LONDON MARKET MIDDAY: Stocks fall as recovery euphoria begins to wane

(Alliance News) - Stock prices in London were lower at midday on Thursday as optimism over the pace of economic recovery continues to be offset by worries about rising infections across Europe and the continent's vaccine struggles.

Ahead, European Union leaders will hold a videoconference on Thursday where they are set to discuss the vaccine roll-out and epidemiological situation, external relations, and the bloc's digital strategy.

In London, the FTSE 100 index was down 25.96 points, or 0.4%, at 6,686.93. The mid-cap FTSE 250 index was down 67.77 points, or 0.3%, at 21,336.77. The AIM All-Share index was 0.6% lower at 1,192.12.

The Cboe UK 100 index was down 0.4% at 667.32. The Cboe 250 was down 0.3% at 19,037.66, and the Cboe Small Companies down 0.5% at 13,818.44.

In Paris, the CAC 40 index was 0.3% lower. In Frankfurt, the DAX 30 was down 0.2%.

"Inflation worries, virus spikes and political tensions continue to pressure market sentiment this week while bullish investors increasingly struggle to find positive catalysts. Most stock traders are now trying to identify shares and sectors with the most potential and/or resilience to the current uncertain climate, meaning the current sector rotation may not be over yet," said analysts at ActivTrades.

In the FTSE 100, Vodafone was up 1.4% after Morgan Stanley reinitiated coverage on the telecommunications firm with an Overweight rating.

At the other end of the large-cap index, miners Antofagasta and Glencore were both down 3.6% amid lower copper prices. The base metal slipped to USD9,011.00 a tonne around midday in London from USD9,013.00 at the same time Wednesday.

Commenting on the miners, AJ Bell's Russ Mould explained: "After a big rally earlier in the year, mining stocks appear to be losing momentum with Antofagasta and Glencore among the biggest losers on the FTSE on Thursday. Investors seem increasingly concerned that the reopening of the global economy is going to experience more setbacks, meaning it is no longer a given that we'll see soaring commodities demand."

British American Tobacco was 3.4% lower and NatWest Group was down 3.0% after the stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

In the FTSE 250, CMC Markets was up 3.4% after the contract-for-difference trading platform said it expects to beat market expectations for annual income amid a high number of active customers.

CMC said it expects net operating income in the financial year that ends on March 31 to be slightly above the upper end of the current range of market consensus, which it put at GBP387.5 million to GBP399.6 million. It also raised its guidance for net operating income in financial 2022 to in excess of GBP330 million.

In financial 2020, CMC reported net operating income of GBP252.0 million, so the guidance on Thursday suggests an increase of at least 59% in the current year.

Pretax profit in financial 2020 was GBP98.7 million, and CMC on Thursday placed market consensus for financial 2021 at GBP206.3 million to GBP217.7 million.

At the other end of the midcaps, Cineworld Group was still the worst performer at midday, down 8.3%. The movie theatre operator posted a USD3 billion loss in 2020, a year battered by major film delays, Covid-19 restrictions and prolonged closures of its cinema chains globally.

Cineworld is set to reopen its doors on next week Friday in the US, but it said it is set to secure USD213 million through a bond issue before that. The cash is a "significant liquidity buffer" before it lifts shutters.

The company noted it already had raised USD810.8 million during the virus-hit 2020.

Revenue during 2020 plunged 81% to USD852.3 million from USD4.37 billion. The west London-based firm swung to a pretax loss of USD2.65 billion from a USD180.3 million profit in 2019.

Cineworld suspended its payout, so it paid no dividends in respect to 2020. In 2019, it declared an ordinary annual payout of 15.5 cents.

Tui was 4.5% lower. The tour operator said summer holiday bookings have been "encouraging" though still massively below pre-pandemic levels, as it nudged down its capacity forecasts for the upcoming peak season.

The Anglo-German firm said group-wide bookings for summer 2021 are at an "encouraging" level of 2.8 million. This is down 60% from summer 2019, however. The company added that overall capacity for summer 2021 has been lowered to 75% of 2019's levels, from the previous forecast of 80%.

The pound was quoted at USD1.3720 at midday Thursday, marginally lower from USD1.3728 at the London equities close Wednesday, recovering from an intraday low of USD1.3670 on Thursday morning.

The euro was priced at USD1.1811, down from USD1.1834. Against the yen, the dollar was trading at JPY109.08, up from JPY108.77.

Brent oil was quoted at USD63.60 a barrel Thursday at midday, down from USD63.98 at the London equities close Wednesday. Gold was quoted at USD1,733.28 an ounce, lower against USD1,736.33.

US stock market futures were pointed lower ahead of economic growth and jobless claims figures at 1230 GMT.

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

Adding to the selling pressure in New York were fears US President Joe Biden will look to hike corporate taxes to pay for his huge economic rescue packages, while a fractious meeting between US and Chinese officials last week indicated relations will not likely improve any time soon.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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