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FTSE 100 makes quiet start as inflation worries point spark interest in value stocks


The FTSE 100 opened the session in the red, though the decline wasn’t quite as bad as predicted by the spread betting firms ahead of the day’s play.

Against a backdrop of rising bond yields, the blue-chip index fell 14 points to 6,609.57.

The recent price action in debt markets reflects a growing preoccupation with inflation, which has sent equity investors scurrying for value stocks, according to Richard Hunter, head of markets at Interactive Investor.

“With commodity prices continuing to rise and with an oil price now up 23% this year, helped by freezing conditions in the US and crimped supply, thoughts are also turning slowly to the possibility of inflation becoming a factor later in the year,” explained.

The miners were well bid as the copper price continued to hold at near-record levels. Antofagasta (LON:ANTO), the Chilean producer of the red metal, led the pack with a 3% gain.

Not far behind were the Evraz (LON:EVR), the iron and steel group, and the majors Glencore (LON:GLEN) and BHP (LON:BHP).

Security group G4S (LON:GFS) fell 10% after bidder GardaWorld said it wouldn’t be increasing its takeover offer.

Smith & Nephew (LON:SN.) continued its post-results slide with the market’s disappointment reflected in a further 2.5% slide in the share price.

6.50 am: Nervy mood ahead of the open 

The mood was a nervous one ahead of the unveiling of Boris Johnson’s road-map out of the current coronavirus lockdown, with FTSE 100 called sharply lower.

He will outline plans to ease some of the restrictions later. Reports suggest the way will be paved for an early return to school for millions of children.

However, the agony may be prolonged for non-essential shops, pubs and salons – heaping on the pain for large parts of the economy.

“Our decisions will be made on the latest data at every step, and we will be cautious about this approach so that we do not undo the progress we have achieved so far and the sacrifices each and every one of you has made to keep yourself and others safe,” the Prime Minister said on Sunday.

Asia’s main markets made a mixed start to proceedings against a backdrop of rising bond yields.

In the US, we could see further progress on the US$1.9 trillion stimulus programme with the House set to vote on the bill by the end of the week.

Back here in the UK, it is shaping up to be a busy week for corporate news. Lloyds (LON:LLOY) and HSBC (LON:HSBA) lead the charge with the latter expected to outline plans to further concentrate its operations on Asia.

A report in the Financial Times also suggests HSBC will exit US retail banking as part of a strategic overhaul of the business.

Also reporting this week are AB Foods (LON:ABF), William Hill (LON:WMH) and BAE Sytems (LON:BA.).

Around the markets

  • Pound: US$1.4016 (flat)
  • Bitcoin US$56,314.03 (-0.83%)
  • Gold US$1,786.90 (+0.53%)
  • Brent crude US$63.88 (+1.54%)

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Monday as the one-year loan prime rate (LPR) in China was left unchanged at 3.85%, largely in line with expectations.

The Hang Seng index in Hong Kong was flat while the Shanghai Composite in China dipped 0.76%.

In Japan, the Nikkei 225 gained 0.46% while South Korea’s Kospi fell 0.90%.

Shares in Australia slipped, with the S&P/ASX 200 closing 0.19% lower.


Proactive Australia news:

Northern Minerals Ltd‘s (ASX:NTU) (OTCMKTS:NOURF) (FRA:NUN) has completed tranche 1 of a placement announced on February 16, 2021, raising A$20 million (before costs).

Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) (FRA:38A) hit a new record high after passing a key technological milestone with electronic transport achieved in a single qubit at room temperature.

Cirralto Ltd (ASX:CRO) has received commitments to raise A$18 million through the issue of 200 million fully paid ordinary shares to institutional sophisticated and professional investors at an issue price of A$0.09 per share.

BlackEarth Minerals NL (ASX:BEM) has soared to a new record high on signing a graphite supply and marketing agreement with Luxcarbon GmbH, Germany – a move that further positions the company as a supplier of graphite concentrate and downstream graphite products to EV and alternative energy markets.

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) is fully-funded to drill and complete the much-anticipated Jewell Well in the SWISH AOI of Oklahoma, USA, after an  A$8.25 million capital raising, with shares up as much as 50%.

Kin Mining NL (ASX:KIN) is undertaking a capital raising of around $15 million to progress the next phase of exploration and resource growth at its Cardinia Gold Project near Leonora in Western Australia.

Blackstone Minerals (ASX:BSX) (OTCQX:BLSTF) (FRA:B9S) has begun trading on the US-based OTCQX Best Market under the code of OTCQX:BLSTF following the rapid increase in value of its shares and strong interest from US investors.

Pantoro Ltd (ASX:PNR) (FRA:RKN) has issued a Letter of Intent for the award of engineering, procurement and construction (EPC) works for the processing facility at the Norseman Gold Project to GR Engineering Services (ASX:GNG).

Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR) has further extended the large copper discovery at Big One Deposit within the Mt Oxide Project in Queensland’s Mt Isa copper-belt following the final results from its 2020 program and recently found historical assays.

Ora Banda Mining Ltd’s (ASX:OBM) (FRA:M6N) infill drilling program at Riverina South deposit within the wider Davyhurst Gold Project in Western Australia has delivered strong assay results of up to 3 metres at 32.4 g/t from 34 metres.

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