- FTSE 100 up 25 points
- Construction growth best since 2014
- Anglo American rises on coal demerger plan
12.18pm: Vaccine fears recede again
AstraZeneca PLC (LON:AZN) cannot have been happy to see the newspaper headlines about blood clot fears surrounding its COVID-19 vaccines, with people under 30 advised to seek a different jab.
But with many saying the benefits outweighing the risks, and Labour leader Kier Stamer saying he had the Astra vaccine for his first jab and would have it for the second, the company’s shares have recovered from their earlier falls.
They are now up 2.65% or 188p at 7290p having fallen as low as 7045p earlier in the day.
The Astra revival has helped the FTSE 100 perk up a bit, with the leading index now 25.66 points or 0.37% higher at 6910.98.
The FTSE 250 has also moved into positive territory again, up 17.2 points or 0.08% at 22,177.77 after Wednesday’s record high.
Laith Khalaf, financial analyst at AJ Bell, said: “The fact an index hits a record high is not itself a buying signal, but the attraction of investing in medium-sized companies are plain to see in the long-term performance figures. Over twenty years, the FTSE 250 has wiped the floor with the big blue chips of the FTSE 100, and indeed those of the much-vaunted S&P 500, which has found itself in so much favour with investors of late.
“Indeed, the FTSE 250 has been the best performing segment of the main UK market since the turn of the century.”
10.59am: Catalytic converter company pleases market
Johnson Matthey PLC (LON:JMAT) is leading the risers in the blue chip index after its said its full year performance was likely to be at the top end of market expectations. The City is expecting profits to come in between £405mln and £502mln.
After COVID-19 disrupted its first half performance, the second was “materially stronger” after increased activity in the automotive sector (it makes catalytic converters to strip emissions from car exhausts.)
It also said it was undertaking a strategic review of its health business.
The news has lifted its shares by 3.29% or 102p to 3201p.
Laura Hoy, equity analyst at Hargreaves Lansdown, said: “With the transition to electric vehicles well under way, [catalytic converters] could eventually become obsolete and that’s prompted the group to embark on a major strategy shift.
“[It] is pivoting its business toward supplying materials for batteries and hydrogen fuel cells, an expensive, but necessary transition…
“We wonder if potential sale proceeds [from the health business] would be used to ramp up its electric vehicle transition, or if management is hoping to unearth a new growth opportunity outside autos. The former makes sense, considering its entrenchment in the auto industry.”
The rest of the UK market has started to drift a little aimlessly. The FTSE 100 is up 13.81 points or 0.2% at 6899.13 while the FTSE 250, obviously uncomfortable being in record territory, is off 30.59 points or 0.14% at 22,129.98.
And Citi strategist Robert Buckland has sounded a note of caution about the current strong market runs.
He said: “Economic recovery hopes may drive global equities higher in the short run. But rising bond yields and a stronger US dollar suggest that liquidity conditions are starting to tighten. Our flat equity market targets to end-year mean that we would prefer to buy any dips..
“The UK is our favourite value trade, while expectations of a stronger dollar mean we also overweight US equities. We are underweight emerging markets and Europe ex UK. Our global sector strategy favours cyclicals over defensives.”
9.44am: UK construction survey beats forecasts
Britain’s builders saw stronger growth in March than expected, with the sector expanding at its fastest rate since September 2014.
The IHS Markit/CIPS UK Construction Total Activity Index came in at 61.7 in March, up sharply from 53.3 in February and much higher than the forecast level of 55. The recovery was supported by strong rises in house building, commercial work and civil engineering.
Housebuilding was the best-performing category, with growth the fastest since July 2020
— LiveSquawk (@LiveSquawk) April 8, 2021
Tim Moore, Economics Director at IHS Markit, which compiles the survey said: “March data revealed a surge in UK construction output as the recovery broadened out from house building to commercial work and civil engineering.
“Total activity expanded to the greatest extent for six-and-a-half years as residential spending remained robust, commercial projects restarted and infrastructure contract awards moved ahead.
“Improving confidence among clients in the commercial segment was a key driver of growth, with development activity rebounding in sectors of the economy set to benefit the most from the improving pandemic situation. The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects.”
But for those worried about the growing risk of inflation, the survey showed that problems could be in store.
Moore said: “Constrained supplier capacity and stretched transport availability continued to pose challenges for the construction sector in March. Short supply of products and materials pushed up purchase prices at the fastest rate since August 2008.”
The FTSE 100 has slipped further following the report, although it is still in positive territory. The index is up just 5.02 points or 0.073% at 6890.34.
9.26am: Investors positive on recovery
Leading shares continue on their merry way, with commodity stocks among the risers on the growing prospects of a strong economic recovery from the pandemic.
The FTSE 100 is up 20.15 points or 0.29% at 6905.47, albeit off the day’s high of 6926.
Neil Wilson at Markets.com said: “The FTSE 100 hit its highest level in over a year this morning. Trading above 6,920 the FTSE is at its highest since the pandemic struck and global stock markets plunged at the end of February 2020. The blue chips are back at last: UK equities entered 2021 at a big discount to peers but have not enjoyed the same bounce as US or some European markets.
“The FTSE 250 is also at a record high – at last UK equities are bouncing strongly on a combination of strong UK growth expectations, ongoing monetary policy support and expectations for a strong global recovery. The move comes after another positive session on Wall Street sent the S&P 500 to another all-time closing high. Yields are supportive after the minutes from the Fed’s meeting in March showed policymakers are no hurry to taper or tighten monetary policy.”
Anglo American PLC (LON:AAL) has added 2.88% or 86p to 3074p after it announced the demerger of its South African thermal coal operations to a new holding company, Thungela Resources Limited .Thungela’s shares will be listed in London and Johannesburg.
Mark Cutifani, Anglo chief executive, said: “Anglo American has been pursuing a responsible transition away from thermal coal for a number of years now. As the world transitions towards a low carbon economy, we must continue to act responsibly – bringing our employees, shareholders, host communities, host governments and customers along with us. Our proposed demerger of what are precious natural resources for South Africa, allows us to do exactly that.
“We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board.”
8.41am: UK markets make bright start
After a strong start to the foreshortened week, the FTSE 100 is closing in on territory last seen over a year ago.
The index of blue-chips is within striking distance of 7,000 and may well benefit from a rotation out of the tech and into the more staid, international, low-growth stocks in which London specialises.
The mid-caps, rather like a central defender in the opposition half, was in nose-bleed territory.
After its record close on Wednesday, the FTSE 250 opened 18.45 points higher at 22,179.55.
In a boost to international market sentiment, the US Federal Reserve minutes from the March meeting showed officials were generally happy with the trajectory of the world’s largest economy.
That said, there appears to be no imminent plan to rein back stimulus plans so early in the recovery.
On the market, the big update of the day was provided by ASOS (LON:ASC), whose shares, like the online retailer itself, continued to make upward progress. They nudged ahead 2.4% in the early exchanges.
“There may be challenges to come, but for the moment ASOS is firing on all cylinders as pandemic lockdowns largely play to its strengths,” said Richard Hunter, head of markets at Interactive Investor, responding to a 24% increase in half-year sales.
Topping the Footsie risers’ column was Johnson Matthey (LON:JMAT) whose performance for the year exceeded forecasts. Shares in the platinum specialist advanced 5.4%.
On the debit side, Aviva (LON:AV.) shares fell 3.4% after they began trading without entitlement to dividend payment.
6.30am: FTSE 100 to start on the front foot
FTSE 100 is expected build on Wednesday’s gains at open amid an optimistic environment.
London’s leading index is called 22 points higher at 6,907 on Thursday at the opening bell.
“The minutes from the March meeting showed that while Fed officials seemed happy with the direction of travel of the US economy, they wanted to see much clearer evidence of further progress before dialling back on the stimulus button. This adherence to what the Fed now calls “outcome-based guidance” is all part and parcel of the US central bank’s new policy of not reacting to perceptions of a direction of travel, but waiting until both goals of higher inflation and full employment has been achieved,” said Michael Hewson at CMC Markets.
“While this is all well and good for now with US 10-year yields retreating from their recent highs it should be remembered that last night’s minutes came before last week’s bumper payrolls report and very positive ISM updates. These reports bode well for further strength in the second quarter, and while the Fed wants to give the impression of a central bank that is prepared to be patient, waiting too long also presents dangers.”
Back to the UK, construction PMI for March are scheduled to come out on Thursday, with consensus expecting the figure to rise to 55 from 53.3 in February.
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Thursday after the S&P 500 hit a record closing high overnight in the US.
The Hang Seng index in Hong Kong gained 0.95% and the Shanghai Composite in China rose 0.22%.
In Japan, the Nikkei 225 slipped 0.17% while South Korea’s Kospi gained 0.14%.
Shares in Australia advanced, with the S&P/ASX 200 trading 0.95% higher.
Proactive Australia news:
Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) has increased the global mineral resources estimate for its flagship Piedmont Lithium Project in North Carolina, USA, to 39.2 million tonnes at 1.09% lithium oxide.
Theta Gold Mines Ltd (ASX:TGM) (OTCMKTS:TGMGF) is trading higher after delivering a maiden underground mining reserve for the high-grade TGME Underground Project in South Africa – 490,000 ounces of gold at 5.49 g/t gold.
Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) (FRA:38A) has begun developing biochip components that are less than 10 nanometres in size – for reference, the average human hair is around 75,000 nanometres wide.
Westar Resources Ltd (ASX:WSR) has completed an 11,038-metre aircore drilling program at the Coolaloo Gold Project near Mt Magnet in Western Australia testing high-priority targets, with samples submitted to a laboratory in Perth.