FTSE 100 stutters amid inflation worries; Lloyds higher as bad debts charges ease

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The FTSE 100 opened lower amid worries over rising prices with the markets largely ignoring the assessment given by Fed Chair Jay Powell that the inflation outlook was “soft”.

Here in the UK, the enthusiasm around Boris Johnson’s roadmap out of lockdown has largely dissipated.

That said travel stocks such as TUI (LON:TUI) and IAG (LON:IAG) were well bid early on, rising 3.2% and 1.3% respectively.

Jet engine maker Rolls Royce (LON:RR.), a beneficiary from any revival of the international airlines, was up 1.5%.

Top of the Footsie leaderboard was Lloyds (LON:LLOY), which raced ahead 4.1% after a drop in bad loan charges.

Chris Beauchamp, chief market analyst at IG, wasn’t getting too carried away by the latest results.

“The pandemic might have begun to ease, but the economic consequences will remain with us for quite some time,” he said.

“A route out of lockdown is now planned by the government, but only slowly, and as a result, the economic outlook is not likely to improve any time soon.

“Low rates mean profitability will remain under pressure, but at least any further disruption to the UK high street and consumers is likely to be minimal.”

Finally, demand for disinfectant boosted the fortunes of household goods giant Reckitt Benckiser (LON:RB.) and with it the share price, which advanced 1.4%.

6.50 am: Footsie called lower 

The FTSE 100 is predicted to start in the red on Wednesday as global markets continued to be rattled by concerns over possible inflation.

Spread-better IG expects the blue-chip index to open down around 50 points after closing on Tuesday with a 14 point gain to 6,625.

Markets appear to be highly uncertain around the outlook for the global economy as certain countries begin considering a return to normalcy following the pandemic, with concerns over inflation proving a particular issue for traders as well as whether some central banks may look to raise interest rates again once businesses begin to reopen.

The lower expected start for the FTSE 100 follows a mixed performance in US markets overnight, with the Dow Jones Industrial Average closing up 0.05% at 31,537 while the S&P 500 climbed 0.13% to 3,881. The Nasdaq was the negative outlier, falling 0.5% to 13,465.

Wall Street was pulled off most of its initial lows by the testimony of Fed chair Jay Powell to the Senate Banking Committee yesterday as he sent no signals he was overly concerned about a recent sharp rise in long term US bond yields while also remaining relatively soft on the inflation outlook.

However, inflation concerns and worries about interest rate hikes hit Asian markets this morning, with Japan’s Nikkei 225 falling 1.43% while Hong Kong’s Hang Seng tumbled 3.13%.

Back in the UK, investors may eye Bank of England governor Andrew Bailey’s comments at the UK Treasury Select Committee this afternoon for any details on how the central bank views the economic and inflationary outlook for Britain.

On currency markets, the pound was up 0.3% to US$1.416 against the dollar, mostly bolstered by hopes the UK may be one of the first major economies to begin easing restrictions this year.

Around the markets:

Sterling: US$1.416, up 0.3%

Brent crude: US$64.99 a barrel, down 0.58%

Gold: US$1,807 an ounce, up 0.07%

Bitcoin: US$49,916, down 1.98%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were lower on Wednesday following a mixed finish on Wall Street, where the Dow Jones Industrial Average reversed steep losses.

The Hang Seng index in Hong Kong dived 2.91% while the Shanghai Composite in China slipped 1.81%.

In Japan, the Nikkei 225 fell 1.61% while South Korea’s Kospi dropped 2.45%.

Shares in Australia slipped, with the S&P/ASX 200 closing 0.90% lower.

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Proactive Australia news:

Corazon Mining Ltd (ASX:CZN) (OTCMKTS:CRZNF) has received firm commitments for a placement to raise approximately A$2 million from sophisticated, professional and institutional investors.

Galena Mining Ltd (ASX:G1A) (FRA:GM6) has returned more broad high-grade lead-silver results in the fifth and final batch of assay results from the 2020 drilling program at Abra Base Metals Project in Western Australia.

Musgrave Minerals Ltd (ASX:MGV) (FRA:6MU) has received further strong gold results of up to 3 metres at 26.4 g/t from 32 metres at White Heat prospect within the high-grade Cue Gold Project in Western Australia.

Lotus Resources Ltd (ASX:LOT) has received binding commitments to raise A$12.5 million (before costs) through the placement of 100 million shares at A$0.125 per share to sophisticated and professional investors.

Great Boulder Resources Ltd (ASX:GBR) has launched a $3.1 million capital raising to fund aggressive exploration programs at the Side Well and Whitehead gold projects, both in WA.

Perseus Mining Ltd (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) (FRA:P4Q) has recorded a 61% increase in group net profit after tax to A$49.1 million in the first half of FY21 compared to the corresponding period in FY20, reflecting its successful transition to a multi-mine, multi-jurisdictional gold producer.

Argonaut Resources NL (ASX:ARE) has acquired a package of highly prospective uranium exploration licences known as the Frome Project south of Lake Frome in South Australia.

archTIS Ltd (ASX:AR9) has entered a 12-month agreement with the Office of the Australian Information Commissioner (OAIC) for the company’s Kojensi SaaS platform.

Aeris Resources Ltd (ASX:AIS) is trading higher after recording a 260% year-on-year rise in net profit for the half-year ended December 31, 2020, which incorporated the results of the Cracow Gold Operations, acquired on July 1, 2020.

Latin Resources Ltd (ASX:LRS) (FRA:XL5) has confirmed very high-grade halloysite, with grades of up to 37% halloysite, and ultra-bright white kaolin in detailed test-work on samples from the company’s 100%-owned Noombenberry Project in WA.

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