LONDON MARKET MIDDAY: Stocks Rise As Markets Await Biden Stimulus Plan

(Alliance News) - Stock prices in London were mostly higher at midday on Thursday as investors await US President-elect Joe Biden's proposals for fresh financial support against a backdrop of political uncertainty in the US.

Biden on Thursday will unveil his plan to revive the US economy, as evidence mounts that the country's recovery from the coronavirus pandemic is flagging, despite substantial fiscal stimulus already.

The FTSE 100 index was up 7.51 points, or 0.1%, at 6,753.03. The mid-cap FTSE 250 index was up 129.65 points, or 0.6%, at 20,745.96. The AIM All-Share index was flat at 1,184.73.

The Cboe UK 100 index was up 0.6% at 675.72. The Cboe 250 was up 0.8% at 18,022.11, and the Cboe Small Companies was up 0.4% at 12,308.56.

In Paris, the CAC 40 was up 0.2%, while Frankfurt's DAX 30 was 0.1% higher.

"A more positive tone in markets has developed ahead of the expected stimulus announcement from Joe Biden," noted Chris Beauchamp, chief market analyst at IG. "Investors are hoping that the president-elect will move quickly and in substantial form to secure a new package that will bolster the US economy as the vaccine programme moves into a higher gear."

In the FTSE 100, Whitbread was the best performer, up 4.5%, with analysts hopeful of a recovery once the pandemic subsides. The Premier Inn chain owner said its third-quarter performance reflected the damage inflicted by the ongoing Covid-19 government restrictions in the UK and Germany, where it operates hotels.

For the third quarter to November 26, total like-for-like sales growth was down 56% and year-to-date was down 70%. Premier Inn UK total sales were 55% down in the third quarter reflecting the ongoing UK government restrictions on the operation of hotels and restaurants, which forced closures of non-essential businesses.

As a result, total UK accommodation sales were down 55% with occupancy at 49%. Whitbread said with the increased restrictions, total UK accommodation sales were down 66% for the 5 weeks to December 31, with occupancy at 31%. Following the updated UK government restrictions announced earlier this month, Whitbread said around two-thirds of hotels remain open, while all restaurants are closed.

Whitbread said its balance sheet remains strong with a net cash position at December 31, of around GBP40.0 million compared to GBP196.4 million at the end of the first half.

"Lockdowns drive the short term narrative but we argue that Whitbread will be the quickest company in our hotel coverage to recover given domestic exposure economy/midscale. We also see a material market share opportunity in the UK and Germany," said Jefferies analyst Becky Lane.

At the other end of the large caps, B&M European Value Retail, Sage Group and SSE were the worst performers, down 4.0%, 2.5% and 2.1% respectively. The stocks went ex-dividend meaning new buyers no longer qualify for the latest payout.

Tesco was down 0.5%, with the UK's largest supermarket chain recovering from heavier losses in early trade. Tesco said a strong UK sales performance was sustained in the third quarter as shoppers splurged on the grocer's premium 'Finest' food products range over the Christmas holiday period.

For the third quarter to November 28, Tesco reported group like-for-like sales growth of 5.7%, while Christmas trading in the six weeks to January 9, like-for-like sales growth was 5.4%. In the UK, like-for-like sales growth was 6.7% for the quarter and 8.1% for the Christmas period. Tesco said UK sales grew across all formats, channels and categories. Online sales growth was particularly marked at over 80%, equating to nearly GBP1 billion extra sales over the 19-week period.

Looking ahead, Tesco said guidance for the 2021 financial year is unchanged, and it remains confident that retail operating profit is likely to be at least at the same level as in 2020, excluding the repayment of business rates relief. In financial 2020, Tesco posted retail operating profit of GBP2.81 billion.

However, Tesco increased the estimate of its incremental costs of dealing with the Covid-19 pandemic in financial 2021, such as increased staff absence, to GBP810 million from GBP725 million.

"Investors will be happy with the announcement however, going forward they will be keeping a close eye on costs associated with the virus as well as further improvements on the online experience and delivery processes as the UK national lockdown continues," said Edison's Neil Shah.

The pound was quoted at USD1.3645 on Thursday at midday, up from USD1.3629 at the London equities close Wednesday, as the UK presses ahead with its mass Covid-19 vaccine rollout.

By the end of the month more than 200 community chemists with capacity for 1,000 doses a week will be able to give vaccines, according to NHS England. The pharmacies join the 200 hospitals, around 800 GP clinics and seven mass vaccination centres where jabs are already being handed out.

"The UK is already on course to set records on distribution time, as PM Boris Johnson announces 24hr vaccine to be rolled out 'as soon as we can'. Once this is cemented, it is likely the pound will strengthen, as investors look to economies without the economic burden of Covid-19," said analysts at OFX.

The euro was priced USD1.2155, marginally lower from USD1.2158. Against the yen, the dollar was trading at JPY104.0, up from JPY103.92.

Brent oil was quoted at USD55.95 a barrel Thursday at midday, down from USD56.21 a barrel at the London equities close Wednesday, easing from 11-month highs.

Gold was quoted at USD1,840.26 an ounce, down from USD1,857.59.

US stock market futures were pointed mostly higher amid political instability as Donald Trump became the first US president to be impeached for a second time. House of Representatives voted to charge him with inciting last week's mob attack on Congress.

The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.1% and the Nasdaq Composite down 0.2%.

The Senate will not hold a trial before January 20, when Biden assumes the presidency, meaning the real estate tycoon will escape the ignominy of being forced to leave early. He is set, however, to face a Senate trial later, and if convicted he might be barred in a follow-up vote from seeking the presidency again in 2024.

"Donald Trump has deservedly become the first president in American history to bear the stain of impeachment twice over," said Democratic Senator Chuck Schumer, who in a week's time will become Senate leader.

Trump survived a first impeachment almost a year ago when the Republican-controlled Senate acquitted him of abusing his office to try and get dirt on Biden's family before November's election.

In Thursday's economic calendar US continuing jobless claims are due at 1330 GMT and US Federal Reserve Chair Jerome Powell speaks at 1730 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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