LONDON MARKET MIDDAY: US Holiday Leads To Quiet Session; Airlines Slip

Mon, 18th Jan 2021 11:59

(Alliance News) -Â Stock trading in London was subdued on Monday with markets in the US shut, leaving investors to mull over mixed economic data from China overnight and look ahead to US President-Elect Joe Biden's inauguration later this week.

The blue-chip FTSE 100 index was down 23.96 points, or 0.4%, at 6,711.75 Monday midday. The mid-cap FTSE 250 index was up just 4.99 points at 20,620.58 and the AIM All-Share index was up 0.1% at 1,173.85.

The Cboe UK 100 index was down 0.3% at 667.99. The Cboe 250 was flat at 17,882.96, and the Cboe Small Companies also unchanged, at 12,289.28.

In mainland Europe, the CAC 40 in Paris was down 0.3% while the DAX 30 in Frankfurt was slightly higher in the afternoon.

Markets have "stumbled" into the new week, said Joshua Mahony, senior market analyst at IG.

"With the US markets closed for Martin Luther King day, today provides a gentle entry into a week that will be dominated by the US. While US trading activity will minimised today, speculation over whether Biden will be able to garner enough support to pass his full stimulus package remain a key concern for markets," said Mahony.

Biden last week unveiled plans to seek USD1.9 trillion to revive the economy through new stimulus payments and other aid, and plans a blitz to accelerate America's stumbling Covid vaccine rollout effort.

His top aide said Saturday the incoming president would sign about a dozen executive orders on his first day in office, as police fearing violence from Trump supporters staged a nationwide security operation ahead of the inauguration. Biden will be sworn in on Wednesday.

Stephen Innes at Axi commented: "The big miss on US retail spending in December set a dour timbre on Friday and the much softer than expected data tone adds gravity to the USD1.9 trillion stimulus package President-elect Biden pushed forward last Thursday. The package is significantly larger than markets factored into their forecasts, but the final package will ultimately be pared down significantly, adding a touch of uncertainty to the view."

Kicking off the new week data-wise were GDP figures out of China, which beat expectations. However, this was tempered by retail sales numbers which, much like those out the US last week, underwhelmed.

The Chinese economy expanded 2.3% in 2020, the lowest growth figure since the Beijing government embarked on major reforms in the 1970s. The figure was a marked slowdown from 2019 growth of 6.1% â€“ itself already the lowest in decades â€“ with the country hit by weak domestic demand and trade tensions. But it is better than that forecast by an AFP poll of analysts from 13 financial institutions, who predicted a 2.0% expansion in gross domestic product.

According to the latest data, industrial production in China grew 2.8% on-year for 2020, slowing further from previous years. Retail sales, whose recovery has lagged behind that of industrial activity, shrank 3.9% for the full year with consumers wary of spending as the pandemic lingered.

"While the Chinese economy has become the main driver for the global economy over the past quarters, the road ahead remains rocky," commented Commerzbank.

Safe-haven gold was quoted at USD1,834.76 an ounce amid Monday's caution, higher than USD1,832.20 on Friday. Fellow safe haven asset, the Japanese yen, also strengthened -against the yen, the dollar edged down to JPY103.73 versus JPY103.79.

Brent oil was trading at USD55.09 a barrel, firm against USD54.87 late Friday.

Sterling was quoted at USD1.3550 on Monday, lower than USD1.3597 at the London equities close on Friday. The euro traded at USD1.2071, falling from USD1.2098 late Friday.

In London at midday, airline shares fell as new coronavirus travel rules came into force in the UK.

New rules requiring arrivals to take a negative coronavirus test up to 72 hours before departure and self-isolate for up to 10 days after entering the UK came into effect at 4am on Monday as travel corridors offering exemptions were scrapped.

Shares in British Airways parent International Consolidated Airlines fell 2.0% and mid-cap easyJet was down 2.6% at midday.

In the FTSE 250, Tritax Big Box was the top performer with shares rising 5.4% on an upgrade to Buy from Hold from Liberum.

Genus was in second place among mid-caps, climbing 4.9% after the animal genetics company said it expects to post a notable increase in profit and revenue for the first half of its financial year.

For the six months ended December 31, Genus expects to post an adjusted pretax profit of between GBP47.0 million and GBP49.0 million, up as much as 34% from GBP36.6 million a year before. Revenue is expected to be between GBP285.0 million and GBP287.0 million, an up to 6.0% increase from GBP270.7 million the prior year.

Based on the strong first-half performance, Genus anticipates beating its previous profit growth expectations for the financial year ending June 30, though growth in the second half is likely to be lower than that seen in the first six months of the year.

Genus shares hit an all-time high of 4,556 pence in morning trade.

Dixons Carphone was benefiting from a ratings upgrade, the stock 3.8% higher after RBC raised the electricals and mobile phone retailer to Outperform from Sector Perform.

Elsewhere in London, Funding Circle rose 5.8% after reporting a strong performance for the second half of 2020, driven by record loans under management and originations.

For the six months to the end of December, the London-based peer-to-peer lender reported total income at GBP121 million, up 26% from GBP96 million the same period the year before. This was driven by a 13% year-on-year rise in loans under management to GBP4.21 billion as at December 31 from GBP3.73 billion, while originations rose by 41% to GBP1.63 billion from GBP1.16 billion the prior year.

By Lucy Heming;Â lucyheming@alliancenews.com