LONDON MARKET OPEN: FTSE 100 Edges Up As Fed's Powell Soothes Markets

(Alliance News) - US Federal Reserve Chair Jerome Powell's successful effort to calm market worries over rising inflation expectations helped London's FTSE 100 get off to a good start on Thursday.

This helped to overcome share price declines for blue-chip stocks Standard Chartered and Hikma Pharmaceuticals, as well as the impact on dollar-earners of the pound rising to USD1.4141 early Thursday from USD1.4100 late Wednesday.

The FTSE 100 index was up 13.23 points, or 0.2%, at 6,672.20 early Thursday. The mid-cap FTSE 250 index was down 23.51 points, or 0.1%, at 21,289.14. The AIM All-Share index was up 0.6% at 1,195.60.

The Cboe UK 100 index was up 0.1% at 664.50. The Cboe 250 was up 0.4% at 19,000.85, and the Cboe Small Companies up 0.5% at 13,153.82.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was up 0.1% early Thursday. The euro traded at USD1.2193 early Thursday, up from USD1.2127 late Wednesday.

"Risk assets are enjoying one of their best days in some time as Fed Chair Powell continued to dispel inflation fears while signalling that the central bank would keep policy accommodative for some time to come. Asia markets took the Wall Street lead and painted the ticker tape green," said Axi's Stephen Innes.

On his second day of Congressional testimony, US Federal Reserve Chair Jerome Powell reiterated his view that the US labour market has a long way to go as it recovers from jobs lost in the virus pandemic and that the central bank is likely to maintain its ultra-easy monetary policy for the foreseeable future.

"With both Fed Chair Powell and Vice Chair Clarida signing for the same song sheet, they left little to the imagination as the FOMC are in total sync on monetary policy's current posture - extremely loose and comfortable might best describe that fit," Innes added.

Powell's testimony - along with some further good news on the vaccine front, with analysis by US regulators showing Johnson & Johnson's single-dose vaccine protects against Covid-19 and Pfizer's jab proving 94% effective in a study involving 1.2 million people in Israel - drove substantial gains in Asia overnight.

The Japanese Nikkei 225 index closed up 1.7%. Against the yen, the dollar firmed to JPY106.07 versus JPY106.00.

In China, the Shanghai Composite closed up 0.6%, while the Hang Seng index in Hong Kong closed up 1.2%. The S&P/ASX 200 in Sydney closed up 0.8%.

In Hong Kong, Standard Chartered shares fell 1.9% and the stock was the worst performer in London's FTSE 100 early Thursday, falling 4.2% as profit failed to live up to consensus expectations.

Chief Executive Bill Winters said: "We are weathering the health crisis and geopolitical tensions very well. We remain strong and profitable, although clearly impacted by credit challenges and low interest rates. Our strategic transformation continues to progress well, and our outlook is bright."

For 2020, the London-headquartered but Asia-focused bank recorded pretax profit of USD1.61 billion, down 57% from the USD3.71 billion reported in 2019. StanChart's profit mark came in below market consensus of USD1.85 billion.

Hikma was the second worst blue-chip performer in London, down 4.2% even as it reported revenue and profit growth for 2020.

Revenue for 2020 rose 6% to USD2.34 billion, while pretax profit increased 14% to USD558 million from USD491 million. The firm declared a full-year dividend of 50 cents per share, up from 44 cents in 2019.

Injectables revenue grew 9% to USD977 million in 2020 with a core operating margin of 38.6% versus 38.0% in 2019. Generics revenue grew 3% to USD744 million with a core operating margin of 21.6% versus 17.2%.

Branded revenue grew 5% at constant currency to USD613 million with core operating margin weakening to 20.6% from 22.1%.

For 2021, Hikma expects Injectables revenue to grow in the mid-single digits with a core operating margin in the range of 37% to 38%. Generics revenue is seen around USD770 million to USD810 million and a core operating margin around 20%. Branded revenue is expected to grow in the mid-single digits in constant currency.

One of the stocks advancing in the wake of its 2020 earnings report was miner Anglo American, rising 4.2% after lifting its dividend.

Revenue for 2020 grew 3% to USD30.90 billion, with underlying earnings before interest, tax, depreciation and amortisation falling 2% to USD9.80 billion.

The firm declared a final dividend of USD0.72, up 53% on a year ago.

"The resilience of our diversified business, following the operational disruptions of the first half and benefiting from strong metals prices in the latter months, generated underlying Ebitda of USD9.8 billion, with an increased mining Ebitda margin of 43%," said Chief Executive Mark Cutifani.

Topping the FTSE 250 was Aston Martin, shares surging 10% as the luxury car maker guided to wholesales above pre-pandemic levels in 2021.

For 2020, total wholesales fell 42% to 3,394 from 5,862 in 2019, which the firm said reflected action to reduce dealer stock levels and the impact of Covid-19. Revenue fell 38% to GBP611.8 million and the firm's pretax loss deepened to GBP466.0 million from GBP119.6 million.

However, Aston Martin said its outlook is unchanged for 2021 and it expects around 6,000 wholesales, which would be above 2019's level. The adjusted earnings before interest, taxes, depreciation and amortisation margin is seen in the mid-teens, from negative 11.5% for 2020 and positive 12.1% for 2019.

The luxury car maker also highlighted the successful launch of its DBX sports utility vehicle, with 1,516 units wholesaled amid strong customer demand and the first new variant planned for the third quarter of this year.

Gold was quoted at USD1,789.49 an ounce early Thursday, soft on USD1,796.20 on Wednesday. Brent oil was trading at USD67.64 a barrel, climbing from USD67.02 late Wednesday.

The economic events calendar on Thursday has eurozone consumer confidence figures at 1000 GMT. In the afternoon there are US GDP readings and the latest jobless claims numbers at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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