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LONDON MARKET MIDDAY: FTSE 100 lags on miners; US inflation print due

(Alliance News) - London's FTSE 100 index was underperforming on Wednesday, dragged down by its ...

Alliance News 13 October, 2021 | 12:15PM
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(Alliance News) - London's FTSE 100 index was underperforming on Wednesday, dragged down by its sizeable mining sector as the rest of Europe raced ahead.

However, the mid-cap FTSE 250 rallied, bolstered by share price gains for hedge fund manager Man Group.

Wall Street was called for a higher start before key US inflation data and after third-quarter earnings from financial firms JPMorgan Chase and BlackRock.

The FTSE 100 index was down 7.14 points, or 0.1%, at 7,123.09 midday Wednesday. The mid-cap FTSE 250 index was up 217.35 points, or 1.0%, at 22,686.25. The AIM All-Share index was up 5.68 points, or 0.5%, at 1,211.95.

The Cboe UK 100 index was down 0.1% at 706.63. The Cboe 250 was up 1.1% at 20,463.37, and the Cboe Small Companies up 0.2% at 15,494.76.

In mainland Europe, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.7% on Wednesday.

"A mixed affair for European markets this morning, with the FTSE 100 lagging its mainland counterparts as commodity stocks head lower," said Joshua Mahony, senior market analyst at IG.

Shares in miners such as Rio Tinto, BHP and Anglo American were down 2.6%, 1.9% and 1.3% respectively at midday.

"The Chinese commodity demand story remains uncertain for now, with factory shutdowns dampening demand for iron ore just as easing lockdown restrictions brought hope of an uplift," said the IG analyst.

Meanwhile, caution was in the air ahead of a key US inflation reading. Due at 1330 BST, the consumer price print for September is expected to show annual growth remained stable at 5.3% year-on-year.

The dollar was mostly lower ahead of the data.

Sterling was quoted at USD1.3633 midday Wednesday, up from USD1.3595 at the London equities close on Tuesday, despite some disappointing GDP data for the UK.

Gross domestic product grew 0.4% month-on-month in August to bring UK economic output 0.8% below pre-virus levels. This was slightly below consensus for 0.5% growth, according to FXStreet. Further, July's reading was revised down to a contraction of 0.1% from growth of 0.1%.

The euro traded at USD1.1562, rising from USD1.1544 late Tuesday after German inflation for September was confirmed at its fastest pace since 1993, rising 4.1% on an annual basis after growth of 3.9% in August.

Meanwhile, eurozone industrial production growth slowed in August, though as anticipated. Month-on-month, industrial output was down 1.6% in the single currency bloc after 1.4% growth in July. This fall was in line with market expectations.

Against the yen, however, the dollar advanced to JPY113.56 versus JPY113.34.

Gold was quoted at USD1,770.20 an ounce, up against USD1,763.12 on Tuesday. Brent oil was trading at USD82.78 a barrel, falling from USD83.50 late Tuesday.

As investors awaited the inflation data and welcomed the opening of US earnings season, Wall Street was called for a moderately higher start. The Dow Jones was pointed up 0.1%, the S&P 500 up 0.2% and the tech-heavy Nasdaq Composite up 0.5%.

JPMorgan set the bar for the rest of the US banking sector as it reported third-quarter results on Wednesday. Boss Jamie Dimon praised the bank's results despite "the dampening effect" of the Delta variant and supply chain issues

The US retail, commercial and investment bank reported revenue of USD29.65 billion for the third quarter of 2021, up 1.3% from USD29.26 billion a year ago. Net income jumped 24% to USD11.69 billion from USD9.44 billion - largely driven by credit reserve releases of USD2.1 billion versus just USD596 million year-on-year - and diluted earnings per share improved 28% to USD3.74 from USD2.92.

JP Morgan shares were up 0.7% in New York pre-market trade on Wednesday, having closed down 0.8% on Tuesday.

Meanwhile, BlackRock was trading 0.5% higher in the pre-market after reporting profit growth and a sharp annual rise in assets under management.

At September 30, the New York-headquartered investment manager recorded USD9.464 trillion in assets under management, rising from USD7.808 trillion at the same point a year before. However, this marked a dip from assets under management of USD9.496 trillion at the end of the second quarter of 2021.

Net income in the third quarter increased to USD1.75 billion from USD1.52 billion, with total revenue up to USD5.05 billion from USD4.37 billion.

In London, shares in Barratt Development were up 5.8% at midday, the stock the top performer in the FTSE 100, after the housebuilder backed its outlook amid ongoing strength in demand for homes.

For the financial year to date, it has seen net private reservations per average week of 281, down slightly from 288 in the same period a year ago but up on 262 two years ago.

Despite global supply chain issues, Barratt said it has not experienced any significant disruption to its build programme. It continues to expect build cost inflation of between 4% and 5% for the full-year.

Informa fell 2.9% after UBS downgraded the business publisher and events organiser to Sell from Neutral.

FTSE 250-listed Man Group rose 7.5% after saying it hit record funds under management driven by a rush of net inflows for its Alternative funds. At the end of September, Man's funds under management stood at USD139.5 billion, up from USD135.3 billion at June 30, the end of the company's second quarter.

The majority of the USD5.3 billion of net inflows came from Man's Alternative funds, drawing USD5.1 billion, which benefited from USD2.1 billion net inflows from its Absolute return and USD2.6 billion from Total return funds.

RHI Magnesita fell 7.9% after RBC cut the stock to Sector Perform from Outperform.

THG shares flagged after attempting to stage a morning rebound. They were down 4.4% at midday to extended Tuesday's 35% slump.

Tuesday's share price tumble came in the wake of its first capital markets day since it listed in September 2020. Though intended to reassure, the event ended up spooking shareholders.

"It seems that attendees didn't get the level of information they wanted, and messages were quickly fed back to HQ to dump the stock,” said Russ Mould, investment director at AJ Bell.

"Having joined the stock market with a lot of fanfare, the market now seems to be taking the view that THG was grossly overvalued and that breaking the business up creates more questions than answers."

Noting the share price decline on Wednesday, THG stressed that it has "consistently" delivered ahead of its targets since floating last year, including a "strong first half performance across all divisions".

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 719.40 -
Man Group PLC 210.10 -
Informa PLC 479.70 -
Anglo American PLC 2,812.50
THG PLC Ordinary Share 172.70 -
Rio Tinto PLC 4,592.50
BHP Group PLC 2,058.50
RHI Magnesita NV Ordinary Shares 3,138.00 -
RHI Magnesita NV Ordinary Shares 36.90 -
BlackRock Inc 896.70
JPMorgan Chase & Co 162.57

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