LONDON MARKET OPEN: Glencore Rises After Reinstating Dividend

(Alliance News) - Stock prices in London opened higher on Tuesday as investors grow more hopeful ...

Alliance News 16 February, 2021 | 8:48AM
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(Alliance News) - Stock prices in London opened higher on Tuesday as investors grow more hopeful for a UK economic recovery, while Glencore led the FTSE 100 after resuming dividends and saying it was ready to support the transition to a low-carbon economy.

London's blue-chip FTSE 100 index was up 40.39 points, or 0.4%, at 6,796.50. The FTSE 250 index was up 80.87 points, or 0.4%, at 21,499.77, and the AIM All-Share index was up 0.3% at 1,231.75.

The Cboe UK 100 index was up 0.5% at 675.81 points. The Cboe 250 was up 0.4% at 18,926.02, and the Cboe Small Companies was up 0.1% at 12,754.71.

The CAC 40 index in Paris was up 0.1% and Frankfurt's DAX 30 was flat.

Richard Hunter, head of Markets at interactive investor, commented "The UK market is showing signs of getting its mojo back, underpinned by strengthening anticipation on the vaccine rollout and thus a route to economic recovery.

"Buying interest is also being underpinned by strength in oil and commodity prices, important sector constituents of the FTSE 100. The oil price, now ahead by 22% in the year to date, saw another strong session as a deep freeze in parts of the US both boosted demand and also potentially threatened supply in the major production area of Texas."

Brent oil was quoted at USD63.50 a barrel on Tuesday morning, higher against USD63.33 at the London equities close Monday.

In the FTSE 100. Glencore was the best performer, up 3.5%, after the Swiss miner and commodities trader reinstated its dividend and outlined climate change goals.

Glencore is a major coal producer. It promised on Tuesday "responsible stewardship of declining coal business over time as industry decarbonises". The miner also set a net zero carbon emissions ambition for 2050. It said it will put its climate strategy to an advisory vote at its annual general meeting in April.

For 2020, Glencore reported adjusted earnings before interest, tax, depreciation and amortisation of USD11.56 billion, down 0.3% from USD11.60 billion the year before due to weaker coal prices.

The result beat the company-compiled analyst consensus for adjusted Ebitda of USD10.69 billion.

Glencore's pretax loss widened sharply to USD5.12 billion from USD888 million the prior year, driven by impairment charges which more than doubled to USD5.72 billion from USD2.32 billion.

At the other end of the large caps, BHP Group was 0.5% lower despite reporting positive interim earnings. The Anglo-Australian miner hiked its interim dividend, as profit and revenue rose on higher metal prices and strong output at several of the group's assets.

For the six months to the end of December, pretax profit rose 13% to USD8.83 billion from USD7.79 billion the same period the year before, on revenue that grew 15% year-on-year to USD25.64 billion from USD22.29 billion.

BHP's profit performance was helped by a rise in iron ore and copper prices, as well as record output from its Western Australian Iron Ore business and record average concentrator throughput at the Escondida copper mine in Chile. Profit from operations increased 17% to USD9.75 billion from USD8.31 billion the prior year.

BHP raised its interim dividend by 55% to 101.0 US cents from 65.0 cents the year before, while net debt as at December 31 fell 7% to USD11.84 billion from USD12.68 billion.

In the FTSE 250, Serco was the best performer, up 6.6%, after the UK outsourcer agreed to acquire Whitney, Bradley & Brown, a provider of advisory, engineering and technical services to the US Military.

Serco bought the company for USD295 million from an affiliate of Miami, Florida-based private equity firm HIG Capital. The Hampshire-based firm said the acquisition will increase the "scale, breadth and capability" of its US defence business, providing a "strong" platform from which to address all major segments of the US defence services market.

In addition, Panmure Gordan upgraded Serco to Buy from Hold.

Rotork was up 5.1% after Jefferies raised the valve actuators maker to Buy from Hold.

Playtech was up 2.5% after the gambling software company signed strategic agreements with various subsidiaries of Greenwood Racing, which owns and operate the Parx Casino in Bensalem, Pennsylvania.

At the other end of the midcaps, Dunelm was the worst performer, down 9.0% at 1,281.00 pence after the homewares retailer said Deputy Chair Will Adderley sold 15 million shares via an accelerated bookbuild secondary placing.

The shares were placed at a price of 1,280p per share, with the sale valued at GBP192 million. Following the placing, the aggregate holdings of the Adderley family are 43%, Dunelm said.

"Will Adderley remains fully committed to Dunelm in his role as deputy chairman as well as a very substantial shareholder in the company and his working relationship with the company is unchanged," Dunelm said late Monday.

The Japanese Nikkei 225 index closed up 1.3%. The Hang Seng index in Hong Kong was up 2.0%. The Hong Kong market reopened on Tuesday after being closed on Monday and for a half day on Friday. The Shanghai market remains closed for the Lunar New Year holiday, reopening on Thursday.

Japan is set to start giving Pfizer-BioNTech shots to 10,000 to 20,000 medical workers from Wednesday after the vaccine was approved by the health ministry on Sunday.

The pound was quoted at USD1.3922 early Tuesday, up from USD1.3909 at the London equities close Monday.

UK Prime Minister Boris Johnson said he is "hopeful" coronavirus restrictions can be cautiously eased in the coming weeks, with vaccines providing "grounds for confidence".

Johnson said he wanted the current national lockdown to be the last - and for the unlocking to be "irreversible" - ahead of the publication of his road map next week.

Johnson will analyse data this week on coronavirus case numbers, hospital admissions, deaths and the impact of the vaccine rollout as he prepares his plan to reduce restrictions.

The euro was priced at USD1.2131, flat from USD1.2129. Against the yen, the dollar was trading at JPY105.53, up from JPY105.36.

Gold was trading at USD1,820.32 an ounce, flat from USD1,819.49.

In the economic calendar for Tuesday, there is eurozone gross domestic product at 1000 GMT and the ZEW survey for Germany and the euro area due at the same time. Financial markets in the US reopen after being closed for a holiday on Monday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Dunelm Group PLC 1,313.00 GBX 3.79 -
Playtech PLC 673.00 GBX 0.22 -
Glencore PLC 369.90 GBX -0.54
Rotork PLC 357.00 GBX 0.56 -
Serco Group PLC 126.70 GBX -1.86 -
BHP Group PLC 1,979.80 GBX -0.81

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