LONDON MARKET OPEN: Green start for FTSE 100 with Next shares rallying

(Alliance News) - London got off to a solid start to Thursday's session after US President Joe Biden unveiled his latest spending plans, looking to pump USD2 trillion into infrastructure.

The blue-chip FTSE 100 index also was given a bost as Next shares rallied on an improved profit outlook for the year ahead.

The FTSE 100 was up 26.11 points, or 0.4%, at 6,739.74 early Thursday. The mid-cap FTSE 250 index was up 120.16 points or 0.6%, at 21,638.87. The AIM All-Share index was up 0.2% at 1,199.67.

The Cboe UK 100 index was up 0.1% at 671.80. The Cboe 250 was up 0.3% at 19,330.30, but the Cboe Small Companies down 0.1% at 13,870.75.

In mainland Europe, the CAC 40 in Paris was flat - after French President Emmanuel Macron said a limited lockdown in place in Paris and other regions would be extended to the whole country - while the DAX 30 in Frankfurt was up 0.2% early Thursday.

The Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite was up 0.6%, while the Hang Seng index in Hong Kong was 1.4% higher. The S&P/ASX 200 in Sydney closed up 0.6%.

"There is no doubt that these markets are addicted to stimulus, and any news which has stimulus inside it, is welcomed by market players with open arms," said Naeem Aslam at AvaTrade.

US President Biden on Wednesday unveiled a far-reaching USD2 trillion infrastructure plan to shore up the nation's highways, bridges and ports, as well as fund telecommunications upgrades plus research and development to boost competitiveness, especially compared to China.

A key source of the financing would come from increasing the corporate tax rate from 21% to 28%, and cracking down on the use of tax havens to avoid paying US taxes.

Looking ahead, Aslam highlighted that Wednesday's US ADP jobs figure, while slightly undershooting market expectations, was still "really decent" and sets a positive tone for Friday's nonfarm payrolls figure.

Before this are US initial jobless claims on Thursday at 1330 BST. A packed data calendar for the day ahead has manufacturing PMI readings from Germany, the eurozone, the UK and US at 0855 BST, 0900 BST, 0930 BST and 1445 BST respectively.

The dollar was broadly higher.

The euro traded flat at USD1.1742 on Thursday, and sterling was soft at USD1.3777 versus USD1.3785 at the London equities close on Wednesday.

Against the yen, the dollar was quoted at JPY110.64, up from JPY110.50.

Gold was quoted at USD1,718.56 an ounce early Thursday, higher than USD1,704.21 on Wednesday. Brent oil was trading at USD63.40 a barrel, slipping from USD64.00 late Wednesday.

Leading the FTSE 100 in early trade was Next, gaining 4.5% as it upgraded guidance for its recently-started financial year.

Pretax profit in the financial year that ended January 30 more than halved to GBP342.4 million from GBP748.5 million the year before, on total revenue that fell 17% to GBP3.53 billion from GBP4.27 billion. The fall in profit was in line with previous guidance.

Full-price sales were down 15% on the year before.

On recent trading, Next said that online sales have been much stronger than expected in the first eight weeks of the new year, and are up more than 60% on two years ago.

"This overachievement plus the expected transfer of sales from retail during the additional two weeks of lockdown, are expected to add GBP30 million of profit. As a result, we are raising our central profit guidance by GBP30 million from GBP670m to GBP700 million," said Next.

The retailer proposed no final dividend for the recently ended year, though said it remains committed to returning capital to shareholders in the long term and will review its position later in the year when it has better visibility of trade once stores reopen.

At the bottom of the blue-chips were ex-dividend stocks, with Phoenix Group falling 3.8% and Smith & Nephew down 1.2%.

In the FTSE 250, Quilter shares rose 2.7% after agreeing to sell Quilter International to Utmost for GBP483 million following a strategic review.

The sale will simplify Quilter and focus the company on its higher-growth UK wealth management business, it said.

Net cash proceeds of around GBP450 million are expected from the sale. The board said that it is currently minded to undertake a capital distribution to shareholders of the majority of the proceeds. A firm decision on the method of distribution will be made at the time of sale completion.

Quilter Chief Executive Paul Feeney said the deal represents an "excellent outcome" for all stakeholders.

"It allows us to focus on accelerating our growth and efficiency plans as well as further simplifying and focusing our business around its core UK high net worth and affluent customer proposition," said Feeney. "It also gives us the ability to deliver a further meaningful capital distribution to shareholders."

Elsewhere in London, Equinti shares slid 5.9% after the financial services administration outsourcer swung to a loss for 2020 and also said its chief financial officer will be departing once a replacement is installed.

Revenue for 2020 fell 15% to GBP471.8 million, and the company swung to a pretax loss of GBP6.6 million from a GBP39.8 million profit. Equiniti blamed a "very challenging environment" with disruption to capital markets and the wider economy hitting its performance.

There was a significant reduction in higher-margin market-paid and discretionary projects as market activity paused, it said, and the fourth quarter was slower than expected. Interest rate cuts and other actions by central banks reduced Equiniti's interest income by GBP16.9 million.

No dividend was declared for 2020, compared to a payout of 5.49p for 2019.

"While uncertainty continues, the outlook for capital market activity in 2021 is encouraging, and we have started the year well with a number of important new business wins. Our focus is on driving performance and market share, while reducing the group's debt and delivering on our cost initiatives to offset reduced interest income in a low interest rate environment," said outgoing interim chief executive, Cheryl Millington.

Paul Lynam starts as Equiniti's new chief executive on Thursday. His appointment was announced in January, succeeding Guy Wakeley who had been in the role since 2014.

Equiniti on Thursday also said that Chief Financial Officer John Stier plans to step down. He will remain in the role until a successor is found and a smooth handover completed.

By Lucy Heming; lucyheming@alliancenews.com

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