LONDON MARKET CLOSE: Miners lead FTSE 100 as inflation fears ebb

(Alliance News) - Stocks in London ended higher on Thursday with the FTSE 100 around its highest ...

Alliance News 14 October, 2021 | 5:09PM
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(Alliance News) - Stocks in London ended higher on Thursday with the FTSE 100 around its highest levels since February 2020 as investors cast global inflationary pressures aside for now.

Consumer price inflation in China slowed unexpectedly in September, statistics from the National Bureau of Statistics of China showed, due to a steeper decline in the cost of food.

The country's annual inflation rate was at its lowest level since March, edging down to 0.7% in September from 0.8% a month earlier and missing market estimates of 0.9%.

Beijing has set a CPI growth target for 2021 of around 3%, compared with 3.5% last year. The consumer price index reading reflected a sharp drop in the cost of food, with pork prices falling faster than they did in August.

Food prices declined by 5.2% in September from a year before, the slide in prices picking up pace from a 4.1% decline in August.

The FTSE 100 index closed up 65.89 points, or 0.9%, at 7,207.71. The FTSE 250 closed up 225.12 points, or 1.0%, at 22,860.39 and the AIM All-Share closed up 12.04 points, or 1.0%, at 1,224.14.

The Cboe UK 100 ended up 1.0% at 716.70, the Cboe UK 250 closed up 0.9% at 20,653.20 and the Cboe Small Companies ended up 0.6% at 15,585.00.

The CAC 40 stock index in Paris ended up 1.3% and the DAX 40 in Frankfurt ended up 1.4%

"Markets throughout Europe and the US have enjoyed a welcome day of positivity, with the FTSE 100 moving within touching distance of 19-month highs. Fears around energy prices and inflation appear to have eased for now, although today's 5% rise in natural gas prices raise the risk that this respite may be brief in nature," said IG Group's Joshua Mahony.

In the FTSE 100, miners ended among the best performers with BHP up 3.7%, Rio Tinto up 3.7%, Anglo American up 3.6%, Antofagasta up 3.3%, and Glencore up 3.4%.

"It's been another decent day for basic resource stocks as metals price continue to rise. Copper prices have risen back to their highest levels since July, while aluminium prices are back at 2008 level," CMC Markets analyst Michael Hewson said.

At the other end of the large-caps, Tesco ended the worst performer, down 3.5%, after the stock went ex-dividend meaning new buyers no longer qualify for the latest payout.

In the FTSE 250, Darktrace ended the best performer, up 5.8%, after the cybersecurity firm increased its annual revenue guidance, thanks to a smaller-than-expected impact from foreign exchange headwinds, and after a strong first quarter.

For the quarter ended September 30, the Cambridge-based firm said grew its customer base by 43% year-on-year to 5,975.

Net annualised recurring revenue surged 64% to USD24.1 million. The company noted that this was unusually high, owed to coming off last year's low base after the firm's performance was hurt by Covid-19. Revenue for the quarter increased 51% to USD93.1 million.

Looking ahead, Darktrace expects annual revenue growth of between 37% and 39%, up from the previously forecast 35% to 37%. In financial 2021, the firm posted revenue of USD281.3 million, up 41% from 2020's USD199.1 million.

At the other end of the midcaps, QinetiQ ended the worst performer, down 13%, after the defence technology company warned its 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 lost 4.2% as the pizza delivery chain said trading was 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.

Elsewhere, Norcros rose 13% after the kitchen and bathroom products supplier expressed confidence in its prospects.

Norcros expects revenue for 26 weeks to October 3 to be GBP200 million, up 49% on a year ago and 15% higher than pre-virus levels on like-for-like basis. Further, it now 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.

The pound was quoted at USD1.3680 at the London equities close on Thursday, up from USD1.3565 at the close Wednesday.

The euro stood at USD1.1587 at the European equities close, firm from USD1.1575 late Wednesday. Against the yen, the dollar was trading at JPY113.63, up from JPY113.35.

Stocks in New York were higher at the London equities close boosted by a healthy start to the US earnings season, fronted by major banks.

The DJIA was up 1.5%, the S&P 500 index up 1.4% and the Nasdaq Composite up 1.3%.

Morgan Stanley beat expectations with record revenues, while both Bank of America and Citigroup saw a jump in profits as they clawed back provisions made at the start of the pandemic.

Those results followed a broadly positive start for the banking sector on Wednesday when JP Morgan Chase's third-quarter earnings beat expectations.

On the economic front, data from the Department of Labor showed initial US jobless claims fell more-than-expected last week.

Initial jobless claims for the week to October 9 fell to 293,000 from 329,000 the week before. Markets had been looking for a reading of 319,000. This marked a fresh post-pandemic low, with the latest reading the lowest since March 14, 2020, when it was 256,000, and it is the first time jobless claims have dipped below the 300,000 mark since the pandemic began.

Brent oil was quoted at USD83.75 a barrel at the equities close, up from USD83.11 at the close Wednesday.

Gold stood at USD1,797.11 an ounce at the London equities close, firm against USD1,792.11 late Wednesday.

The economic events calendar on Friday has US retail sales at 1330 BST.

The UK corporate calendar on Friday has a trading statement from stockbroker Hargreaves Lansdown.

By Arvind Bhunjun;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Glencore PLC 357.20
Darktrace PLC 416.20 -
Antofagasta PLC 1,359.50 -
QinetiQ Group PLC 253.00 -
Domino's Pizza Group PLC 368.60 -
Tesco PLC 280.65
Norcros PLC 301.00 -
Anglo American PLC 2,812.50
BHP Group PLC 2,058.50
Rio Tinto PLC 4,592.50

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