LONDON MARKET MIDDAY: Housebuilders, travel firms up before UK budget

(Alliance News) - The FTSE 100 got a lift ahead of Wednesday's UK budget, with travel and leisure ...

Alliance News 3 March, 2021 | 12:05PM
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(Alliance News) - The FTSE 100 got a lift ahead of Wednesday's UK budget, with travel and leisure stocks rising in expectation of further support for the virus-hit services economy

The FTSE 100 index was up 65.21 points, or 1.0%, at 6,678.96 midday Wednesday. The more domestically focused FTSE 250 index was up 236.39 points, or 1.1%, at 21,414.30. The AIM All-Share index was up 0.1% at 1,191.24.

The Cboe UK 100 index was up 0.8% at 665.36. The Cboe 250 was up 1.5% at 19,063.70, at 18,991.12, and the Cboe Small Companies up 0.6% at 13,422.36.

In mainland Europe, the CAC 40 in Paris was up 0.8%, while the DAX 30 in Frankfurt was 1.0% higher Wednesday afternoon.

"After Tuesday's indecision it looks like Monday's bullishness has returned," said Chris Beauchamp, chief market analyst at IG.

"The FTSE 100 is back at the highs of last week and is contemplating a move above 6,700," Beauchamp said. "While some of those gains might be down to the budget, the real move upwards will come when the banking, mining and oil sectors, the heavyweights of the index, decide to rally."

The UK government budget is due around 1230 GMT and is expected to provide further support for the economy through the coronavirus crisis.

UK Chancellor Rishi Sunak is set to announce an extension of the furlough scheme to the end of September, with employers asked to contribute to workers' salaries from July. That month, employers will be expected to contribute 10%, increasing to 20% in August and September, as the economy reopens. Employees will continue to receive 80% of their salary for hours not worked until the scheme ends.

The chancellor also will announce further support for self-employed workers, with more than 600,000 people – many of whom become self-employed in 2019-20 – now eligible for cash grants.

The pound edged up ahead of the budget statement, trading at USD1.3965 at midday versus USD1.3946 late Tuesday.

A sector in focus this afternoon will be housebuilders. The Times newspaper reported last week that Sunak will extend the stamp duty holiday to the end of June. It is currently set to expire at the end of this month.

Pesimmon shares were up 4.1% at midday - even after the housebuilder on Wednesday said revenue for 2020 fell 8.8% to GBP3.33 billion and pretax profit dropped 25% to GBP783.8 million - while Barratt Developments was up 3.3% and Taylor Wimpey up 3.0%.

AJ Bell investment director Russ Mould noted shares in Premier Inn-owner Whitbread also were higher ahead of the budget.

"Hotels group Whitbread topped the FTSE 100 leaderboard amid suggestions the furlough scheme and business rates holiday will both be extended, supporting a hard-pressed leisure and hospitality sector," said Mould.

Whitbread shares were up 5.1% at midday. Other travel & leisure names gained as well, with British Airways-parent International Consolidated Airlines up 4.9% in the FTSE 100 and cinema chain operator Cineworld up 7.7% in the FTSE 250.

The worst performer in the FTSE 100 at midday was Avast, falling 4.7%. The digital security and privacy products provider guided to softer organic growth in 2021.

Revenue rose 2.5% to USD892.9 million with adjusted billings up 1.2%. Pretax profit slipped to USD436.7 million from USD400.1 million in 2019, though adjusted earnings before interest, taxes, depreciation and amortisation rose 2.6% to USD495.5 million.

"Underpinned by a strong prior year billings performance, we expect to deliver financial 2021 organic revenue growth in the range of 6% to 8%," said Avast. This midpoint of this would be below the 7.9% generated in 2020.

At the top of the FTSE 250 was Micro Focus, rallying 17% after signing a commercial agreement with Amazon.com's cloud platform arm.

The pact with Amazon Web Services formalises a strategic collaboration to accelerate "the modernization of mainframe applications and workloads of large public and private enterprises" to the AWS Cloud. The two will work to use Micro Focus technology for customers looking to shift their business-critical mainframe applications and workloads to a cloud-based production environment.

In conjunction with the agreement, Micro Focus has issued warrants to Amazon NV Investment Holdings to subscribe for up to 15.9 million shares in the London-listed firm at 446.60 pence each.

The worst performer in mid-cap index was Hiscox, down 9.3%, after the insurer posted a loss for 2020.

The Bermuda-based insurer swung to a pretax loss in 2020 of USD268.5 million, from a USD53.1 million profit the year prior, as total expenses jumped to USD3.22 billion from USD2.82 billion while gross written premiums remained unchanged at USD4.03 billion.

Chair Robert Childs said the company expects to pay USD475 million in Covid-related claims net of reinsurance, the majority for event cancellation and the remaining for business interruption and other claims.

"These are large sums and disappointingly means that we will make a pre-tax loss for the year," Childs said, adding that, without Covid-19, Hiscox would have posted a profit of USD207 million.

Wall Street is on course for a rebound on Wednesday, with the Dow Jones Industrial Average called up 0.6%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.7%.

Stocks in New York are set to get a boost from vaccine optimism, after US President Joe Biden said Tuesday the country would have sufficient vaccine supply by the end of May to inoculate the US adult population.

"We're now on track to have enough vaccine supply for every adult in America by the end of May," said Biden – who last month had forecast it would take until the end of July to amass that many doses.

"That's progress. Important progress. But it is not enough to have the vaccine supply," Biden said. "We need vaccinators, people who put the shots in people's arms, millions of Americans' arms."

In focus will be the US ADP employment report at 1315 GMT - which comes ahead of the monthly jobs report on Friday.

While the pound nudged up on Wednesday, other currencies fell against the dollar.

The euro traded at USD1.2069 on Wednesday, soft on USD1.2072 late Tuesday. Against the yen, the dollar rose to JPY106.99 versus JPY106.73.

Gold was quoted at USD1,722.30 an ounce on Wednesday, down from USD1,727.95 on Tuesday as the dollar strengthened. Brent oil was faring better, trading at USD64.03 a barrel, up from USD63.64 late Tuesday.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Barratt Developments PLC 781.80 GBX -0.38 -
Cineworld Group PLC 99.58 GBX 1.32 -
Hiscox Ltd 864.00 GBX 1.03 -
Avast PLC 471.20 GBX -0.06 -
Micro Focus International PLC 550.00 GBX 1.18 -
Persimmon PLC 3,161.00 GBX -0.47 -
Taylor Wimpey PLC 188.10 GBX 0.08 -
Whitbread PLC 3,545.00 GBX 2.66 -
International Consolidated Airlines Group SA 208.75 GBX 2.63

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