LONDON MARKET OPEN: Asia virus worry, strong pound hold down FTSE 100

Mon, 26th Apr 2021 08:52

(Alliance News) -Â Stocks in London got off to a soft start on Monday, weighed down by concerns over coronavirus infections in Asia, while a stronger pound put additional pressure on the blue-chip FTSE 100 index.

The FTSE 100 was down 7.46 points, or 0.1%, at 6,931.10 early Monday. The mid-cap FTSE 250 index was up 13.32 points, or 0.1%, at 22,385.58. The AIM All-Share index was up 0.2% at 1,267.94.

The Cboe UK 100 index was flat at 689.94. The Cboe 250 was up 0.1% at 20,018.60, and the Cboe Small Companies flat at 14,451.95.

In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 30 in Frankfurt was up 0.1% early Monday.

In Asia on Monday, the Japanese Nikkei 225 index closed up 0.4%. In China, the Shanghai Composite closed down 1.0%, while the Hang Seng index in Hong Kong was down 0.5%. The S&P/ASX 200 in Sydney closed down 0.1%.

"With Covid cases continuing to rise rapidly in some parts of the world, overall sentiment remains somewhat contained," said Lloyds Bank.

India has become the new pandemic hotspot. Queues of Covid-19 patients and their fearful relatives have built up outside hospitals in major cities as another 2,624 deaths, a daily record, were reported in 24 hours.

Mounting cases also have forced Japan to declare a state of emergency in some areas just three months before the Olympics are due to open. The country's minister for virus response, Yasutoshi Nishimura, has warned of a "strong sense of crisis", saying current restrictions were not sufficient.

In a fresh blow to trans-Tasman travel, New Zealand on Friday paused arrivals from Western Australia, temporarily excluding the state's travellers from a quarantine-free bubble due to a fresh Covid-19 outbreak.

It is the first major snag since the two countries opened their bubble on April 18, almost 400 days after both closed their international borders due to the pandemic.

As well as the worrisome virus situation, a stronger pound was weighing on the dollar-earning constituents of the FTSE 100 index.

Sterling was quoted at USD1.3926 early Monday, up from USD1.3847 at the London equities close on Friday.

The euro traded at USD1.2099 on Monday, up from USD1.2062 late Friday. Against the yen, the dollar was quoted at JPY107.72, down from JPY108.34 late Friday in London.

In London, stocks sensitive to fluctuations in sterling, such as cigarette maker British American Tobacco and distiller Diageo, fell 1.4% and 1.1% respectively as the pound rose.

Towards the other end of the blue-chip index was Pearson, rising 2.2% after a good start to 2021.

Sales rose 5% annually on an underlying basis during the first quarter of the year. Pearson posted 25% growth in its Global Online Learning unit and a 1% hike in North American Courseware. In Global Assessment and International, sales fell 2%.

"It's been a good start to the year for Pearson, delivering 5% sales growth in the quarter. This is despite a longer period of disruption from Covid-19 in the quarter compared to last year," Chief Executive Andy Bird said.

In the FTSE 250, Tate & Lyle gained 6.5% after confirming it is exploring the sale of a controlling stake in its Primary Products business to a "new long-term financial partner".

"Tate & Lyle continues to successfully execute its strategy and remains confident in the future growth prospects of the company. However, the board believes that if a transaction of this nature was completed it would enable Tate & Lyle and the new business to focus their respective strategies and capital allocation priorities and create the opportunity for enhanced shareholder value," the company said.

The Sunday Telegraph had reported that Tate & Lyle has started a GBP1.2 billion auction for the Primary Products division.

Tate & Lyle said talks are at an early stage, and stressed that there can be no certainty a transaction will be concluded.

Tate & Lyle has a GBP3.76 billion market capitalisation.

IMI advanced 5.9% after the specialist engineering firm raised its guidance and unveiled a GBP200 million share buyback programme.

IMI said momentum continued from 2020 into the start of 2021, with a strong first quarter performance. Revenue of GBP421 million was up 7.7% on a year ago and up 2.6% on the first quarter of 2019, a pre-pandemic period.

Group margins improved "significantly" in the first quarter, with all divisions improving.

Following the good start to the year, IMI raised its guidance for 2020 adjusted earnings per share to a range of 81 pence to 87p, from a prior range of 75p to 82p.

"Given the accelerated progress against our strategy, including the identification of further opportunities for profitable growth, we now have confidence that IMI will become a sustainable 18% to 20% margin business over time," it added.

Further, the company has decided that a GBP200 million share buyback is "appropriate" due to its performance and robust cash generation. This will allow for a more efficient balance sheet while still leaving ample capacity to continue investing in growth, it said.

Gold was quoted at USD1,777.92 an ounce early Monday, nudging up from USD1,776.95 on Friday. Brent oil was trading at USD65.47 a barrel, lower than USD66.09 late Friday.

The economic calendar on Monday has the Ifo's German business climate at 0900 BST and US durable goods orders at 1330 BST.

By Lucy Heming;Â lucyheming@alliancenews.com