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FTSE 100 recovers some lost ground; Wall Street opens higher

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  • FTSE 100 slides 12 points
  • US stocks open higher
  • US jobless claims fall

2.47pm: Wall Street starts in the green

Wall Street has started on the front foot on Thursday as traders seemed to breathe a sigh of relief as Joe Biden was officially confirmed as the next US president ahead of his inauguration on January 20.

In the first minutes of trading, the Dow Jones Industrial Average was up 0.55% at 30,997 while the S&P 500 climbed 0.91% to 3,782 and the Nasdaq rose 1.35% to 12,912.

Markets may be relaxing a little following the certification of the election results, the final legal hurdle which was disrupted yesterday after a mob of Trump supporters broke into the Capitol building.

Sentiment may also have been given a boost by the latest weekly jobless claims figures for the week to January 2, which showed 787,000 Americans filed for unemployment benefits compared to 790,000 in the previous week, marking the third straight week of declines.

Back in London, the FTSE 100 had recovered some lost ground on the back of the positive open on Wall Street and was down 12 points at 6,829 at 2.45pm.

1.41pm: National Express to suspend all coach services from Sunday

Heading into mid-afternoon the FTSE 100 was still in the doldrums and slipping gradually lower, falling 42 points to 6,799 shortly before 1.30pm.

Supermarket giant J Sainsbury PLC (LON:SBRY) was leading the blue-chip risers, rising 3.8% to 241.4p after a strong performance for the firm over the Christmas period led it to upgrade its full year profit forecasts.

Meanwhile, car selling website Auto Trader Group PLC (LON:AUTO) was the biggest faller, down 4.4% to 583p followed by British Land Co PLC (LON:BLND) which was down 2.7% to 475.3p.

Lower down in the mid-cap FTSE 250, transport firm National Express Group PLC (LON:NEX) was also pumping the brakes, albeit in a more literal sense, as it said it will suspend all of its coach services in the UK from midnight on Sunday.

The company’s managing director of UK coach services, Chris Hardy, said that tighter lockdown restrictions and falling passenger numbers meant it was “no longer appropriate” to run the services.

“As the vaccination programme is rolled out and Government guidance changes, we will regularly review when we can restart services. We plan to be back on the road as soon as the time is right and have put a provisional restart date of Monday 1 March in place”, Hardy added.

Despite news of the suspension, the company’s shares were up 1.1% at 244.6p in mid-afternoon.

12.50pm: Wall Street to open mostly higher

US investors appear to be prepared to shrug off last night’s scenes of insurrection and Washington DC and keep the bull market gong.

Spread betting quotes suggest that while the tech-heavy Nasdaq Composite is set to open 21 points lower at 12,719, the other two main stock indices are expected to open higher.

The Dow Jones industrial average is seen rising 89 points to 30,918 while the S&P 500 is expected to open 16 points to the good at 3,764.

While last night’s violent scenes are obviously disconcerting, they could not stop ratification of the Georgia run-off elections, the results of which give the Democrats control of the Senate through the vice-president’s casting vote.

“With the Democrats now set to control Congress when Joe Biden officially becomes President in a few weeks’ time, the market is now recalibrating the scenario where the future leader has a greater chance of pushing through his policies and thus what the consequences would be on asset classes, economic growth, monetary policy and so on. Previously the market seemed to be content with a situation of government gridlock,” suggested Russ Mould, the investment director at AJ Bell.

Neil Wilson at markets.com said investors are betting “more stimulus and fiscal expansion from a Democrat-controlled Congress will be the driving force for the upside to show more gains”.

“Any whispered concerns about higher taxes and more regulation are being shouted down by the prospect of more spending,” he added.

US broking giant Citi appears to be unconvinced that 2021 is set to be a banner year for equities, as it has forecast a meagre 2% increase in the MSCI All Countries World Index over the course of the year.

Market observers who can drag their attention away from events on Capitol Hill will be waiting for the ISM services index for December, which Daiwa Capital Markets said will cast further light on how the economy closed out last year.

“In particular, following yesterday’s soft ADP reading, the employment component will allow analysts to refine their expectations for tomorrow’s official employment report,” Daiwa said.

Economists are expecting a reading of 54.5m down from 55.9 previously.

Ahead of the non-farm payrolls figure tomorrow for December, the weekly jobless figures are due out, with the number of initial jobless claims expected to have risen to around 802,500 from 787,000 the week before.

In London, the FTSE 100 remains in the red, down 39 points (0.6%) at 6,803, while the more domestically focused stocks in the mid-cap FTSE 250 are faring no better – worse, in fact – with an 86 point (0.4%) fall to 20,887.

IP Group PLC (LON:IPO), down 8.8% at 1,179.21p, was the biggest mid-cap faller after Investec lobbed out 62mln shares in the intellectual property firm.

Travel ticket booking outfit Trainline PLC (LON:TRN) was 7.0% lower at 2,293.81p after it announced it planned to raise £150mln through the issue of senior unsecured convertible bonds due for redemption in 2026.

9.50am: Construction PMI eases in December

The IHS Markit/CIPS UK construction purchasing managers’ index (PMI) for December eased slightly to 54.6 in December from November’s 54.7.

The reading was still above the 50-point level that separates a contraction in activity from expansion.

Increased construction activity primarily reflected another sharp rise in house building during December while commercial activity also expanded, IHS Markit said.

Civil engineering was the weakest-performing category, with activity falling for the fourth time in the past five months.

“December data illustrated a positive end to the year for the UK construction sector, mostly fuelled by a sharp rebound in house building. Overall output growth has slowed in comparison to the catch-up phase last summer, but now it is encouraging to see the recovery driven by new projects and stronger underlying demand,” said Tim Moore, the economics director at IHS Markit.

“A sustained improvement in construction order books resulted in a rise in employment numbers for the first time in nearly two years and the most optimistic growth expectations since April 2017. Construction companies are hopeful that higher demand will broaden out beyond residential projects in the next 12 months, led by infrastructure spending and a potential rebound in new commercial work from the depressed levels seen during the pandemic.

“Transport delays and a lack of stock among suppliers were the main difficulties reported by UK construction firms at the end of 2020, which contributed to the fastest rise in purchasing prices for nearly two years,” he added.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS) said the survey provided some positive news from the construction sector in December.

“Long-term prospects came to fruition and halted projects started again as clients became more optimistic after the covid hiatus. To meet this demand head-on, builders opted for job creation for the first time in 21 months to increase previously pared-back capacity,” Brock said.

“Further down the line, with purchasing growth close to its highest for six years, supply chains were groaning at the seams and delivery times increased to the most dramatic extent for six months. Low availability for finished products and raw materials as a result of port disruptions added to builders’ woes as suppliers named their price for goods in acutely short supply and input price inflation increased to its highest level since April 2019,” Brock observed.

The FTSE 100, after a solid start, has fallen into the red at 6,824, down 18 points (0.3%).

8.45am: Biden boost

The FTSE 100 is moving into territory last seen in February and inching towards the 7,000-mark.

It opened 30 points to the good after ending a frenetic Wednesday session almost 230 points, or 3.5% higher.

The post-Brexit readjustment continued, while new impetus has been provided by US stimulus hopes.

The market seemed prepared to overlook the awful scenes of rioting in Washington, which left four dead, and took a more pragmatic view after Democrats were declared winners of two Senate seats contested in Georgia.

Traders reasoned the result, which gives Joe Biden control of the upper house, allows the incoming president now to simply wave through the next major cash bail-out for the American economy.

On the London market, Sainsbury (LON:SBRY) led the blue-chip index with a gain of 4% after nudging up its profit forecasts.

“For Sainsbury, which operates in a fiercely competitive arena, the outlook will remain challenging, particularly given the pressure on pricing which the sector demands,” said Richard Hunter, head of markets at Interactive Investor.

“There will also be significant costs arising from the redefinition of the business in the form of the overhaul of the Argos store estate and the extension to its convenience store format in the shape of its new Neighbourhood Hub.”

Rio Tinto (LON:RIO), up 4% in early skirmishes, advanced on the back of a resurgent iron ore price, which itself benefited from the hope the US economy may return to form under the Biden administration.

On the FTSE 250, IP Group (LON:IPO), an investor in fledgeling growth businesses,  fell almost 9% after it emerged that Invesco has sold almost 62mln shares in the business.

Proactive news headlines

Sativa Wellness Group Inc (LON:SWEL) said it has witnessed record sales in December. In a brief update, the chief executive of the cannabis and cannabidiol (CBD) wellness firm Henry Lees-Buckley said 2020 had been a “transformational year for the company” and that the company’s integrated supply chain allowed them to control quality and costs.

OKYO Pharma Limited (LON:OKYO) has appointed a chairman and a new chief executive. Industry veteran Dr Gary Jacob will assume the role of CEO, taking over from Willy Simon, who will become a senior non-executive director. Gabriele Cerrone is taking the chair of OKYO, but in a non-exec capacity.

Primary Health Properties PLC (LON:PHP) has told investors that it intends to pay four interim dividends in equal instalments of 1.55p in 2021. The level of the dividends implies a full-year dividend 6.2p, up from the 5.9p paid in 2020.

Sareum Holdings PLC (LON:SAR) said it has been formally granted a US patent over its SDC-1802 TYK2/JAK1 kinase inhibitor programme, which is in pre-clinical development targeting cancer. It means the company’s technology is now patented in all major territories, including Europe, Japan and China.

Bahamas Petroleum Company PLC (LON:BPC) told investors it is on-track to add further wells to its operations in Trinidad and also Suriname. At the same time, it confirmed on-target production with 500 barrels of oil per day being produced at the end of 2020. Now, with an extensive work programme on the slate the company is targeting production growth up to 2,500 bopd by the end of 2021.

Mkango Resources Ltd  (LON:MKA) has received approval from the TSX-Venture exchange for the issue of Mkango shares to Talaxis Limited. Talaxis is to be granted 1mln shares and in return has agreed to give up the right to buy 12mln Mkango shares at 6.6p each; Mkango shares currently trade at around 16p.

Chaarat Gold Holdings Limited (LON:CGH) has appointed Panmure Gordon as its joint corporate broker with immediate effect. Panmure will work together with the company’s existing brokers Canaccord Genuity Limited and finnCap Limited. 

Destiny Pharma PLC (LON:DEST) said chairman Nick Rodgers recently purchased 9,000 ordinary shares at a price of 88p apiece. Following the transaction, his total beneficial interest is 47,462 shares, representing 0.08% of the total issued share capital of the company.

Crossword Cybersecurity PLC (LON:CCS) told investors that it will hold a webinar panel discussion on Tuesday January 12, 2021 at 10am. Entitled “Cyber Security: skills shortage, automation deficit or poor hiring practices – what’s the reality?”, the online discussion will bring together academics, customers and industry professionals to discuss one of the biggest challenges in the industry. It will be chaired by Dr Robert Nowill, executive chair of The Cyber Security Challenge, with a panel including Amanda Finch, CEO at The Chartered Institute of Information Security; Darren Argyle, CISRO at Standard Chartered Bank; and Stuart Jubb, Managing Director for Crossword Cybersecurity’s consulting division.

6.59 am: Winning streak set to continue 

The FTSE 100 is seen on the front foot ahead of Thursday’s open with the benchmark poised to extend its winning streak.

CFD firm IG Markets sees the London index up around 36 points, making the price 6,887 to 6,890 with just an hour to go until the open.

It would mark a fourth successive daily gain since trading resumed for 2021.

Global equities were boosted by Wednesday’s news – prior to the disturbances in Capitol Hill – that the Democrats won the two seats contested in Georgia.

The one-sided result means incoming president Joe Biden will have greater control and as a result US government stimulus would find an easier pathway.

“Optimism was doing the rounds because there was a view that the future Biden administration would go down the stimulus route,” CMC Markets analyst David Madden highlighted in a note.

“The disturbance at Capitol Hill derailed the process of certifying the Biden electoral victory for a number of hours but it then continued so the final confirmation of Biden’s win should be relatively straightforward.”

On Wall Street, the Dow Jones closed Wednesday up 437 points or 1.44% finishing at 30,829.

The S&P 500 added 0.57% to 3,748 whilst the Nasdaq was down 0.6% at 12,740.

In Asia, Japan’s Nikkei rose 434 points or 434 points to trade at 27,490 and Hong Kong’s Hang Seng was down 0.42% at 27,578.

The Shanghai Composite was up 0.34% at 3,562.

Around the markets

The pound: US$1.3590, down 0.13%

Gold price: US$1,926 per ounce, up 0.23%

Silver: US$27.32 per ounce, up 0.09%

Brent crude: US$54.69 per barrel, up 2%

WTI crude: US$51.04 per barrel, up 2.2%

Bitcoin: US$37,239, up 6%

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