LONDON MARKET MIDDAY: Mood upbeat as US earnings season enters Day 2

(Alliance News) - Ahead of further US bank earnings and producer price data on Thursday, stocks ...

Alliance News 14 October, 2021 | 12:00PM
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(Alliance News) - Ahead of further US bank earnings and producer price data on Thursday, stocks markets across Europe advanced.

London's blue-chip mining sector and oil majors were driving the FTSE 100 higher, while the FTSE 250 index overcame QinetiQ's 11% share price tumble.

"Having dropped back in an orderly fashion into earnings season, it seems stock markets have now reached a level at which investors are once again happy about buying the dip, hence the broad recovery in indices this morning," said Chris Beauchamp, chief market analyst at IG.

The FTSE 100 was up 50.03 points, or 0.7%, at 7,191.85 on Thursday at midday. The mid-cap FTSE 250 index was up 128.81 points, or 0.6%, at 22,764.08. The AIM All-Share index was up 5.98 points, or 0.5%, at 1,218.08.

The Cboe UK 100 index was up 0.7% at 713.64. The Cboe 250 was up 0.4% at 20,551.99, and the Cboe Small Companies up 0.6% at 15,585.68.

In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt both were up 0.8% in early afternoon trade.

Bolstering London's FTSE 100 was its heavyweight mining sector, with Anglo American up 4.0%, Antofagasta up 3.2%, and Glencore up 3.1%.

The natural resources sector was following commodity prices higher, with copper up 1.2% at midday. Brent oil was trading at USD84.13 a barrel on Thursday, up a dollar from USD83.11 late Wednesday and boosting oil majors BP and Royal Dutch Shell by 1.3% and 1.8%, respectively.

"A slowdown in the global economic recovery could easily trigger a pullback in commodity prices in the near-term, but for today it seems that investors are very much risk-on," said Russ Mould, investment director at AJ Bell.

Gold also was in demand on Thursday. The precious metal was trading at USD1,800.01 an ounce, rising from USD1,792.11 on Wednesday. This lifted London-listed precious metals miners, with Polymetal International up 2.4% at midday and Fresnillo up 1.5%.

Gold breached the USD1,800-an-ounce mark as the dollar softened.

Sterling was quoted at USD1.3724 midday Thursday, higher than USD1.3565 at the London equities close on Wednesday and trading around its best level for over a fortnight. The euro traded at USD1.1609 on Thursday, up on USD1.1575 late Wednesday. Against the yen the dollar was essentially unchanged at JPY113.34.

Wall Street was on track for a bright start on Wednesday as investors await a deluge of bank earnings. The Dow Jones Industrial Average was pointed up 0.6%, the S&P 500 up 0.75 and the Nasdaq Composite up 0.8%.

Wells Fargo, Bank of America, Morgan Stanley and Citigroup on Thursday are following in JPMorgan's footsteps, after it on Wednesday became the first big US bank to report on conditions in the third quarter of 2021. Analysts were broadly positive on JPMorgan's results, but the stock ended the day 2.6% lower. It was up 0.5% in New York pre-market activity Thursday.

"The earnings call provided plenty of reasons to be cheerful, with the bank noting that the overall US recovery was intact and credit demand was still strong," IG's Beauchamp commented on JPMorgan's results.

Also in focus on Thursday is US producer price data, due at 1330 BST. Factory prices are expected to grow 8.7% year-on-year in September, according to FXStreet, picking up from August's 8.3% rise.

The reading will be closely watched after US Federal Reserve minutes released on Wednesday showed the central bank could begin reducing the pace of its USD120 billion monthly asset purchase programme as soon as mid-November.

Back in London, Tesco was the worst performing blue-chip stock as it went ex-dividend, meaning new buyers no longer qualify for the latest payout. The grocer was down 1.2% at midday.

At the bottom of the FTSE 250 was QinetiQ, sinking 11% after warning its that full-year profit margin will be at the lower end of guidance.

QinetiQ also cautioned that it is experiencing supply issues on a "large complex programme", which it didn't name, that could result in the need for a one-off write down. It is working to cap the risk at below GBP15 million.

Domino's Pizza fell 1.4% as it said trading is in line with expectations with sales growth in the third quarter, though noted supply chain pressures.

System sales rose 9.9% to GBP375.8 million in the thirteen weeks that ended September 26, compared to GBP342.1 million in the same period last year. Although the company said it will continue to manage supply chain pressures, it expects them to continue into 2022.

DiscoverIE rose 3.5% on a strong start to its financial year. In the six months that ended September 30, the electronic components maker said revenue remained "well ahead" of both the Covid-impacted prior year and the pre-Covid year.

Sales were up 23% year on year at constant currency in the first half. discoverIE noted this represents organic growth of 15% over last year and 8% compared with two years ago. discoverIE said it managing supply chain challenges "effectively," but did note "some limiting" of growth rates in the first half.

Elsewhere in London, shares in Norcros rose 7.4% as it upgraded full-year expectations. The kitchen and bathroom products supplier said its market outperformance has continued into the new financial year and it expects interim underlying operating profit no less than GBP21 million, exceeding the GBP12.8 million reported a year ago and GBP17.4 million two years ago.

Further, thanks to the "excellent" first half, Norcros now expects underlying operating profit for the year to March 31 to be "significantly ahead" of its prior expectations.

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
discoverIE Group PLC 983.00 -
QinetiQ Group PLC 253.40 -
BP PLC 340.85
Antofagasta PLC 1,350.50 -
Glencore PLC 351.90
Domino's Pizza Group PLC 365.00 -
Norcros PLC 303.00 -
Fresnillo PLC 883.40 -
Anglo American PLC 2,717.00
Polymetal International PLC 1,355.00 -
Royal Dutch Shell PLC B 1,646.60
Tesco PLC 280.10
Royal Dutch Shell PLC Class A 1,651.40
JPMorgan Chase & Co 158.29

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