LONDON MARKET OPEN: FTSE down as pound strengthens; UK jobs data mixed

(Alliance News) - Stock prices in London opened slightly lower on Tuesday morning despite improving UK jobs data, as analysts cautioned that "real picture is still hidden" amid the hundreds of thousands of workers still supported by the government's furlough scheme.

The FTSE 100 index was down 13.57 points, or 0.2%, at 6,986.18. The mid-cap FTSE 250 was down 5.92 points at 22,484.94. The AIM All-Share index was down 0.01 points at 1,251.84.

The Cboe UK 100 index was down 0.2% at 695.59. The Cboe 250 was down 0.1% at 20,133.24. The Cboe Small Companies was up 0.1% at 14,514.79.

Unemployment in the UK edged down to 4.9% in the quarter ending February, the National Statistics Office said, with the jobless rate lower than expected. The UK unemployment rate was 0.9 percentage point higher than a year earlier but 0.1 percentage point down from 5.0% in the three months ended January.

For December to February, an estimated 1.7 million people were unemployed, up 311,000 on a year before but down 50,000 on the quarter, the first quarterly decrease since October to December 2019.

Market consensus, according to FXStreet, forecast the rate at unemployment rate in the quarter to February at 5.1%.

"Most of the data published by the ONS today is unsurprising but it does reinforce the huge challenges ahead. Whilst the unemployment rate fell a sliver for the three months to the end of February, early indicators suggest there was a further decrease in the number of employees on the payroll in March, down 56,000 from the previous month," said Danni Hewson, AJ Bell financial analyst.

The pound was quoted at USD1.3995 early Tuesday, up from USD1.3984 at the London equities close Monday.

The euro was priced at USD1.2072 early Tuesday, firm from USD1.2029 late Monday. Against the Japanese yen, the dollar was quoted at JPY108.35, firm from JPY108.06.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 0.3% and up 0.1%, respectively.

German producer prices of industrial products rose at a fast pace in March, figures from the Federal Statistical Office showed.

In March, the index of producer prices for industrial products increased by 3.7% compared with the prior year. This was the quickest increase year-on-year since November 2011, when producer prices jumped by 4.6%.

When compared with the previous month, the index increased by 0.9%.

In the FTSE 100, Avast was the best performer, up 5.4% early Tuesday after the cybersecurity provider said it has made a "good start" to the year with continued demand for its security, privacy and performance solutions. Revenue for the three months to the end of March grew by 11% year-on-year to USD237.1 million.

The Consumer Direct business continued to deliver good growth, Avast said, while the SMB business also sustained its positive momentum.

For the first quarter, adjusted earnings before interest, tax, depreciation and amortization increased 10% to USD133.7 million, resulting in an adjusted Ebitda margin of 56.4%. However, Avast said guidance for its adjusted Ebitda margin for the full 2021 remains broadly flat versus the prior year.

Rio Tinto was up 0.7% in the morning trading after the miner left its annual production guidance unchanged after a "solid" first-quarter. Pilbara iron ore shipments rose 7% annually to 77.8 million tonnes in the first three months of the year. Pilbara output slipped 2% to 76.4 million tonnes, however.

"Labour resource availability and weather challenges disrupted maintenance. Tropical Cyclone Seroja impacted mine and port operations in April," Rio Tinto explained.

Bauxite output also was 2% lower, at 13.6 million, while production of mined copper was 9% lower year-on-year at 120,500 tonnes. For aluminium, production was 3% higher at 803,000 tonnes.

For the whole of 2021, Rio continues to expect Pilbara iron ore shipments of between 325 million and 340 million tonnes. Guidance for bauxite, aluminium and mined copper also was unchanged.

At the other end of the blue-chip index were tobacco firms. British American Tobacco was down 6.4% and Imperial Brands down 5.8%. The Wall Street Journal on Monday reported that US President Biden's administration is considering a rule to cut nicotine in cigarettes.

Citing people familiar with the matter, the WSJ reported that the cut would leave the amount of nicotine in cigarettes at levels which are no longer addictive.

Associated British Foods was down 1.6% despite awarding shareholders with dividend as Primark once again became cash generative, after stores were allowed to reopen last week.

AB Foods declared a 6.2 pence a share payout for the 24 weeks to February 27 after not paying dividends for its previous financial year.

The company reported a 8% decline in pretax profit for the half-year to GBP275 million, as revenue fell by 17% to GBP6.31 billion year-on-year. On a constant currency basis, revenue came in 18% lower.

The performance was hurt by the impact on its Retail division of the measures taken to control the spread of Covid-19, AB Foods explained.

Elsewhere, the Sugar arm continued to deliver a much-improved performance, driven in the first half by Illovo, the company said. Grocery delivered a strong result through a combination of successful new product launches and increased volumes through retail sales channels, it said. Profit at both AB Agri and Ingredients also were well ahead of last year.

Looking forward, AB Foods said, following the exceptional performance of its Grocery, Sugar, Agriculture and Ingredients businesses in the first half, it expects a softer performance in the second half.

"With the reopening of stores in England and Wales last week, and expected re-openings in some markets over the coming weeks, we will be trading at the end of April from 68% of our retail selling space, which increases to 79% if stores with restricted trading are included," the company noted. AB Foods added that it will increase its retail selling space with an additional nine stores opening in the second half.

However, the company noted that it continues to expect the profit for Primark to be somewhat lower than last year.

Among London mid-caps, Moneysupermarket.com was the worst performer, down 1.7% early Tuesday. The comparison website said first-quarter performance was in line with expectations, given ongoing market disruption. Total revenue for the three months to the end of March was GBP85.5 million, a decline of 20% on the prior year.

Revenue dropped across all of its businesses for the three months, with the company blaming the "disruption" caused by the pandemic along with the "continuation of tightened lending criteria". Insurance revenue was down 21%, Money by 26%, Home Services by 15% and 'Other' by 14%. TravelSupermarket revenue remained negligible due to travel restrictions.

"We are moving ahead with our updated strategy, enhancing how we manage our data and starting to attract customers more efficiently. Several channels remain impacted by Covid-19, but we are well positioned to weather this period and return shortly to profitable growth," said Chief Executive Peter Duffy.

Hammerson was also down 1.7%. The property investor noted that footfall across its retail assets in England "is encouraging". Non-essential stores were allowed to re-open in England on Monday, after being closed for more than three months due to virus lockdowns.

"Across a seven-day average, footfall at our flagships is around four-fifths of that achieved in the same week in April 2019. This is an improvement of approaching 50% points on reopening in June 2020," Hammerson said.

So far, it has collected 51% of rent due for the first quarter of the year and 46% for the first half. For 2020, the year just gone, it has collected 78% so far.

In addition, the company named Himanshu Raja as chief financial officer, succeeding James Lenton who gave notice of his resignation back in January. Himanshu previously served as CFO of security services firm G4S.

Brent oil was quoted at USD67.82 a barrel Tuesday morning, up from USD66.79 late Monday. Gold was trading at USD1,773.15 an ounce, slightly lower from USD1,773.63.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.