LONDON MARKET MIDDAY: Risk-on trade as corporate earnings cheered

(Alliance News) - A solid start to earnings season in the US helped to foster confidence at the ...

Alliance News 15 October, 2021 | 11:55AM
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(Alliance News) - A solid start to earnings season in the US helped to foster confidence at the end of the week, with the FTSE 100 on Friday trading around its best levels since the pandemic began.

The FTSE 100 index was up 19.02 points, or 0.3%, at 7,226.73 on Friday. The blue-chip index hit an intraday high of 7,242.73 in early trade, its best level since February 2020 - though still remains some way off its all-time high of 7,903.50 reached in 2018.

The mid-cap FTSE 250 index was up 91.17 points, or 0.4%, at 22,951.56 at midday. The AIM All-Share index was up 1.10 points, or 0.1%, at 1,226.18.

The Cboe UK 100 index was up 0.2% at 716.88. The Cboe 250 was up 0.3% at 20,714.08, and the Cboe Small Companies up 0.2% at 15,607.98.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 40 in Frankfurt was up 0.3% in early afternoon trade.

"European markets are continuing their push higher, with early signs pointing towards a potential boost from Q3 earnings season," said Joshua Mahony, senior market analyst at IG.

Goldman Sachs will be the last big US bank to report on third quarter earnings after generally well-received updates from peers such as JPMorgan and Citigroup.

Goldman shares were trading 0.5% higher pre-market on Friday, after closing up 1.2% on Thursday.

Ahead of the results, Wall Street was on track for a higher open. The Dow Jones was called up 0.4%, the S&P 500 up 0.35 and the Nasdaq Composite up 0.3%.

On the data side, focus will be on US retail sales after consumer and producer price inflation readings earlier in the week managed to avoid spooking investors.

With risk-on mode in full swing, the dollar eased. Sterling was quoted at USD1.3732 on Friday, up against USD1.3680 at the London equities close on Thursday. The euro traded at USD1.1607, higher than USD1.1587 late Thursday.

Safe havens slipped. Against the yen, the dollar was quoted at JPY114.27 versus JPY113.63 - the dollar trading above the JPY114.0 mark for the first time in nearly three years. Gold was quoted at USD1,781.89 an ounce on Friday, down from USD1,797.11 on Thursday.

Meanwhile, Brent oil strengthened to trade at USD84.87 a barrel at midday, up from USD83.75 late Thursday.

This boosted the share price of oil major BP, up 1.5%, and peer Royal Dutch Shell, with 'A' and 'B' shares rising 1.4% and 1.8% respectively.

The travel sector also got a boost on clarity over relaxed testing rules. British Airway parent International Consolidated Airlines was up 3.0% at midday and budget airline easyJet rose 2.5%.

Travellers arriving in England will be able to take cheaper lateral flow tests rather than PCR tests. The change in policy for the post-arrival test will come into force from October 24, in time for families returning from half-term breaks.

The tests will cost about GBP25, compared with a typical price of GBP75 for PCR tests.

At the bottom of the FTSE 100 was Pearson, falling 13% on a slip in US Higher Education Courseware sales.

For the nine months to the end of September, total sales were up 10% on an underlying basis. All segments saw growth except for Higher Education, where sales fell 7% as growth in international courseware, including Canada and the UK, was more than offset by a 9% decline in US Higher Education Courseware. Pearson pointed to a decline in US enrolments, particularly in community colleges.

Pearson said it remains on track to deliver full-year adjusted operating profit in line with market expectations, which it placed at GBP377 million. This would be up from GBP313 million in 2020, but still far lower than the GBP581 million achieved in 2019.

In the FTSE 250, Mediclinic International rose 9.0% as it said revenue in the first half of its current financial year was ahead of pre-pandemic levels.

The Stellenbosch, South Africa-based private hospitals operator delivered 12% year-on-year revenue growth to GBP1.58 billion in the six months to September 30. Its performance was driven by a recovery in patient activity across all three divisions. When compared with pre-pandemic, revenue was up 4% at the group, with Hirslanden and Mediclinic Middle East delivering volumes in excess of pre-pandemic levels.

On AIM, ITM Power fell 6.1% after raising GBP250 million to expand its operations.

ITM raised the funds through an oversubscribed placing of 57.5 million shares at a price of 400 pence per share, and a subscription by Dublin-based chemicals firm Linde and company management for 5.0 million shares at the same price. The price per share reflects a 16% discount from ITM Power's closing price of 474.80p on Thursday.

ITM is looking to develop a second manufacturing facility in the UK and a new international factory. These facilities, once completed are expected to increase the Sheffield-based hydrogen power equipment maker's manufacturing capacity to 5 gigawatts per annum by 2024.

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
easyJet PLC 528.20
BP PLC 340.85
Pearson PLC 589.00
ITM Power PLC 400.20 -
Mediclinic International PLC 291.60 -
International Consolidated Airlines Group SA 131.70
Royal Dutch Shell PLC B 1,646.60
Royal Dutch Shell PLC Class A 1,651.40
Goldman Sachs Group Inc 382.73

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