LONDON MARKET MIDDAY: Stocks edge higher; US earnings in focus

(Alliance News) - Stock prices in London were higher at midday on Monday as the UK government presses ahead with its roadmap out of lockdown, while US stocks were called lower as earnings season continues.

The FTSE 100 index was up 7.99 points, or 0.1%, at 7,027.52. The mid-cap FTSE 250 was up 81.51 points, or 0.4%, at 22,604.03. The AIM All-Share index was up 0.2% at 1,257.09.

The Cboe UK 100 index was up 0.2% at 699.50. The Cboe 250 was up 0.5% at 20,215.30. The Cboe Small Companies was up 0.3% at 14,547.75.

In mainland Europe, the CAC 40 index in Paris was up 0.2% and the DAX 30 in Frankfurt was down 0.2%.

"The FTSE 100 consolidated its position as investors balanced reopening optimism with a need to take stock after the index closed above 7,000 for the first time post-Covid," said AJ Bell investment director Russ Mould. "Sunny weather should have given retailers and hospitality businesses in England a boost over the weekend and this helps explain why the more domestic-facing FTSE 250 outperformed its large-cap counterpart and is marking new record levels."

In the FTSE 100, Johnson Matthey was up 1.7%. The speciality chemicals firm said it has entered into a strategic partnership with Finnish Minerals Group for sustainable battery materials production.

Johnson Matthey said the partnership will support development of a second commercial plant for eLNO cathode materials, which will be located in Finland and powered solely by renewable energy.

In addition, Johnson Matthey signed an agreement with SQM for supply of lithium hydroxide from SQM's Salar del Carmen plant in Antofagasta, Chile, and with Nornikel for nickel and cobalt supply from Finland and Russia.

At the other end of the large-caps, Melrose Industries was 1.8% lower. The industrial turnaround specialist said it has agreed to sell its Nortek Air Management business - comprising the Nortek Global HVAC and Air Quality & Home Solutions segments - to Chicago-based Madison Industries for around GBP2.62 billion.

Melrose said it intends to use part of the net proceeds to reduce debt and contribute around GBP100 million to the GKN UK defined-benefit pension schemes, which means that the funding deficit will have been reduced from approximately GBP1 billion to GBP200 million under Melrose's ownership of GKN, a UK-based engineering firm.

Melrose also said it intends to return a portion of the net proceeds to shareholders.

Flutter Entertainment was down 0.8%. The gambling firm has hired investment bank Moelis & Co to advise on the sale of Oddschecker, a betting odds comparison site, Sky News reported Friday afternoon. Citing "City sources", Sky said the business, which was set up in 1999 and has had several owners, could sell for about GBP150 million.

In the FTSE 250, Energean was the worst performer, down 4.7%, after the oil and gas company posted a drop in revenue and a wider loss in 2020.

Revenue fell 63% to USD28.0 million from USD75.7 million the previous year. The company made a pretax loss of USD113.6 million, widening from a USD104.3 million loss in 2019, as low oil and gas prices hit the exploration and production company.

Elsewhere in London, Equiniti shares were up 16% at 159.65 pence after it confirmed it has received a 170 pence-per-share cash offer from Siris Capital and said it will evaluate the proposal "carefully in all respects".

On Sunday, Sky News reported that Siris was close to making a formal offer for Equiniti valuing the company at around GBP600 million. The report said the private equity firm had been interested in the London-based company since July but was rebuffed several times.

Equiniti's statement early Monday was its first acknowledgement of an offer from Siris. It noted the proposal was non-binding and subject to a number of preconditions, including the completion of detailed due diligence and the arrangement of debt financing.

The financial administration services provider urged shareholders to take no action on the Siris offer, while it reviews it together with its financial and legal advisers. Equiniti said it will make a further announcement "in due course".

Meanwhile, cybersecurity firm Darktrace confirmed plans to list on the London Main Market in early May. Darktrace said it expects to be eligible for inclusion in FTSE indices.

It is targeting a free float of at least 20% and will make up to 15% more shares available in an over-allotment option. The pricing for the initial public offering will be set in a book-build led by Jefferies, Berenberg and KKR Capital Markets.

The company believes it can achieve a valuation of around GBP3 billion, Sky News reported earlier this month.

The dollar was starting the week lower against major counterparts. The pound was quoted at USD1.3896 at midday on Monday, up from USD1.3821 at the London equities close Friday.

The euro was priced at USD1.2033 at midday, up from USD1.1981 late Friday. Against the Japanese yen, the dollar was quoted at JPY108.17, lower from JPY108.82.

"The dollar is starting the week on the backfoot, reaching a new multi-week low against the euro. Despite last week's publication of economic data that came up well above expectations, providing evidence of the strength of the US economic recovery, the inflationary fears that led to rising treasury yields and dominated the trading agenda during the month of March have all but vanished from the horizon of investors," said analysts at ActivTrades.

"The Fed has successfully passed the message that any spike in prices is likely to be transitory and therefore the central bank will not accelerate the timing of the tapering. This stance has reassured investors, leading to a drop in treasury yields and causing dollar weakness," ActivTrades added.

Brent oil was quoted at USD66.61 a barrel Monday at midday, down from USD66.70 late Friday. Gold was trading at USD1,789.30 an ounce, marginally higher from USD1,778.24.

New York stock market futures were pointed lower on Monday, after the S&P 500 and Dow Jones Industrial Average indices closed at record highs on Friday.

The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index down 0.1% and the Nasdaq Composite down 0.1%.

The US earnings season picks up pace this week, with Coca-Cola, IBM and United Airlines all due to report first-quarter results on Monday. The stocks were down 0.4%, down 0.1% and up 0.2% in pre-market trade.

Tesla shares were 1.7% lower in pre-market trade after two men were killed in a crash in Texas while riding in a Tesla car that police said almost certainly had no one behind the wheel, US media reported Sunday.

The vehicle was driving at high speed late Saturday north of Houston when it slammed into a tree and burst into flames, the Wall Street Journal reported, quoting Harris County constable Mark Herman.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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