LONDON MARKET OPEN: Risk Mood Boosted Ahead Of Yellen; AO World Slides

(Alliance News) - London stocks jumped at Tuesday's open as markets await an appearance from incoming US Treasury secretary Janet Yellen, who is expected to push the President-elect Joe Biden's pro-stimulus stance.

The FTSE 100 index was up 44.49 points, or 0.7%, at 6,765.14 early Tuesday. The mid-cap FTSE 250 index was up 97.86 points, or 0.5%, at 20,737.20. The AIM All-Share index was up 0.1% at 1,175.84.

The Cboe UK 100 index was up 0.6% at 673.19. The Cboe 250 was up 0.5% at 18,038.48, and the Cboe Small Companies up 0.1% at 12,314.01.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was rose 0.5% early Tuesday.

"Global risk sentiment is on the up, as a combination of maximum policy overdrive on the Yellen Treasury appointment and the market giving the Biden policy agenda an early stamp of approval sees risk green lighted in early European trade," said Stephen Innes, chief global markets strategist at Axi.

While Biden's inauguration on Wednesday is the key event for the week, traders will be keeping a close watch on Yellen's hearing on Tuesday, where the former Federal Reserve chief is expected to tell lawmakers the world's top economy could suffer if they do not approve a big spending plan.

"Economists don't always agree, but I think there is a consensus now: without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later," she was expected to say, the Wall Street Journal reported.

"Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job."

Axi's Innes said macro risk indicators are all "leaning positive" on Tuesday, with the US dollar softer.

Sterling was quoted at USD1.3595 early Tuesday, higher than USD1.3570 at the London equities close on Monday. The euro traded at USD1.2115, up from USD1.2075 late Monday.

The safe haven Japanese yen, however, fell against the dollar. Against the yen, the dollar was quoted at JPY104.05 versus JPY103.70.

In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.4%. In China, the Shanghai Composite ended down 0.8, while the Hang Seng index in Hong Kong rallied 2.7%.

The S&P/ASX 200 in Sydney closed up 1.2%.

In London, Experian rose 1.6% after a better-than-expected third quarter.

The FTSE 100 credit-checking firm delivered organic revenue growth of 7% for the three months to December 31 and total revenue growth of 10% at constant exchange rates.

By region, North America posted organic revenue growth of 9% and Latin America growth of 13%, while UK & Ireland saw revenue fall 2% and EMEA/Asia Pacific reported an 11% decline.

"Experian is performing very well, even in the exceptional circumstances created by the pandemic, and we expect to deliver a strong performance for this financial year. This again illustrates the resilience of our business. We remain highly focused on investing to sustain this performance and to take full advantage of the recovery when it comes," said Chief Executive Brian Cassin.

Experian expects organic revenue growth for the fourth quarter will be around 3% to 5%, with full-year benchmark earnings before interest and tax in a range of USD1.36 billion to USD1.38 billion.

Rio Tinto hailed a "strong" operational performance in 2020, with its Pilbara iron ore asset in Australia posting an output rise, shaking off Covid-19 and a cyclone at the start of the year.

Shares in the miner advanced 1.0% in London.

Pilbara iron ore shipments rose 2% annually in the fourth quarter to 88.9 million tonnes and were up 1% over 2020 to 330.6 million tonnes. Pilbara output rose 3% year-on-year to 86.0 million in the final quarter and by 2% over the whole year to 333.4 million tonnes.

Aside from the virus outbreak and being hit by brute weather early in the year, Rio Tinto's 2020 will be remembered for outcry and regulatory scrutiny after the company blew up a 46,000-year-old Aboriginal heritage site to expand the Pilbara iron ore mine in Western Australia. Rio on Tuesday warned the regulatory impact from that event "remains unknown".

At the bottom of the FTSE 250 in early trade was AO World, sinking 7.6%. The online electrical retailer boasted a record peak trading period, though added it has incurred higher costs as well, due to the "operational challenges" of working in a Covid-secure environment.

In the three months ended December 31, its third-quarter, AO's UK revenue rose 67% to GBP457.3 million, with Germany revenue jumping 77% to EUR73.6 million.

"The significant increase in demand for AO's products and services since the start of the pandemic has continued throughout our third quarter as we experienced our strongest ever peak trading period over the Black Friday period and in the run up to Christmas," AO added.

However, AO said it has seen costs rise "significantly" due to "some of the operational challenges of working in a Covid compliant environment". The company has also seen higher rates of cancellation of long-term mobile contracts and warranties, it added.

Centamin shares rose 2.5% as both its fourth quarter and full-year results were in line with revised guidance.

Gold production from the Sukari gold mine for the fourth quarter of 2020 was 67,996 ounces, in line with quarterly guidance of around 60,000 to 70,000 ounces though down 54% on a year ago. For the full-year, production amounted to 452,320 ounces, again in line with the guidance range of 445,000 to 455,000 ounces but down 6% on 2019.

Revenue for the fourth quarter was USD150 million, generated from gold sales of 79,535 ounces at an average realised gold price of USD1,887 per ounce sold. Revenue for the full-year was USD829 million.

Centamin said its guidance is unchanged, seeing 2021 gold production of 400,000 to 430,000 ounces.

Gold was quoted at USD1,843.86 an ounce early Tuesday, edging up from USD1,836.71 on Monday amid the weaker dollar. Brent oil was trading at USD55.26 a barrel early Tuesday, firm on USD54.90.

The economic events calendar on Tuesday has eurozone construction output at 1000 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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