LONDON MARKET MIDDAY: Stocks rise as investors await US tech earnings

(Alliance News) - Stock prices in London were higher at midday on Monday with miners and oil companies boosting the FTSE 100, while investors look ahead to earnings this week from the biggest US technology companies.

Also this week are interest rate decisions from the Bank of Canada on Wednesday and the Bank of Japan and European Central Bank on Thursday. Meanwhile, UK Chancellor of the Exchequer Rishi Sunak unveils his latest government budget on Wednesday.

"Sunak said over the weekend that Wednesday's budget will include boosts to public investment including GBP6 billion extra for the NHS and GBP7 billion for transport schemes in larger cities. He also seems set to provide some support to offset 'cost of living' increases. Nevertheless, overall the budget is likely to be cautious and fiscally neutral," said analysts at Lloyds.

The flagship FTSE 100 index was up 40.95 points, or 0.6%, at 7,245.50. The mid-cap FTSE 250 index was up 20.98 points, or 0.1%, at 22,952.64. The AIM All-Share index was down 0.1%, at 1,232.44.

The Cboe UK 100 index was up 0.4% at 718.31. The Cboe 250 was up 0.1% at 20,658.52, and the Cboe Small Companies was up 0.3% at 15,556.34.

In mainland Europe, the CAC 40 stock index in Paris was down 0.1% while the DAX 40 in Frankfurt was up 0.3% in early afternoon trade.

"The FTSE 100 started a new week in robust fashion on Monday despite a lukewarm reaction to better-than-expected results from index heavyweight HSBC," commented AJ Bell investment director Russ Mould.

"The mining sector is doing the heavy lifting, as it did at the end of last week. The coming days look busy as more of the UK's big companies report on third-quarter trading and Chancellor Rishi Sunak delivers his latest budget," said AJ Bell's Russ Mould.

"As we head into winter, Covid is starting to move back into the market's consciousness amid concern about a rising number of infections in the UK - threatening the return of restrictions which could hit the travel and hospitality sectors in particular," Mould added.

In the FTSE 100, miners Antofagasta, BHP, Rio Tinto and Glencore were up 1.8%, 1.5%, 1.6% and 1.2%, respectively.

Shares in oil majors were also among the best blue-chip performers with BP, Royal Dutch Shell 'A' and 'B' up 1.6%, 1.3% and 1.1%, respectively, tracking spot oil prices higher.

In addition, oil stocks were the best performers among London mid-caps as well, with Harbour Energy and Cairn Energy up 3.8% and 3.7% respectively.

Brent oil was trading at USD86.05 a barrel on Monday at midday, up sharply from USD84.77 late Friday.

HSBC Holdings was up 1.7% after the bank reported a sharp rise in profit in the third quarter, emboldening it to embark on a USD2 billion share buyback.

In the three months to September 30, the lender reported pretax profit of USD5.40 billion, up sharply from USD3.07 billion the year before. HSBC benefited from a USD659 million expected credit benefit compared to a USD785 million charge a year before.

"HSBC has indicated that it has weathered the storm and that the worst is behind it. Quite apart from a share buyback programme of up to USD2 billion, the current dividend yield of 3.7% is an equal show of confidence in prospects as well as effectively paying shareholders to wait while the next leg of growth is sought. The shares have also seen the benefit of the improvement in the bank's fortunes, having risen by 42% over the last year, as compared to a rise of 23% for the wider FTSE 100," said interactive investor's Richard Hunter.

In the FTSE 250, Weir Group was up 2.7% after Exane BNP upgraded the engineer to Outperform from Neutral.

At the other end of the midcaps, Darktrace as by far the worst performer, down 18% at 779.00 pence, after Peel Hunt started coverage on the cybersecurity firm with a Sell rating and a price target of 473p.

Peel Hunt cited concerns over intensifying competition, limited research & development spend, and some controversy around the Darktrace's products for its bearish stance.

Still, with its current market capitalisation still standing at GBP6 billion, Darktrace will replace Wm Morrison Supermarkets in the FTSE 100 when the grocer de-lists on Wednesday following its takeover.

Elsewhere, James Fisher was down 33% after the marine services provider said further delayed projects, an increase in bad debt risk and a poor performance in September for its Tankships division have hurt its prospects.

James Fisher now anticipates underlying operating profit for the full year to be in the range of GBP27 million to GBP32 million. It posted underlying operating profit of GBP40.5 million in 2020. In addition, Investec downgraded the stock to Hold from Buy.

The pound was quoted at USD1.3757 at midday Monday, down from USD1.3773 at the London equities close Friday.

The euro was priced at USD1.1625, down from USD1.1650. Against the Japanese yen, the dollar was trading at JPY113.65, down slightly from JPY113.68.

Gold stood at USD1,799.47 an ounce, down from USD1,809.80 late Friday.

US stock market futures were pointed to a flat to higher start as investors brace for a week of earnings from mega-cap technology companies.

The Dow Jones Industrial Average and the S&P 500 were called flat and Nasdaq Composite up 0.2%.

Facebook will be the second of the 'Faang' stocks to report earnings after the market close on Monday, followed by Alphabet and Microsoft on Tuesday, and Amazon and Apple on Thursday.

The social media company is grappling with allegations from whistleblower Frances Haugen, who told the US Congress earlier this month that Facebook placed profit over the well-being of its users, especially young girls.

Investors also will be looking to see what damage Apple's privacy changes have had on Facebook's advertising revenue following peer Snap's plunge on Friday. Snap had reported a hit from Apple's move to change its privacy settings that have made it more difficult to target advertising.

Facebook shares were down 1.2% in pre-market trade in New York, having lost 5.1% on Friday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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