The mood in European equity markets is subdued today as health woes linger.
Europe
A number of major economies are still dealing with high numbers of new Covid-19 cases so that is hanging over sentiment. US politics is influencing stocks too. The riot in the Capitol building last week is still engulfing the Trump administration. On the other hand, there is talk that President-elect Joe Biden will unveil trillions in new stimulus measures this week. The FTSE 100 has fallen the most out of the well-known European indices on account of the rally in sterling. Internationally focused stocks like Unilever, British American Tobacco, AstraZeneca and GlaxoSmithKline are feeling a little pressure because the move higher in the pound impacts their profits.
The DIY boom and the robust demand in the construction sector have helped Kingfisher in recent months as the group owns B&Q and Screwfix. Like-for-like (LFL) group sales in November and December increased by 11.4% and 22.1% respectively. Iberia, as well as France, suffered in November but they recovered in December. The British and Irish businesses performed well in both months. The online division saw stellar growth as sales surged an average of 154.8% across the months. B&Q is the retail side of the business, while Screwfix supplies building contractors – the unit is on track to register £2 billion in sales this financial year. In light of the recent sales numbers, the company is comfortable with the top end of forecasts from analysts.
Land Securities, the property specialist, has struggled for much of the past year as the pandemic has severely impacted the retail sector, so collecting rents has been difficult. This morning’s update covered the December quarter. In the timeframe, the company was due to collect £112 million in rent but it only collected 65% of the amount. Last year’s metric was 94%, so that highlights the pain caused by the health emergency. 36% of the rent due from the retail business was collected, by contrast, the office division received 96% of the due rent. As a reaction to the health crisis, Land Securities announced an £80 million support fund for tenants as a way of providing assistance. So far, £24 million has been allocated to clients. If rent is not collected it does not necessarily mean that it will never be received. Between late March and late December it collected 80% of the total rent it was owed.
Games Workshop Group posted a solid set of first half year numbers. Revenue increased by 25.8% to £186.8 million. Pre-tax profit came in at £92 million, up 55% on the year. The company sells well-known tabletop games like Warhammer – which witnessed a jump in demand thanks to the restrictions. The stock is in the red today but seeing as it posted a record close yesterday it seems that a lot of positive news was baked into the price.
Vistry, the housebuilder, confirmed that demand has been strong. Full year pre-tax profit is predicted to come in at the higher end of expectations of £140 million. The group will pay a modest final dividend. Vistry’s update today was similar to that from Barratt Developments last Friday.
US
The S&P 500 is a touch higher as it regained some of the ground in lost yesterday. Chatter that Mr Biden will reveal extra stimulus plans this week seems to have put a floor under stocks as some traders are worried about exiting the market for fear of a huge spending plan being posted. The NASDAQ 100 is fractionally in the red following last night’s relatively large loss.
Zoom Communication shares are a little higher today even though the company announced plans to raise $1.5 billion from a stock issue. The group’s video chatting services saw huge demand as the pandemic prompted a surge in remote working. Zoom’s share price is up roughly 330% in the past 12 months so the group is seeking to take advantage of the high valuation and raise more cash.
Walmart is teaming up with Ribbit Capital, the investment group that backed the Robinhood app and Credit Karma, to create a new fintech group to grow its retail financial services business. Robinhood has been a roaring success in terms of onboarding retail clients, so that bodes well for Walmart.
Twitter and Facebook are still in focus following the suspension of President Trump’s accounts on the social media platforms. The tech sector as a whole is at risk of being subjected to tougher regulation but the social media titans are at the centre of the attention because of the riot in the Capitol Building.
Boeing delivered 157 aircraft in 2020 but it had over 600 cancellations. The group’s reputation took a pounding because of the 737 Max scandal and the pandemic made matters worse.
FX
The US dollar index is a little lower on the session following on from the three week high that was set yesterday. In the past week the greenback has enjoyed a decent rebound but the positive move seems to be taking a breather today. EUR/USD is essentially flat on the session.
The CMC GBP Index is up 0.65% as we heard from Andrew Bailey, the head of the Bank of England. The central banker played down the possibility of introducing negative interest rates as he described the policy as ‘controversial’. Sterling hit its highest level in over own week on the back of the update.
Bitcoin’s volatility has cooled following its 20% tumble yesterday, which was a result of the FCA’s warning to retail clients about the risks associated with the asset. Today’s trading range has been relatively low as the dust a settled. It currently trading at $34,500, up 1.5% today.
Commodities
Gold had had a lacklustre session as volatility in the markets as a whole has been low, especially the US dollar. The yellow metal has been in a downtrend for nearly one week and should it break below yesterday’s low, it could target $1,800.
WTI and Brent crude oil are higher today as the same old supply worries are doing the rounds. Last week Saudi Arabia announced plans to cut output by 1 million barrels per day in February and March. Tomorrow’s EIA report is expected to show that US oil stockpiles will fall by 2.6 million barrels, which would be the fifth consecutive week of declines.
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