mahoney added.

"The selling pressure we are now seeing highlights the markets disdain for fleeting and short-lived periods of outperformance. The fact that the housing market was always expected to contract once the stamp duty holiday boost came to an end has restricted valuations across the housebuilding sector."

In addition, Persimmon was down 0.4%. Its 2020 results will include a GBP75 million provision to address cladding issues, the company said.

Flammable building cladding came into stark focus following the fire that engulfed Grenfell tower, a residential tower block in London. The fire killed 72 people.

Shares in Dutch brewer Heineken were down 1.8% in Amsterdam. It warned it will cut 8,000 jobs and posted a swing to a net loss totalling EUR204 million for 2020, from a EUR2.17 billion profit in 2019.

"The pandemic has also impacted beer consumption and demand with the closure of pubs and restaurants, and Dutch beer maker Heineken has seen the impact of that with full year beer volume declining 8.1%," CMC Markets UK's Hewson said.

Pub firms on the London Stock Exchange were lower in a negative read-across. Mid-cap JD Wetherspoon was down 0.6%. Fuller, Smith & Turner fell 2.4%, and AIM-listed City Pub Group dropped 4.1%.

The pound was quoted at USD1.3837, up from USD1.3790 at the London market close on Tuesday.

It is "too soon" to book a holiday, UK Transport Secretary Grant Shapps warned.

The Cabinet minister told BBC Radio 4's Today programme that "people shouldn't be booking holidays right now â€“ not domestically or internationally".

He went on: "The prime minister will say more about the route to unlocking this country, starting when he speaks about it on February 22.

The euro stood at USD1.2121 on Wednesday afternoon in London, up from USD1.2100 at the European equities close Tuesday.

Against the yen, the dollar was trading at JPY104.76, up from JPY104.62 at the London equities close on Tuesday.

Brent oil fetched USD61.45 a barrel midday on Wednesday, up from USD60.70 a barrel at the London equity market close on Tuesday.

Gold was quoted at USD1,842.46 an ounce, up from USD1,837.66.

Still to come on Wednesday is CPI data from the US at 1330 GMT. The US earnings calendar has fourth-quarter figures from soft drinks firm Coca-Cola and carmaker General Motors.

By Eric Cunha; ericcunha@alliancenews.com;