LONDON MARKET EARLY CALL: Higher call ahead of Shell, NatWest earnings

(Alliance News) - Stocks in London are set for a higher start after a dovish US Federal Reserve ...

Alliance News 29 April, 2021 | 6:57AM
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(Alliance News) - Stocks in London are set for a higher start after a dovish US Federal Reserve meeting, with focus now switching to a bumper day for UK earnings.

IG says futures indicate the FTSE 100 index of large-caps to open up 9.03 points, or 0.1%, at 6,972.70 on Thursday. The FTSE 100 closed up 18.70 points, or 0.3%, at 6,963.67 on Wednesday.

"European markets look set to start the day higher on the back of last night's dovish Fed, as well as a positive Asia session," said Michael Hewson, chief market analyst at CMC Markets.

Temporary price jumps will not spook the Federal Reserve into pulling back on the stimulus it has pumped into the US economy during the Covid-19 pandemic, Chair Jerome Powell said on Wednesday.

He highlighted the commitment of the policy-setting Federal Open Market Committee to keep the US benchmark lending rate near zero, where it has been since the start of the crisis, and continue its massive bond buying program until employment recovers and inflation exceeds the two percent threshold "for some time".

Responding to concerns from notable economists and some investors that policymakers could let things get out of control, Powell snapped back: "We know our job."

The policy-setting Federal Open Market Committee left its benchmark rate unchanged in the range of 0.00% to 0.25%, as widely expected. The Fed also left its quantitative easing programme unchanged.

The dollar was lower across the board in the wake of the Fed announcement.

Sterling was quoted at USD1.3953 early Thursday, higher than USD1.3912 at the London equities close on Wednesday.

The euro traded at USD1.2133, rising from USD1.2100 late Wednesday. Against the yen, the dollar fell to JPY108.61 from JPY108.85.

In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney was 0.3% higher. Markets in Japan were shut for the Showa Day holiday.

CMC's Hewson added: "The positive mood was also helped by positive earnings announcements, from the likes of Apple and Facebook, who both blew through market expectations, on revenues and profits."

Apple shares rose 2.4% after-hours as the iPhone maker reported doubled earnings for the second quarter of its financial year, driven by record revenue through sharp growth in iPhone and Mac sales.

For the three months ended March 27, the Cupertino, California-based tech stock posted net income of USD23.68 billion, more than doubled from USD11.25 billion the same period the year before. Total net sales grew 54% year-on-year to USD89.58 billion from USD58.31 billion the prior year, driven by a 66% rise in iPhone sales to USD47.94 billion, as well as a 70% increase in Mac sales to USD9.10 billion, the latter reaching an all-time high.

Facebook shares surged an even-greater 6.2% post-market as earnings jumped on strong advertising revenue. For the first quarter ended March 31, Facebook posted revenue of USD26.17 billion, up 48% from USD17.74 billion last year and net income was USD9.50 billion, almost double from USD4.90 billion.

Prior to the Apple and Facebook results, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.5%, the S&P 500 down 0.1% and Nasdaq Composite closing 0.3% lower.

The week's earnings deluge will continue in the UK on Thursday, with first-quarter results from oil major Royal Dutch Shell, fund manager Schroders, state-backed lender NatWest Group, and Paddy Power-owner Flutter Entertainment.

The economic events calendar on Thursday has German unemployment and inflation readings at 0855 BST and 1330 BST respectively. There are US economic growth and jobless claims figures at 1330 BST.

Gold was quoted at USD1,784.53 an ounce early Thursday, higher than USD1,772.08 on Wednesday. Brent oil was trading at USD67.44 a barrel, soft on USD67.65 late Wednesday.

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
Facebook Inc A 331.08 USD -1.68
Apple Inc 130.15 USD 0.39

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