LONDON MARKET OPEN: Stocks boosted by US Fed minutes; ASOS rises

Thu, 08th Apr 2021 08:48

(Alliance News) - Stocks in London opened higher on Thursday following well-received meeting minutes from the US Federal Reserve, while ASOS shares rose after positive interim results.

The Fed said it would continue to maintain an accommodative stance until its inflation outcomes are achieved, minutes from the mid-March meet of the Federal Open Market Committee showed Wednesday.

The policy-setting FOMC left its benchmark rate unchanged in the range of 0% to 0.25%, as widely expected. Following the two-day meeting, the Fed signalled that interest rates will remain at near zero through until 2023.

The members also reaffirmed the central bank would aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%.

The FTSE 100 index was up 40.10 points, or 0.6%, at 6,925.42 early Thursday. The mid-cap FTSE 250 was up 26.81 points or 0.1%, at 22,187.38. The AIM All-Share index was up 0.4% at 1,234.40.

The Cboe UK 100 index was up 0.4% at 689.80. The Cboe 250 was up 0.1% at 19,816.30. The Cboe Small Companies was up 0.1% at 14,138.75.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.4% and 0.3% respectively.

"A dovish set of meeting minutes from the Federal Reserve has further reassured investors that Jay Powell and the gang won't be turning off the stimulus taps any time soon. Those calming words from the Fed allowed the FTSE to open in the green for the 3rd day running, adding 0.4% after the bell this Thursday. Putting the UK index at 6,920, the FTSE is now at its best price since the end of February 2020," commented Spreadex analyst Conor Campbell.

In the FTSE 100, Johnson Matthey was the best performer, up 4.4%, after the speciality chemicals company said its financial 2021 operating performance is expected to be around the top end of market expectations.

The company said following disruption from Covid-19, its second half was materially stronger. Johnson Matthey attributed the performance to increased activity in autos and other key end markets and actions taken to transform its operations, including tight cost management.

Further, its strong operational performance has enabled continued investment into strategic growth projects. Johnson Matthey said it continues to review its portfolio to focus on areas to maximise value for shareholders. As part of that process, the company is undertaking a strategic review of its Health business.

In the Clean Air division, Johnson Matthey said there was a strong recovery in demand across all regions towards the end of the first half following a period of disruption caused by the coronavirus pandemic.

Anglo American was up 3.1% after the miner announced the demerger of its South African thermal coal operations via the transfer to new holding company Thungela Resources.

The demerger comes as the global mining behemoth pursues a "responsible transition" away from thermal coal.

The proposal will also allow Thungela to attract new shareholders and to access new sources of capital as an independent company offering direct exposure to thermal coal, Anglo added.

At the other end of the large-caps, Aviva was the worst performer, down 3.6% and Smurfit Kappa was 3.0% lower. The stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

In the FTSE 250, Dunelm Group was up 2.7%. The home furnishings retailer said though quarterly sales fell overall, digital sales more than trebled.

For the third quarter to March 27, total sales were GBP236.6 million, down 17% from GBP284.4 million at the same time last year as the majority of the retailer's store estate was shuttered in the period due to Covid-19 restrictions.

However digital sales - which includes click & collect and home delivery - surged to make up 92.4% of total sales from 22.5% a year before.

At the other end of the midcaps, Direct Line was the worst performer, down 4.6%, after the stock went ex-dividend.

On AIM, ASOS was up 1.1% after the online fashion retailer said its first half sales rose by almost a quarter, as stay-at-home measures shut its high street counterparts and caused a boom in e-commerce and also hailed its acquisition of Arcadia's assets.

In the six months to February 28, revenue rose 24% to GBP1.98 billion from GBP1.60 billion a year earlier. The measure includes other items such as delivery receipts and third party revenue.

Retail sales alone were 24% higher at GBP1.92 billion from GBP1.55 billion.

Its profit also surged. ASOS recorded a pretax profit of GBP106.4 million, from GBP30.1 million a year earlier. Adjusted pretax profit, so not including one-off costs related to its Topshop deal, came in at GBP112.9 million.

"The company has managed to retain its young and trendy following and, following a partial return to the workplace and the renewed ability to socialise, ASOS could well benefit from many a refreshed wardrobe. The addition of the Topshop brands are seen as both complementary to its existing offerings as well as providing another route to its youthful audience, and the initial signs of the integration are promising," said Interactive Investor's Richard Hunter.

In Asia, the Japanese Nikkei 225 index ended down 0.1%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong is up 0.7%.

Meanwhile, Prime Minister Boris Johnson has sought to reassure the public the Oxford/AstraZeneca vaccine is safe after UK regulators said there was a possible link between the jab and "extremely rare" blood clots.

The UK Medicines & Healthcare products Regulatory Agency said the benefits still outweigh the risks overall but while it has not concluded that the vaccine causes rare brain clots, it said the link is getting firmer.

Johnson sought to boost public confidence in the vaccine as he said the changes in its use would not force a change in the road map out of lockdown.

The pound was quoted at USD1.3785 early Thursday, up from USD1.3747 at the London equities close on Wednesday.

"GBPUSD has been notably offered since touching the 1.3915-20 highs on Tuesday and appeared somewhat flow-driven. A combination of factors weighs on sterling as arguably a lot of the recent good news is priced in. At the same time, concerns emerge regarding potential links to side effects from the UK's vaccination workhorse," said Axi's Stephen Innes.

The euro was priced at USD1.1892, flat from USD1.1891. Against the yen, the dollar was trading at JPY109.55, down from JPY109.72.

Brent oil was quoted at USD62.62 a barrel on Thursday morning, up from USD62.08 late Wednesday in London. Gold was trading at USD1,744.74 an ounce, marginally higher against USD1,739.40.

In Thursday's international economic calendar, there is UK Markit construction PMI at 0930 BST and eurozone producer prices at 1000 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com