LONDON MARKET OPEN: Lacklustre start after mixed sessions in NY, Asia

Tue, 09th Mar 2021 08:49

(Alliance News) -Â It was a quiet start to Tuesday's session for equities in London, coming off mixed performances in New York and Asia overnight.

The FTSE 100 index was up just 1.35 points at 6,720.48 early Tuesday. The mid-cap FTSE 250 index was down 42.53 points, or 0.2%, at 21,167.69. The AIM All-Share index was slightly lower at 1,162.67.

The Cboe UK 100 index was down 0.1% at 670.20 points. The Cboe 250 was up 0.1% at 18,929.94, and the Cboe Small Companies up 0.1% at 13,642.92.

In mainland Europe, the CAC 40 in Paris was up 0.1% while the DAX 30 in Frankfurt was down 0.3% early Tuesday.

"Sector rotation is still very much the name of the game among investors as they want the biggest bang for their buck. Traders know that the upcoming US stimulus package is going to strengthen the US economic recovery, and this has made them to back value stocks. Having said that, many are still worried about the long-term borrowing cost creeping higher which could be a threat for equities," said Naeem Aslam at AvaTrade.

In London, Scottish Mortgage Trust fell 2.4% after the tech-heavy Nasdaq Composite tumbled 2.4% in New York on Monday. Scottish Mortgage holds investments in tech firms such as Amazon.com and Tesla.

The Japanese Nikkei 225 index closed up 1.0% on Tuesday. In China, the Shanghai Composite ended down 1.8%, while the Hang Seng index in Hong Kong closed up 0.8%. The S&P/ASX 200 in Sydney closed up 0.5%.

Against the yen, the dollar nudged up to JPY108.84 versus JPY108.82 in London late Monday.

Sterling was quoted at USD1.3884 early Tuesday, higher than USD1.3810 at the London equities close on Monday. The euro traded at USD1.1884 early Tuesday, firm on USD1.1862 late Monday.

Gold was quoted at USD1,697.91 an ounce early Tuesday, higher than USD1,682.85 on Monday. Brent oil was trading at USD67.90 a barrel, down on USD68.55 late Monday.

At the top of the FTSE 100 was M&G, up 5.0% after saying it is on track for its medium-term targets after a "resilient" 2020 performance.

M&G, which was demerged from Prudential in 2019, reported assets under management & administration up 4% to GBP367.2 billion from GBP351.5 billion, principally reflecting the acquisition of Royal London's platform business Ascentric back in September.

Pretax profit from continuing operations fell to GBP1.61 billion from GBP1.75 billion a year earlier, as total revenue, net of reinsurance from continuing operations, dropped to GBP15.22 billion from GBP32.13 billion in 2019.

Most of that revenue fall was from a drop in investment return to GBP9.26 billion from GBP19.62 billion. Fee income was more steady at GBP1.03 billion, down from GBP1.29 billion. Earned premiums, net of reinsurance, fell to GBP4.87 billion from GBP11.19 billion.

Going forward, M&G said it is on track to achieve annual run-rate shareholder cost savings of GBP145 million through business transformation and modernisation in 2022. It declared a 12.23 pence ordinary dividend.

In the red were miners, with BHP Group down 3.8%, Rio Tinto down 2.7% and Glencore down 2.3%.

"Iron ore prices are down 8%, as anti-pollution restrictions in China's top steelmaking city of Tangshan (which accounts for a quarter of steel output in China) pressures prices. It's a bit of a perfect storm at the moment, with a stronger USD, some concerns around a US infrastructure package, and the push back on the reflation theme also adding to the weakness," said Stephen Innes at Axi.

Pearson shares declined 4.3% after the education publisher was cut to Hold from Buy by Societe Generale. Pearson on Monday had reported a 46% fell in adjusted operating profit in 2020 as revenue declined by 12%.

At the bottom of the FTSE 250 was ITV, down 7.0% as it reported a fall in 2020 profit and declared no dividend for the year.

Total group revenue for 2020 fell 16% to GBP3.26 billion, with ITV Studios revenue down 25% to GBP1.37 billion, while total advertising revenue fell 11% to GBP1.58 billion. Pretax profit slumped to GBP325 million from GBP530 million.

ITV Studios revenue was hit by disruption to the majority of its productions from March onward, the company noted.

"While total revenues and profits were down our financial performance was ahead of expectations driven by a strong end to Q4 and our firm control over costs," said Chief Executive Carolyn McCall.

"We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which if they materialise will affect revenues."

ITV declared no dividend for 2020 after paying out 8.0p for 2019. The firm said it intends to restore payouts "as soon as circumstances permit".

Ultra Electronics rose 4.5% on an "excellent" performance in 2020. Revenue rose 4.2% to GBP859.8 million while pretax profit grew 14% to GBP103.7 million.

"We enter 2021 with a record order book giving us strong visibility, and we remain well positioned in key growth areas to support customers' evolving priorities," said Chief Executive Simon Pryce.

Ultra raised its dividend by 5.0% to 56.9p for the year.

Pryce said: "This excellent performance gives us further confidence in Ultra's exciting potential and our ability to deliver exceptional value for all stakeholders over the longer term."

The economic events calendar on Tuesday has eurozone gross domestic product at 1000 GMT.

By Lucy Heming;Â lucyheming@alliancenews.com