LONDON MARKET MIDDAY: Stocks Rise As Investors Eye US Jobs Numbers

(Alliance News) - Stock prices in London continued to move higher at midday on Friday with investor attention turning to the imminent release of the US jobs report for January.

Rapid progress in the UK's swift mass vaccination programme has boosted investor sentiment in London. At the same time, a nationwide drop in Covid-19 cases in the US and improvements in economic indicators have raised hopes that the US labour market is on the upswing.

The FTSE 100 index was up 6.59 points, or 0.1%, at 6,510.31 - but is on track to end the week down 0.3%. The internationally exposed index's gains were hindered by sterling strength.

The mid-cap FTSE 250 index was up 137.10 points, or 0.7%, at 20,946.40. The AIM All-Share index was up 6.26 points, or 0.5% at 1,210.33.

The Cboe UK 100 index was up 0.1% at 647.35. The Cboe 250 was up 0.3% at 18,377.31 and the Cboe Small Companies was up 0.6% at 12,435.54.

In mainland Europe, the CAC 40 in Paris was up 1.0% while the DAX 30 in Frankfurt was 0.3% lower.

"With the UK vaccination programme ramping up at an impressive clip, traders are favouring those FTSE value names once more. The feeling is that any company which has made it this far is likely to come out the other side, and thus even those stocks with major losses such as airlines and cruise companies are coming into a period of consistent upside," said IG Group's Josh Mahony.

All adults aged 50 and over should receive a coronavirus vaccine by May, the UK government announced Friday.

Ministers had previously refused to give a firm date, saying only that the first nine priority groups would be vaccinated by the spring. But the Cabinet Office announced on Friday morning that the government intended to vaccinate all nine cohorts by May.

So far, more than 10.4 million people in the UK - about one in five of the population - have received their first dose of a coronavirus vaccine.

In the FTSE 100, UK banks were once again among the best performers. The Bank of England told financial services firms on Thursday to brace for negative interest rates, giving domestic lenders six months to prepare, but also said such a move isn't imminent.

Shares in Lloyds, NatWest and Barclays were up 2.1%, 2.0% and 1.5% respectively.

In addition, BoE Governor Andrew Bailey said on Thursday that the UK''s economic performance compared with other countries during the Covid-19 pandemic was not as bad as it seemed and talked up the country's economic prospects as the mass vaccination programme continues.

The comments continued to give sterling a boost, quoted at USD1.3690 Friday at midday, up from USD1.3659 at the London equities close Thursday.

"Bailey said he expected the UK economy to be back to pre-Covid levels by the end of this year rather than early 2022 which had been the previous forecast. Despite an unemployment rate that should tick towards 8% as the governments furlough scheme is unwound pent up consumer demand for spending in the hospitality sector as well as the high street should provide a welcome tailwind to the recovery," said analysts at OFX.

Premier Inn hotel chain owner Whitbread was the best blue-chip performer, up 4.1%, as the outlook for the UK economy improves.

Barratt Developments was up 2.0% after Liberum raised the housebuilder to Buy from Hold.

At the other end of the large caps, Johnson Matthey was down 3.2%, after Barclays downgraded the speciality chemicals company to Underweight from Equal Weight.

In the FTSE 250, Beazley was the standout performer, up 15%, despite the insurer swinging to an annual loss and skipped paying any dividend for 2020.

Beazley posted a pretax loss of USD50.4 million for the year ended December 31, swinging from a USD267.7 million profit in 2019 on revenue of USD2.91 billion, up 10% from USD2.34 billion. However, the loss was half of market forecasts for a USD106.4 million loss.

"Given the underperformance of the shares year-to-date, we expect that the surplus capital ratio of 23% will be in focus," analysts at Jefferies said.

Elsewhere in London, French Connection was up 72% after the struggling fashion chain said it has received two separate takeover approaches. French Connection, responding to recent share price movement, noted the approaches have been from Spotlight Brands in conjunction with Gordon Brothers International and from Go Global Retail in conjunction with HMJ International Services.

The euro was priced at USD1.1973, flat from USD1.1976. Against the yen, the dollar was trading at JPY105.52, higher versus JPY105.44.

Brent oil was quoted at USD59.45 a barrel Friday at midday, sharply higher from USD58.55 at the London close Thursday, on the verge of reaching the USD60 per barrel level for the first time since the pandemic hit last year.

Gold was quoted at USD1,805.10 an ounce, up from USD1,788.70.

US stock market futures were pointing higher ahead of the closely watched US nonfarm payroll report for January at 1330 GMT.

The Dow Jones Industrial Average was called up 0.4%, the S&P 500 up 0.5% and Nasdaq Composite up 0.3%.

Analysts predict that the US economy created about 50,000 jobs in January, while the unemployment rate remained unchanged at 6.7%.

"While we are expecting to see the jobs picture stabilise somewhat following a rare negative NFP figure last month, the US economy remains under pressure until the vaccination effort can spark a reopening phase. However, the optimism of future improvement essentially provides a free hit at today's jobs report, with any weakness likely to be disregarded as fleeting and transitory in nature. Meanwhile, any outperformance can be viewed as an early sign of recovery for the US economy," IG's Mahony commented.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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