News

Commodity stocks hurt FTSE, vaccine safety concerns grow

Today’s session has been uneventful due to an absence of new positive news. 

Europe

This morning, European stocks got off to a good start as the bullish mood that was doing the rounds last week spilled over to today. The Biden administration approved the much-talked-about $1.9 trillion spending scheme late last week and that greatly influenced the overall mood in the markets. Also contributing to the positive sentiment is the recovery story but some doubt has been cast over that in light of the growing safety concerns with respect to the AstraZeneca-Oxford Covid-19 vaccine. There are worries the drug is connected to blood clots so some countries have stopped distributing it for now. It seems the recovery trade has hit a small bump in the road so that is contributing to the mildly bearish mood. The FTSE 100 is in the red as commodity stocks, BP, Royal Dutch Shell, Rio Tinto, Glencore and BHP Group, are weighing on the index.          

Flutter Entertainment replied to speculation in the press that it is contemplating selling off a small portion of FanDuel, its US subsidiary, via an IPO. The Parent of Paddypower said it is considering its options but no action will be taken for the time being. It was only three months ago that Flutter increased its holding in FanDuel to 95% so it seems a little strange that it is now thinking about disposing of a portion of the operation. Recently, several US states have eased up on their restrictions with respect to gaming so European firms moved in quickly. If Flutter is mulling a partial IPO it might be because they are keen to raise funds as a way of expanding the business.

Ascential shares are down over 4% as the group reported a 30% fall in full year revenue to £263.7 million. EBITDA slumped from £128.5 million to £50 million. The media group was hit by the restrictions. The cancelation of the creativity Festival in Cannes contributed to its marketing unit enduring a 60% fall in income.  It wasn’t all bad news in the update as the first two months of the year saw strong revenue and profit growth. 

Germany has suspended the distribution of the AstraZeneca-Oxford vaccine due to fears over its safety. The authorities in The Netherlands and Ireland have also halted administering the drug as there as worries the vaccine increases the likelihood of developing blood clots.

Deliveroo plans to raise £1 billion from listing on the London stock market while the value of the overall group is speculated to be in excess of £5 billion. The food delivery market exploded in the past year due to restrictions. Deliveroo has 6 million customers across 12 countries but it faces competition from Just Eat Takeaway – the largest food delivery company in the world outside out of China.        

Emmanuel Faber, the chairman and CEO of Danone, has forced out of the business as the food group came under pressure from activist investors.

Provident Financial shares slumped as its home credit business has seen a jump in complaints. The lender mapped out a £50 million plan to settle the disputes but if it is not approved, the unit could collapse. 

US

The Dow Jones retreated from its record high on Friday as trading has been lacklustre. It appears the bulls are taking a breather in light of solid gains that were posted last week. The New York empire manufacturing reading jumped to 17.4, the fastest rate of growth in almost two years. The update contributes to the narrative the US economy is recovering.   

AMC Entertainment shares are surging as the group plans to re-open theatres in LA today, the intention is to re-open 23 venues in LA on Friday. The stock saw a lot of volatility in the past two months as it was targeted by a group of retail investors because it was known there was a high level of short interest in the stock. The re-opening story has added a new dimension to its appeal.        

GenMark Diagnostics’ shares hit an all-time high as it agreed to be acquired by Roche for $1.8 billion, or $24.05 per share.

Caesars Entertainment, Penn National Gaming, NXP Semiconductors and Generac will be added to the S&P 500. This bodes well for the stocks as funds that track the well-known index will have to purchase the shares. 

FX

The CMC USD Index is up 0.1% as the 10-year yield is relatively high - it is off the recent highs but it is comfortably above the lows of last week. The fact the 10-year yield is not too far away from the 13 month high that was set recently, it is making the US dollar more attractive. The Federal Reserve is not in any way close to lifting interest rates but it is further along the line than the ECB or the Bank of England. It was a quiet day in terms of economic announcements from Europe. GBP/USD and EUR/USD are in the red due to the greenback’s move.

Commodities

Gold has been trading in a small range today. Last week, it slumped to a nine month low but it has enjoyed a small rebound since. It appears the recovery has run out of steam and that it is at a crossroads. If the metal holds above its recent low, it might look to retest $1,760, while a move lower could see it find support at $1,670.

Oil started out on a positive note this morning as the well-received industrial production and refining data from China boosted the energy market. The second largest economy in the world is hungry for minerals, but that didn’t stop WTI and Brent crude oil from rolling over.