19th Jan 2021 08:13
(Alliance News) - Global stock markets were rallying on Tuesday, as the focus shifts for now from vaccine rollout rates to the prospects for a big US economic stimulus package.
The Senate confirmation hearing for Treasury secretary pick Janet Yellen on Tuesday is expected to give lawmakers a chance to go over President-elect Joe Biden's huge stimulus proposal.
US markets were closed Monday for a public holiday, but equities were rising in both Asia and Europe on Tuesday.
While Biden's inauguration on Wednesday is the key event for the week, traders will be keeping a close watch on Yellen's hearing, where the former Federal Reserve chief is expected to tell lawmakers the world's top economy could suffer if they do not approve a big spending plan.
"Economists don't always agree, but I think there is a consensus now: without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later," she was expected to say, the Wall Street Journal reported.
"Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job."
There are fears that Biden's USD1.9 trillion aid package, while welcomed by markets, could face stiff opposition from fiscal conservatives as it goes through Congress, watering down many of its elements. Investors also are concerned that the massive spending package – the third in less than a year – will lead to higher taxes.
Stephen Innes, chief global market strategist for Axi, said Yellen is likely to affirm the US Treasury's commitment to market-determined foreign exchange rates, whereas outgoing president Donald Trump had called for a weaker dollar.
"Her comments on fiscal policy will perhaps be of more interest to investors, which indirectly could encourage USD shorts on the view that monetary and fiscal policy are singing from the same song sheet meaning maximum policy overdrive."
He added: "With the focus on policy linked to inequality framing her testimony, it does hint of a dovish agenda for as far as the eye can see."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.7% at 6,764.38
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Hang Seng: up 2.7% at 29,630.38
Nikkei 225: closed up 1.4% at 28,633.46
DJIA and S&P 500: US markets were closed Monday for holiday
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GBP: up at USD1.3605 (USD1.3570)
EUR: up at USD1.2103 (USD1.2075)
Gold: firm at USD1,838.30 per ounce (USD1,836.71)
Oil (Brent): firm at USD55.30 a barrel (USD54.90)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1000 CET EU euro area balance of payments
1100 CET EU construction output
1100 CET Germany ZEW indicator of economic sentiment
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As the number of first doses delivered in the UK passed four million, ministers and officials said it was still too soon to rely on the jab "coming to our rescue", PA reports. The warning came as the latest official figures showed there was a record 37,475 people in hospital with the disease across the UK. As the pressure continues to mount, the NHS Confederation has said the health service could reach its limit for critical care beds this week. Northern Ireland's health minister Robin Swann said "real intense pressure" is expected on inpatient and intensive care units in the next seven days. Meanwhile scientists advising the UK government have warned there is a danger that people could start relaxing their guard as the vaccine started to become available.
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US President-elect Biden on Monday filled several administration posts, including naming former Goldman Sachs senior executive Gary Gensler to lead the Securities & Exchange Commission. Gensler served as chair of the US Commodity Futures Trading Commission between 2009 and 2014, "leading the Obama-Biden administration's reform of the USD400 trillion swaps market", Biden's transition team said in a statement. "Prior to his public service, Gensler worked at Goldman Sachs, becoming a partner in the mergers & acquisition department, headed the firm's Media Group, led fixed income & currency trading in Asia, and lastly co-headed Finance, being responsible for the firm's worldwide controllers and treasury efforts," the statement added. Gensler - who worked as chief financial officer for Hillary Clinton's 2016 presidential campaign - is tipped to roll back efforts to ease regulations imposed on the financial sector following 2008's global crisis.
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BROKER RATING CHANGES
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GOLDMAN SACHS RESUMES TESCO WITH 'BUY' - TARGET 295 PENCE
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COMPANIES - FTSE 100
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Rio Tinto hailed a "strong" operational performance in 2020, with its Pilbara iron ore asset in Australia posting an output rise, shaking off Covid-19 and a cyclone at the start of the year. Aside from the virus outbreak and being hit by brute weather early in the year, Rio Tinto's 2020 will be remembered for outcry and regulatory scrutiny after the company blew up a 46,000-year-old Aboriginal heritage site to expand the Pilbara iron ore mine in Western Australia. Rio on Tuesday warned the regulatory impact from that event "remains unknown". Pilbara iron ore shipments rose 2% annually in the fourth quarter to 88.9 million tonnes and were up 1% over 2020 to 330.6 million tonnes. Pilbara output rose 3% year-on-year to 86.0 million in the final quarter and by 2% over the whole year to 333.4 million tonnes.
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Experian reported a better-than-expected third quarter. The credit-checking firm delivered organic revenue growth of 7% for the three months to December 31 and total revenue growth of 10% at constant exchange rates. By region, North America posted organic revenue growth of 9% and Latin America growth of 13%, while UK & Ireland saw revenue fall 2% and EMEA/Asia Pacific reported an 11% decline. "Experian is performing very well, even in the exceptional circumstances created by the pandemic, and we expect to deliver a strong performance for this financial year. This again illustrates the resilience of our business. We remain highly focused on investing to sustain this performance and to take full advantage of the recovery when it comes," said Chief Executive Brian Cassin. Experian expects organic revenue growth for the fourth quarter will be around 3% to 5%, with full-year benchmark earnings before interest and tax in a range of USD1.36 billion to USD1.38 billion.
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British Land said it has hired Tesco's deputy chief financial officer to be its own finance head. Bhavesh Mistry will join British Land as CFO no later than August 1, and in the meantime David Walker will continue in his role as interim CFO.
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COMPANIES - FTSE 250
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AO World said a pandemic-driven uplift in demand continued throughout its third quarter, resulting in its "strongest ever" peak trading period over the Black Friday shopping event and the run up to Christmas. In the three months to December 31, the online electrical appliance retailer recorded UK revenue of GBP457.3 million, up 67% year-on-year, and German revenue of EUR73.6 million, up 77%. "We look forward to the last quarter and the next financial year with confidence as the structural shift to online is cemented in consumers' minds by the outstanding service millions of new customers have received in 2020. This is compounded by the ongoing tailwinds we expect to be driven by working from home and associated usage and appreciation of electrical products so essential to our day to day lives," said AO World.
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Premier Foods also said its third quarter was "exceptional", as pandemic restrictions saw more consumers eating at home. Sales grew 9.0% in the 13 weeks to December 26 and were up 13% in the year-to-date, the food producer said. "The vast majority of the group's Grocery brands continued to see substantial growth with more meals eaten at home by consumers, reflecting further pandemic lockdown restrictions in the UK. Sales of Sharwood's cooking sauces grew by 40% in Q3 due to strong commercial plans and new product launches while Bisto and Batchelors both reported healthy double digit sales growth," the firm said. The Mr Kipling cake brand is track for another record year, Premier Foods noted. The company said it now expects trading profit for its current financial year to be in the range of GBP145 million to GBP150 million. This compares to a trading profit of GBP132.6 million in the financial year ended March 2020 - meaning at the high end of guidance, Premier Foods could report 13% growth in profit for its current year.
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Gold miner Centamin said both its fourth quarter and full-year results were in line with revised guidance. Gold production from the Sukari gold mine for the fourth quarter of 2020 was 67,996 ounces, in line with quarterly guidance of around 60,000 to 70,000 ounces though down 54% on a year ago. For the full-year, production amounted to 452,320 ounces, again in line with the guidance range of 445,000 to 455,000 ounces but down 6% on 2019. Revenue for the fourth quarter was USD150 million, generated from gold sales of 79,535 ounces at an average realised gold price of USD1,887 per ounce sold. Revenue for the full-year was USD829 million. Centamin said its guidance is unchanged, seeing 2021 gold production of 400,000 to 430,000 ounces.
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Tuesday's Shareholder Meetings
Tracsis PLC - AGM
Pacific Horizon Investment Trust PLC - GM re share issue
Flutter Entertainment PLC - GM re replacement of CREST
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By Tom Waite; [email protected]
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