LONDON MARKET OPEN: Stocks Climbs As FTSE Shakes Off Firm Pound

(Alliance News) - Stock prices in London were largely higher on Monday morning, with the mood in Europe lifted by a trio economic reports showing China is continuing its economic recovery from Covid-19, as well as hopes of a vaccine for the infectious disease.

The FTSE 100 index was up 37.40 points, or 0.6%, at 5,956.98 early Monday.

The mid-cap FTSE 250 index was up 58.88 points, or 0.3%, at 17,881.79. The AIM All-Share index was down 0.5% at 973.25.

The Cboe UK 100 index was up 0.5% at 591.79. The Cboe 250 was up 0.4% at 15,085.06, and the Cboe Small Companies was down 0.1% at 9,375.48.

The pound was quoted at USD1.2960 early Monday, up from USD1.2924 at the equities close on Friday. Sterling was up despite being faced with rises in Covid-19 infections in the UK as well as the looming threat of a no-deal Brexit.

UK Cabinet Office minister Michael Gove however insisted that the door is "ajar" for post-Brexit trade talks to continue with the EU after Downing Street declared negotiations as "over".

Gove accused EU officials of not being serious about making compromises and said they would have to back down if chief negotiator Michel Barnier is to resume negotiations in London this week.

In mainland Europe, the CAC 40 index in Paris was up 1.0% and the DAX 30 in Frankfurt was up 0.8%.

British Land and Taylor Wimpey were among those in the green, gaining 1.5% and 0.2%, respectively. Data from property portal Rightmove showed October has been a bumper month for the UK housing sector.

Rightmove said the national average asking price climbed 1.1% to a record GBP323,530 in October, from GBP319,996 in September. Annually, the October rise is 5.5%, or GBP16,818, the biggest rate of increase in over four years, Rightmove noted. The portal now forecasts annual price growth of about 7% by the end of December as the housing market continues its bounce following the Covid-19 lockdown.

At the other end of the large caps was St James's Place, down 0.9%, after Barclays cut the stock to Equalweight from Overweight.

In early company news, Land Securities as it unveiled a strategic plan which could see it exit "subscale sectors over time, where we have little or no competitive advantage".

Landsec was up 1.0%.

Perhaps the most notable of the measures unveiled will see Landsec "realise and recycle capital" from the sale of properties in the hotels, leisure and retail parks space, three assets battered by Covid-19.

The firm added a review has found that "certain elements of our portfolio are subscale".

On the whole however, the property firm painted an optimistic picture about its retail assets, despite its regional shopping centres being among the worst-hit by the pandemic.

"Not all retail is the same. Regional shopping centres have been most impacted by these challenges, but these represent only 13% of our portfolio and our shopping centres are amongst the very best in the sector. Of the balance, our outlets remain an attractive subsector, many of our suburban shopping centres offer significant repurposing potential and our investment in retail parks is modest," Landsec explained.

Landsec also was bullish about the "quality of the central London portfolio", 64% of its property assets by value.

"London remains one of the world's gateway cities, and this portfolio represents a good source of liquidity over time, it said.

Rolls-Royce was up 3.3%, the best blue-chip performer. The jet engine maker's shares had climbed 14% on Friday after Bloomberg reported Europe's top aviation regulator is satisfied that changes to the Boeing 737 MAX have made the aircraft safe enough to return to the skies before 2020.

Elsewhere in London, boohoo plunged 12%, after it noted speculation over the future of its auditor PwC.

The online retailer said PwC remains its auditor "at this time", despite press reports saying the accounting firm will quit over concerns about the online retailer's reputation.

Citing two people familiar with the matter, the Financial Times on Friday reported PwC has signalled its intention to quit as boohoo's auditor with the past month.

"The group's audit committee has recently launched a competitive tender process for the group's audit, and will update shareholders at its conclusion. PwC signed an unqualified opinion on the group's 2020 financial statements and having served as the group's auditor since 2014, is not participating in this process," boohoo said on Monday.

Among Asian stock markets on Monday, the Shanghai Composite index gave up morning gains and closed 0.7% lower. The Hang Seng index in Hong Kong was up 0.8% in late trade. Tokyo's Nikkei 225 closed up 1.1%.

"EU bourses are pointing to a mildly stronger start following an upbeat session in Asia," noted Gain Capital analyst Fiona Cincotta.

China's economy grew 4.9% on-year in the third quarter, the National Bureau of Statistics said, though this was slightly below expectations. Analysts polled by AFP earlier pegged third-quarter growth in China, where the coronavirus first surfaced, at 5.2% from a year ago, up from the second quarter's 3.2% rise.

"Despite the disappointing print, there were some encouraging signs with an upturn in consumption and continued strength in the factory sector. The monthly indicators actually beat forecasts suggesting that the recovery is picking up momentum boding well for the coming quarter and hopes that China will be able to help haul the globally economy back onto its feet," Cincotta continued.

Also boosting the mood were hopes of a Covid-19 vaccine, Cincotta noted, after US firm Pfizer on Friday said one could be ready by the end of the year. However, the analyst added that equity gains are being capped as virus infections are still on the rise.

Pfizer said it expects to file for emergency use authorisation for its Covid-19 vaccine in late November, around two weeks after the November 3 US presidential election. The company said it hopes to move ahead with the vaccine after safety data is available in the third week of November.

More than half of England is living with heightened coronavirus restrictions after the severest measures came into force in Lancashire and Londoners were towards the end of last week banned from meeting indoors.

The new measures across the UK placed more than 28 million people in England into the top two tiers of restrictions.

Still to come on the data calendar on Monday are EU construction output figures at 1000 BST.

The euro stood at USD1.1712, down from USD1.1718 at the European equities close Friday.

Against the yen, the dollar was trading at JPY105.46, firm from JPY105.40 late Friday.

Brent was changed hands at USD43.20 a barrel on Monday morning, up from USD43.00 at the London equities close on Friday.

An ounce of gold fetched USD1,909.62, up from USD1,900.51.

By Eric Cunha; ericcunha@alliancenews.com

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