FTSE 100 to see quiet start to quiet week for economic data releases

  • FTSE 100 up 10 points
  • Wall Street opens in the green
  • Inmarsat accepts GBP5.4bn bid by Viasat

2.55pm: US stocks open higher

The FTSE 100 was back in the green as US stocks opened higher on Monday afternoon.

London’s leading index added 10 points to 7,314, while Dow Jones Industrial Average in New York added around 190 points at 36,518.

The S&P 500 gained over16 points to stand at 4,714 and the tech-laden Nasdaq exchange added over 65 points at 16,037.

Wall Street shares raced out of the gate, building on Friday’s record gains, and as Congress passed a new infrastructure spending package worth over US$1 trillion late on Friday.

The bill was passed by the House of Representatives and now just needs President Joe Biden’s signature. The package would provide new funding for transportation, utilities and broadband, among others.

Last week, positive sentiment won over the equity markets as employment data and earnings were stronger than expected, while the Federal Reserve did announce that it will finally begin tapering its pandemic-era economic aid by the end of this month.

“US capital markets only want to hear one story at the moment as that’s what suits its buy-everything narrative,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, at Forex firm OANDA.

“That’s an economic recovery reinforced by total belief in Jerome Powell’s promises that post-the-Fed-taper, interest rates hikes will not be on the horizon.”

2.05pm: UK satellite firm Inmarsat to be acquired by US competitor Viasat for GBP5.4bn

The FTSE 100 was treading water in the early afternoon, down by 1 point to 7,303.

UK satellite firm Inmarsat has accepted a US$7.3bn (GBP5.4bn) by US competitor Viasat, as the sector continues to consolidate.

Inmarsat is owned by private equity firms, including Warburg Pincus and Apax Partners, after being taken private for US$3.4bn two years ago.

Viasat will pay US$850mln in cash, US$3.1bn in shares and the assumption of US$3.4bn of net debt.

“This is a transformative combination that advances our common ambitions to connect the world. The unique fusion of teams, technologies and resources provides the ingredients and scale needed for profitable growth through the creation and delivery of innovative broadband and IoT services in new and existing fast-growing segments and geographies,” said Viasat’s executive chairman Mark Dankberg.

1.10pm: Bitcoin, Ethereum buoyed by strong investor interest

The FTSE 100 was still in the red at lunchtime, down 4 points to 7,299.

Conversely, cryptocurrencies have been on a strong rally as investors have been piling in.

According to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, many people see the digital coins as a hedge against inflation.

“Some appear to have been enticed by the argument that the huge monetary stimulus programmes unleashed by central bank is fuelling inflation which will see the value of money decrease over time, whereas Bitcoin has a fixed limit on the number of coins which can be created,” she said.

“It’s a highly risky strategy given just how volatile the crypto currency is, amid other pressures on its valuation like clampdowns by authorities and even comments on social media.”

Bitcoin has risen 4% to US$65,955 on Monday, with Ethereum touching all-time highs of US$4,768.

The second largest cryptocurrency is up nearly 59% since the start of October, with its continued strength coming as blockchain technology becoming increasingly accepted by banks and organisations.

12pm: US set for positive open

US stocks are expected to open mostly higher, building on new records set last week after a better-than-expected employment report for October and as corporate earnings also continue to surprise to the upside.

Futures for the Dow Jones Industrial Average rose 0.22% in Monday pre-market trading, while the broader S&P 500 index added 0.07% and those for the tech-heavy Nasdaq 100 shed 0.02%.

US stocks closed higher on Friday after October non-farm payrolls data showed employment gains of 531,000, beating consensus estimates for 450,000 new jobs.

Also driving positive sentiment was Pfizer which said that its coronavirus (COVID-19) drug, used with an HIV drug, cut the risk of hospitalization by 89%.

On the day, the Dow Jones increased by 204 points, or 0.56%, to 36,328 and the S&P rose 0.37% to 4,698 while the Nasdaq gained 0.2% to 15,972.

“US futures are steady after another round of all-time highs on Friday,” commented Neil Wilson, chief market analyst at markets.com.

“Earnings are better than were expected, jobs growth is picking up and the Fed’s carried off the taper without undue alarm. Pfizer’s antiviral announcement on Friday is a major positive: Dr Scott Gottlieb said the US is ‘close to the end of the pandemic phase’.

“After last week’s round of policy meetings, this week we get a lot of jawboning from the likes of Powell, Bailey and Macklem on equality and diversity. We’ll also be watching the US CPI numbers on Tuesday, and UK growth numbers for the third quarter on Thursday.”

Meanwhile, the FTSE 100 dropped 10 points to 7,293 at noon.

11am: The Hut Group founder speaks of regret for London IPO

The FTSE 100 dipped in the red in late morning, albeit by just 1 point to 7,302.

THG PLC (LSE:THG) founder and chief executive Matt Moulding has said listing in London “just sucked from start to finish” and he wished to have chosen New York for a flotation.

The retailer has halved in value since the IPO in September 2020, but Moulding said that the business is “in better shape than it’s ever been” and “it’s just operating in this environment [that] sucks.”

When asked if he would IPO again, in an interview with GQ at the GQ Heroes conference, he said: “Shit, no. No. I wouldn’t… There are scenarios where if you’re not an individual leading a big company, then I think the UK market can work really well. But there aren’t any examples, I don’t believe, where an individual brings a big company to a public market and it can go well, certainly as you get to a certain scale anyway.”

Last month, the firm committed to appointing a non-executive chair.

Shares were flat at 204.18p in the late morning, having risen as much as 6% earlier on Monday.

9.40am: JD Sports responds to allegations over meeting with Footasylum boss

The FTSE 100 was nearing the flatline in mid-morning, up a mere 2 points to 7,306.

JD Sports Fashion PLC (LSE:JD.) dipped 1% to 1,107p after publishing a response to media reports on a meeting between executive chairman Peter Cowgill and Barry Bown, his counterpart at Footasylum.

The Sunday Times obtained a video that was secretly filmed by an unnamed competitor of the FTSE 100 group who opposed the JD’s GBP90mln takeover of Footasylum.

It is understood that the Competition and Markets Authority (CMA) has launched an investigation into this meeting, since it happened while it was examining the deal.

According to City rules, the two sides were allowed to hold business meetings but “no business secrets, know-how, commercially sensitive information, intellectual property or any other information of a confidential or proprietary nature” can be shared while a verdict is awaited.

The athleisure retailer said that the CMA has already been fully apprised of the content of the meeting, adding that it “firmly believes” that it does not represent wrongdoing or a breach of rules.

8.35am: Darktrace claws back losses

The FTSE 100 had a lukewarm start to the trading week, up only 7 points to 7,311.

Asian markets have taken a circumspect stance as traders worry recovery won’t be plain sailing, hampered by the rise in Covid-19 cases, power shortages and a shadow over the property sector.

Despite China’s exports beating forecasts and resulting in a record trade surplus, imports missed estimates, suggesting a slowdown of domestic demand.

“Further strength in the oil price boosted the majors, miners crept into positive territory and airline-related stocks were also in demand in the face of potentially recovering international travel. Less positively, there was some pressure on banking stocks as the Bank of England‘s inaction last week on interest rates undid some of the optimism which had been building on a potential boost to earnings,” said Richard Hunter, head of markets at interactive investor.

Darktrace PLC (LSE:DARK) was the top riser, up nearly 4% to 599.5p as it clawed back last week’s losses.

This might be being helped by some positive analysts opinions, with Berenberg saying, following a visit to Darktrace’s HQ in Cambridge, the recent share price capitulation “is a result of fear not fact”.

CRH plc, Polymetal International PLC (LSE:POLY) and Fresnillo PLC (LSE:FRES) followed suit.

Fallers were topped by ITV PLC (LSE:ITV), Standard Chartered PLC (LSE:STAN) and Informa PLC (LSE:INF), retracing gains made last week.

6.55am: FTSE 100 to see quiet start

The FTSE 100 is expected to open 3 points higher at 7,307 on Monday morning.

It’s not going to be a busy week in terms of economic data releases. The key numbers will be Wednesday’s US CPI for October and consensus looks for a slight uptick given the ongoing wage pressures and supply shortages.

“Global equities higher Friday once again driven by DM and not least US stocks while EM lagged driven by Chinese stocks. US stocks have had an impressive run with S&P500 higher in 16 out of the last 18 trading days and are now 3% above the peak early September,” analysts at Danske Bank said.

“The positive tone from Friday on Wall Street has not carried over to EM where markets are lower this morning. Futures in Europe and US are also lower as we head into a new week.”

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Monday as China’s exports rose 27.1% in October compared with a year ago.

That was higher than the 24.5% growth forecast in a Reuters poll.

In Japan, the Nikkei 225 slipped 0.35% and South Korea’s Kospi dipped 0.31%.

China’s Shanghai Composite rose 0.17% while Hong Kong’s Hang Seng index declined 0.66%

Australia’s S&P/ASX200 fell 0.06% to 7,452.20 points on Monday following its best week since May mostly due to positive sentiment surrounding central banks and their outlooks over the coming months.

Gold stocks in Australia benefitted last week from the RBA, the US Federal Reserve and the Bank of England indicating they are in no hurry to increase interest rates.


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