FTSE 100 driven higher by miners (with Rio Tinto the exception)

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  • The FTSE 100 closes up 26 points
  • The index of blue-chips hits highest level since 21/2/20
  • US benchmarks higher

5.15pm: FTSE closes ahead


FTSE 100 index finished positively on Friday, while Wall Street surged as buyers returned once more to the table.


The UK index of the biggest shares closed up around 26 points, or 0.37%, at 7,234. The session peak was 7,243, while the low was 7,206.


In New York, the Dow Jones Industrial Average surged over 291 points to stand at 35,294, while the S&P 500 gained 25 points and the Nasdaq added nearly 49. Markets across the Pond have been boosted by big company earnings.


“It is a solidly-positive end to the week for markets, which have built on yesterday’s rebound to make further inroads into the losses of September,” noted Chris Beauchamp, chief market analyst at IG.


“Once more the sellers were able to push markets down, but not hold them there, and like a ball escaping from being held under water, US indices have rocketed higher over the past 48 hours,” he added.


“From the looks of it we are on our way higher over the medium term, and while FTSE 8000 and Dow 40,000 might be a way off yet, both are now arguably feasible goals over the next year.”


3.25pm: Half- hearted surge


The FTSE 100 has put in a half-hearted surge after a positive opening on Wall Street.


London’s index of heavyweight shares was up 32 points (0.5%) at 7,240.


US stocks started strongly on Friday, looking to end a choppy week positively following some resilient retail sales numbers and further corporate earnings news.


After half an hour of trading, the Dow Jones Industrial Average was 307 points, or 0.9% higher at 35,221, while the S&P 500 index gained 0.6%, although the tech-laden Nasdaq Composite only rose 0.2%.


September retail sales rose a seasonally adjusted 0.7% from the previous month, as households shrugged off supply constraints, the Delta variant and the end of enhanced unemployment benefits. August retail sales were revised up to 0.9% from 0.7%.


The rise in sales partly reflects higher consumer prices, which advanced 0.4% in September from August and 5.4% from a year earlier. Retail sales rose 13.9% in September from a year earlier.


In a quick reaction to the numbers, economists at ING said: “A strong performance from retail sales coupled with surging spending on travel and leisure suggests that the economy is re-accelerating after the recent Covid-related slowdown. This should help cement expectations for a November 3rd QE taper announcement from the Federal Reserve.


Over on the cryptocurrency markets, Bitcoin has burst through the US$60,000 level on expectations that the US stock market regulator will give the go-ahead for an exchange-traded fund linked to cryptocurrency prices.


Bitcoin currently trades at US$60,098, up US$2,607.


2.20pm: Defensive stocks out of favour


Nothing much changed among London’s blue-chips over the lunchtime session.


Defensive stocks, such as utilities Severn Trent (LSE:SVT) PLC, United Utilities PLC and consumer goods giant Unilever are out of favour (down by 1.5 – 2.3%), which might suggest that the market is roaring ahead but it isn’t.


The FTSE 100 is up 21 points at 7,228, loitering around the 7,230 level as it has for most of the day.


Banks have muscled miners out of the Footsie’s top echelon after an upbeat note on the sector from Barclays.


“Reflecting rising rate expectations, we lift EPS [earnings per share] and PTs [price targets] across a number of our banks. We are 15% ahead of co-consensus EPS on key OWs Lloyds, NatWest and HSBC, driven by revenues, and see further upside from higher rates and lower deposit betas. Valuations are attractive,” Barclays said.


HSBC Holdings PLC, up 2.0% at 434.7p, is the sector’s best p[erformer, closely followed by Barclays PLC (LSE:BARC) itself, which is up 1.9% at 198.18p. Standard Chartered PLC (LSE:STAN) is 1.9% firmer at 494.4p.


1.15pm: Footsie back at pre-pandemic levels


The FTSE 100 is at its highest level since 21 February 2020. On that particular day, the index plunged 247 points as the City got the first serious inkling of the crisis heading its way.


As one might expect, the recovery has seen winners and losers.


Gambling firms and miners figure prominently among the winners while anything to do with aeroplanes has got it in the neck and so, perhaps surprisingly, have housebuilders.


The good fortunes of the gambling firms has been more to do with mergers & acquisitions activity than any great surge in punters doing their cojones out of lockdown boredom.


Entain PLC (LSE:ENT), which owns the Ladbroke and Coral brands, has risen 142% since the Footsie was last at this level, largely because of bid interest from US outfit Draftkings Inc (NASDAQ:DKNG), which has indicated it is willing to pay 2,800p a share to get its hands on the British firm’s online gaming expertise.


Entain is trading just below 2,100p so the market is expecting the bid to fail.


Meanwhile, sector peer Flutter Entertainment, which owns Paddy Power and Betfair, is up 60% since February 2020. It has not received a bid approach but it is regarded as being “in play”, thanks to its stake in FanDuel, a US fantasy sports company valued at around GBP13bn.


The US was incredibly late to the legalised gambling scene and its operators are looking to make up for lost time by buying British and Irish bookies.


As for the miners, Glencore PLC (LSE:GLEN) and Antofagasta PLC (LSE:ANTO), both up 74% since 21 February 2020 battle it out to be the biggest beneficiary of the commodities boom.


Other big winners have been Royal Mail Group PLC, despite its recent fall from favour, and perennial stock market star, Scottish Mortgage Investment Trust PLC (LSE:SMT), the investor in rising disruptive technology and biotech companies. The former is up 138% and the latter 122%.


As for the hard-hit aerospace sector, it is little surprise that British Airways owner, International Consolidated Airlines SA is the worst performer, down 56%.


Over the same period, Melrose Industries, which owns automotive and aerospace engineer GKN (LSE:GKN), has fallen 39% while sector peer Rolls-Royce Group PLC has shed 35%.


Thanks to the Chancellor of the Exchequer’s generosity, Britain’s housing market has remained on fire like a bonfire of insanity throughout the pandemic but that has not stopped the likes of Taylor Wimpey PLC (LSE:TW.) and Berkeley group Holdings PLC from taking a bath.


Taylor Wimpey is down by a third over the last 18 months and Berkeley is off by 27%.


A bit further down the list of doom – or further up, depending on which direction you are coming from – is BP PLC (LSE:BP.), which is down 20% since February 2020. That’s impressive (in a bad way) given how much the oil price has shot up. Over the same period, Royal Dutch Shell has slipped just 5%.


Both oil giants are doing OK today, however, with BP PLC (LSE:BP.) up 1.4% at 362.65p and Shell 1.6% firmer at 1,788.8p.


11.55am: The FTSE 100 is up 15 points (0.2%) at 7,223.


Across the pond, US stocks look set for modest gains at the open on Friday ending a choppy week positively, as investors await another batch of major corporate earnings.


Futures for the Dow Jones Industrial Average were around 0.3% higher, while those for the broader S&P 500 index also added 0.3%, and tech-focused Nasdaq-100 futures rose 0.2%.


The Footsie spins its wheels


After a bright start, the Footsie has spent much of the morning marking time.


The index of blue-chip shares was up 17 points (0.2%) at 7,224, around the sort of level it was at in March 2020 when the word Covid-19 made the jump from the science pages to the front pages.


If the Footsie does at least maintain its station it will register its best week since May of this year.


Banks and oils feature prominently among the best performers; the former on expectations that interest rates will rise soon and the latter in line with rising oil prices.





The Footsie is making progress despite the strength of sterling, the mounting supply chain difficulties and the continued effect of the Covid-19 epidemic in the UK.


As regards the latter, the Office for National Statistics (ONS) revealed today that the first half of 2021 saw almost 100,000 more deaths in England and Wales than would be expected in a non-pandemic period.


The ONS said “excess deaths” due to dementia and Alzheimer’s disease since the beginning of 2020 were 4.3% above expected; this reduced to 7.7% below average by 2 July 2021.


Diabetes was the most common underlying cause of death that also mentioned Covid-19 on the death certificate (3.7% of deaths due to cause).


“There have been suggestions that the coronavirus pandemic has led to the deaths of many ‘vulnerable’ people who would have otherwise been expected to die in the following days, weeks or months,” said an ONS statistician, addressing the top of “mortality displacement” – the phenomenon by which a period of high mortality can be followed by below-average mortality.


“However, today’s analysis shows that while there is some evidence of this so-called ‘mortality displacement’ among older age groups – it does not account for the significant excess mortality seen since the beginning of the pandemic.


“In fact, we are yet to see any evidence that deaths in those aged under 65 or in private homes would have likely occurred over the following weeks or months, as deaths in these age groups and settings continue to be well above normal levels,” the statistician added.


10.30am: Oil price surge continues


Some markets have recovered more quickly from the shock of the pandemic than others.


The dear old Footsie, for instance, has only just recovered to levels seen in March of last year, just before the coronavirus effluent hit the stock market fan.


The FTSE 100 is up 17 points (-.2%) at 7,224, already below its highs for the day.


On the plus side, progress has been made despite sterling rising more than half a cent against the US dollar; a strong exchange rate is normally a millstone around the Footsie’s neck.


” The FTSE 100 has broken out to a new post-pandemic high, stretching its recent range by a few more points on the upside to hit a high of 7,242 this morning. This marks a roughly 400pt reversal from the Sep 20th intraday low. It’s been a very tight range of that size since April but there are encouraging signs the FTSE can yet end the year at its pre-pandemic level of 7,700,” said Neil Wilson at Markets.com.





“Why the rally? Key is energy – BP and Shell among the top performers of the last month and have a big index weighting. That’s BP and Shell, which are both up more than 20% in the last month as oil and natural gas prices have soared. WTI [the US oil benchmark] is back above $82 this morning,” he added.


BP PLC (LSE:BP.) and Royal Dutch Shell PLC (LSE:RDSB) are both around 1.5% firmer this morning.




9.15am: Miners (with one obvious exception) lead the market higher


Resource stocks, with one notable exception, are driving the FTSE 100 higher this morning.


London’s index of leading shares – a disproportionate number of which are mining stocks – was up 21 points at 7,229.


The recalcitrant miner is Rio Tinto PLC (LSE:RIO), which is down 1.3% at 5,044p after it lowered production guidance from its Pilbara operations in Western Australia, citing “modest delays” to completion of the new greenfield mine at Gudai-Darri and the Robe Valley brownfield mine replacement project due to the tight labour market in Western Australia.


The miner is not the worst blue-chip performer, however; that unwanted title goes to Pearson PLC (LSE:PSON) after its nine-month trading update.


READ Pearson sales up 10% but effects of Covid dragging on


Pearson’s chief executive Andy Bird said college enrolments and schools continue to be affected by coronavirus disruption.


The shares were down 2.4%.


8.30: Travel stocks well bid early on


The FTSE 100 opened 24 points in the green at 7,231.95 – making for a near 2% rise in the value of the blue-chip index over the last five trading days.


Still, traders remain nervous with contagion, inflation, stagnation, interest rates and tapering each and all providing a threat to the new-found stability (complacency?) in London.


Wall Street closed firmly in positive territory after hours Thursday, while Asia’s main markets followed suit.


Back here in the UK, it was a rare ‘up day’ for travel-related stocks with British Airways owner IAG flying 2.1% higher in early trade. Whitbread, owner of the Premier Inn budget hotel chain, nudged ahead 2%.


Evraz, up 2.1%, led the mining and metals revival that also included Anglo American and Glencore. Rio Tinto, off 2%, seemed to be on the other side of this trade.


With crude oil prices up almost 3% over the trading week it was hardly surprising to see BP among with risers with a 1.7% gain.


6.50 am: The tale of Boxer the cart horse (O-Level English Lit students will be the only people to remember this one)


Markets are busting out all overt – except in London, where the FTSE 100 is doing its impression of Boxer, the willing but plodding carthorse in Animal Farm.


Spread betting quotes suggest London’s index of leading shares will open around 27 points higher at 7,235; not bad but not a patch on the performance of US indices yesterday or Asian ones this morning.


Still, as CMC’s Michael Hewson points out, that would represent an 18 month high for the Footsie.


“There still seems to be an element of complacency amongst investors that rising energy prices won’t prompt a wave of demand destruction, especially if supply chain snarl-ups also feed into higher prices, which consumers then can’t absorb,” Hewson opined.


“Yesterday’s US PPI [producer] prices for September still came in at a record high, but there was evidence that the trend was starting to slow; however, in recent months we have seen evidence that US retail sales have been slowing, while consumer confidence has also fallen sharply from the peaks we saw at the start of, and during Q2.


“With that in mind today’s US retail sales numbers for September and University of Michigan confidence numbers could be key indicators as to whether we’ve seen a trough after the Delta related slowdowns seen during Q3,” Hewson said.


The Dow Jones blasted 535 points higher to close at 34,913 yesterday while the S&P 500 posted its best one-day gain since March, leaping 75 points to 4,438.


Asian markets have picked up the baton this morning with Tokyo’s Nikkei 225 388 points to the good at 28,939 and Hong Kong’s Hang Seng 221 points heavier at 25,184.


There is a small sigh of relief in Asia today as well as China rolled over CNY 500 billion of maturing MLFs [medium-term lending facilities] at an unchanged 2.95% and injected CNY 10 bio in short-term liquidity via the repos today. China announces its one and five-year Loan Prime Rates next week, but I expect any easing to come via a RRR cut to the banks, rather than a straight rate cut,” said OANDA’s Jeffrey Halley.


Confirming the suspicion that all of the excitement is happening somewhere else, London’s corporate schedule is a bit threadbare today, apart from a fiscal first-quarter (July-September) trading update from investment platform operator Hargreaves Lansdown PLC (LSE:HL.).


Around the markets


  • Sterling: US$1.3686, up 0.12 cents
  • 10-year gilt: 1.044%, down 4.86 basis points
  • Gold: US$1,794.90 an ounce, down US$3.00
  • Brent crude: US$84.62 an ounce, up 62 cents
  • Bitcoin: US$59,898, up US$2,407

6.50am: Early Markets – Asia / Australia


Shares in Asia-Pacific rose on Friday with the Taiex index (+2.4%) in Taiwan leading gains among the region’s major markets.


Taiwan Semiconductor Manufacturing Company (TSMC) shares rose more than 4.7% following its earnings release a day earlier.


TSMC reported a net profit of 156.3 billion Taiwan dollars (around US$5.57 billion) for the third quarter, above expectations of 149 billion Taiwan dollars.


China’s Shanghai Composite gained 0.46% while Hong Kong’s Hang Seng index surged 1.07%


In Japan, the Nikkei 225 jumped 1.56% and South Korea’s Kospi rose 0.84%.


Australia’s S&P/ASX200 gained 0.69% to 7,362 even as Australian Securities and Investments Commission (ASIC) said it recently observed ‘blatant’ attempts to pump share prices using posts on social media.


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