LONDON MARKET MIDDAY: Stocks recover modestly; Netflix misses targets

(Alliance News) - Stock prices in London were continuing to recover from Tuesday's steep losses at midday on Wednesday against a backdrop of rising global coronavirus infections, while Netflix will be in focus after missing subscriber targets.

Countries around the world are urgently working to accelerate vaccination campaigns and revive their pandemic-ravaged economies, with new variants of Covid-19 driving unprecedented infection numbers in some of the worst-hit nations, including Japan and India.

The FTSE 100 index was up 16.95 points, or 0.3%, at 6,876.65 at midday Wednesday. The flagship index closed down 140.21 points, or 2.0%, at 6,859.87 on Tuesday.

The mid-cap FTSE 250 was up 20.50 points, or 0.1%, at 22,129.05. The AIM All-Share index was up 0.2% at 1,240.55.

The Cboe UK 100 index was up 0.3% at 684.32. The Cboe 250 was up 0.1% at 19,774.59. The Cboe Small Companies was up 0.2% at 14,366.64.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.1% and 0.3% respectively.

"European markets are in recovery mode today, with stocks turning upward to regain lost ground after sharp declines yesterday. Markets are caught between optimism over vaccination progress at home, and the fact that global efforts to combat the pandemic remain reliant upon economic restrictions until vaccines are widespread," said IG Group's Josh Mahony.

In the FTSE 100, Hikma Pharmaceuticals was the best performer, up 2.9% after the drugmaker said it resumed the launch of its generic version of GlaxoSmithKline's Advair Diskus in the US. The drug is is used to treat people with asthma and people with chronic obstructive pulmonary disease. Glaxo shares were up 1.9%.

BP and Royal Dutch Shell 'A' and 'B' shares were up 2.2%, 2.1% and 2.0% respectively after Deutsche Bank started coverage on the oil majors with Buy ratings. Deutsche also rated peers ENI and Total as Buy. ENI was up 0.6% in Milan and Total up 1.0% in Paris.

At the other end of the list of London large-caps, Just Eat Takeaway.com was still the worst performer at midday, down 4.8%, amid competition concerns.

Uber Technologies is attempting to break what it called Just Eat Takeaway's "monopolistic" stranglehold on the German food delivery market, the Financial Times reported.

Shares in the San Francisco, California-based firm were up 0.7% in pre-market trade in New York.

According to the newspaper, Uber Eats will launch in Germany for the first time over the next few weeks, starting in Berlin, in its biggest entry to a new country since 2018.

Bunzl was 2.8% lower. The distribution and services firm said its "diversified and resilient" business model delivered good overall growth during the first quarter of 2021, despite the boost from supplying PPE during the virus pandemic starting to fall away.

Revenue was up 5.4% at actual exchange rates and 10% at constant exchange rates. Underlying revenue growth at constant exchange rates increased by 1.4%, in line with expectations.

In addition, Bunzl said adjusted operating margin continued to be supported by demand for Covid-19 related products. The company delivered personal protective equipment to businesses to help combat the pandemic.

Looking ahead, Bunzl said guidance remains unchanged. At constant exchange rates, Bunzl continues to expect robust revenue growth in 2021 compared to the prior year, after excluding larger Covid-19 related orders, which contributed GBP550 million of revenue in 2020.

Antofagasta was 0.5% lower. The Chilean miner said copper production in the first quarter was in line with guidance at 183,000 tonnes, 5.7% lower than in the same quarter in 2020 and 5.0% lower than in the fourth quarter, mainly due to expected reduced grades at the Los Pelambres mine.

Gold production was 59,100 ounces in the first quarter, 9.2% lower than in the same period in 2020 but 8.0% higher than in the fourth quarter, mainly due to changes in grade at the Centinela mine.

Looking ahead, Antofagasta said full-year guidance is unchanged at 730,000 tonnes to 760,000 tonnes of copper at a net cash cost of USD1.25 per pound and capital expenditure of USD1.6 billion.

Peer BHP was down 0.7% after the Anglo-Australian miner said it is bringing new supply in copper, petroleum and iron ore, while coal production guidance has been lowered after wet weather hit operations.

At the end of March, BHP said it had four major projects under development in petroleum, iron ore and potash, with a combined budget of USD8.5 billion over the life of the projects.

Both metallurgical coal and energy coal production guidance were lowered due to wet weather hitting numerous sites over the last few months.

Metallurgical coal production guidance was reduced to between 39 million tonnes and 41 million tonnes, having previously been set at between 40 million tonnes and 44 million tonnes.

Energy coal guidance was lowered to between 18 million tonnes and 20 million tonnes, from between 21 million tonnes and 23 million tonnes.

The pound was quoted at USD1.3928 at midday on Wednesday, lower from USD1.3940 at the London equities close Tuesday.

On the economic front, UK inflation rose slightly in March according to the latest figures from the Office for National Statistics, but the annual print just missed market estimates.

On an annual basis, UK consumer prices rose 0.7% in March, accelerating from a rise of 0.4% in February. However, the latest reading was just shy of market consensus, cited by FXStreet, for an 0.8% increase.

On a monthly basis, consumer prices grew 0.3% in March, rising slightly from inflation of 0.1% in February. The figure was in-line with the consensus estimate.

Inflation remains well below the Bank of England's target of 2.0%. The central bank's next interest rate decision is on May 6. However, consumer prices are expected to rise as the UK economy reopens.

"UK inflation is set to rise above 2% this year, predominantly on energy-related tailwinds... We suspect CPI is more likely to drift lower, suggesting the pressure on the Bank of England to tighten policy again will be fairly modest," said analysts at ING.

The euro was priced at USD1.2002, down from USD1.2035 late Tuesday in London. Against the yen, the dollar was quoted at JPY108.09, marginally higher from JPY108.03.

Brent oil was trading at USD65.92 a barrel Wednesday at midday, up from USD65.71 late Tuesday. Gold was quoted at USD1,788.71 an ounce, higher from USD1,776.45.

US stock market futures were pointed to a lower open, deepening their retreat from Tuesday's losses.

The Dow Jones Industrial Average and the S&P 500 index were both called down 0.1% and the Nasdaq Composite was seen opening 0.2% lower.

Netflix will be in focus after the video streaming services provider missed membership targets.

Revenue for the first quarter of 2021 grew 24% year-on-year to USD7.16 billion from USD5.77 billion, while net income surged to USD1.71 billion from USD709 million. Earnings per share also jumped to USD3.75 from USD1.57. The revenue figure was in line with the Los Gatos, California-based firm's beginning-of-quarter forecast, it said, while operating profit and margin reached all-time highs, at USD1.96 billion and 27.4% respectively.

However, Netflix said it finished the quarter with 208 million paid memberships, up 14% on a year ago but below its guidance of 210 million. Paid net additions of 4.0 million were below its 6.0 million guidance.

Looking ahead to the second quarter, Netflix expects revenue to rise 2.3% quarter-on-quarter to USD7.30 billion. However, net income is expected to slip to USD1.44 billion, down 16% on the first quarter's result.

Netflix shares were down 8.0% in New York pre-market trade.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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