20th Jan 2021 17:01
(Alliance News) - Stocks in London ended higher on Wednesday as the US transfer of power got underway with President-elect Joe Biden to assume the highest office in the land.
The FTSE 100 index closed up 27.44 points, or 0.4%, at 6,740.39. The FTSE 250 ended up 278.57 points, or 1.4%, at 20,881.46, and the AIM All-Share closed up 4.61 points, or 0.4%, at 1,185.74.
The Cboe UK 100 ended up 0.3% at 670.13, the Cboe UK 250 closed up 1.3% at 18,106.56, and the Cboe Small Companies ended up 0.4% at 12,387.68.
In Paris the CAC 40 ended up 0.5%, while the DAX 30 in Frankfurt ended up 0.8%.
Stocks in New York were higher on a historic day, as Biden gets set to be sworn in as the 46th US president, amid hopes for more stimulus spending and an improved rollout of coronavirus vaccines.
The DJIA was up 0.7%, the S&P 500 index up 1.1% and the Nasdaq Composite up 1.7%.
"Traders are in risk-on mode as Joe Biden will be sworn in as the next US president later. Biden is keen to stimulate the economy. Last week, he announced a USD1.9 trillion relief package but the spending won't stop there as he also has big infrastructure, energy and education investment plans," said CMC Markets analyst David Madden. "There is a view in the markets that more spending is in the pipeline, after all, Biden will want to start his presidency on a positive note."
The 78-year-old six-term Democratic senator, who defeated Republican President Donald Trump in the November presidential election, ran twice unsuccessfully for the Oval Office - in 1988 and 2008. Biden also spent five decades in Washington and served two terms in the White House as vice president, under then-president Barack Obama.
On the London Stock Exchange, Pearson ended the best blue chip performer, up 8.6% after the education publisher said it expects profit and sales for 2020 to be in line with expectations, in spite of the Covid-19 pandemic disrupting business through closed schools and cancelled exams.
For the year, the FTSE 100 firm's sales declined by 10% year-on-year, with the only positive performance coming from the group's Global Online Learning business.
In the closely watched North American Courseware unit, sales fell by 13% for 2020, with Canada declining significantly due to the closure of schools and bookstores. However, the rise in digital purchases led to a recovery in the fourth quarter of the year.
"Pearson is far from an A* grade company, but it's not come out of the crisis bottom of the class either. A slew of disposals and a reasonably cash generative business model has kept the balance sheet in reasonably good state throughout the current crisis. That gives the group breathing room and the firepower to fund new digital expansions in the years ahead," said Hargreaves Lansdown's Nick Hyett.
Burberry Group closed up 3.9% after the fashion house said its full price sales recovered during its festive quarter, helped by growth in mainland China, though trading in Europe continued to be hurt by Covid-19 restrictions.
The luxury goods retailer expects "regional disruptions" due to Covid-19 for the remainder of its financial year, and it warned that the UK will lose its attractiveness as a luxury shopping destination following the end of the VAT retail export scheme. The policy allowed non-EU tourists to get VAT refunds.
In the 13 weeks to December 26, its third quarter and a period which includes the crucial Christmas stretch, retail revenue fell 4.3% year-on-year to GBP688 million from GBP719 million a year earlier. Comparable store sales fell 9%, following growth of 3% a year earlier, the luxury brand added.
At the other end of the large caps, GlaxoSmithKline ended the worst performer, down 2.2%. The pharmaceutical giant said it and peer Merck had opted to discontinue a clinical trial of bintrafusp alfa in patients with advanced non-small cell lung cancer. Glaxo and Merck entered a global strategic alliance to jointly develop and commercialise bintrafusp alfa in February 2019.
In March 2020, they agreed to amend the protocol of the Intr@pid Lung 037 study versus pembrolizumab, switching to an adaptive trial design based on pre-specified rules and a change to study endpoints to progression-free survival/overall survival from overall response rate/progression-free survival.
However, an independent data monitoring committee has now recommended that the trial be discontinued and this recommendation has been followed "as the study is unlikely to meet the primary efficacy endpoint".
The pound was quoted at USD1.3631 at the London equities close, up from USD1.3616 at the close Tuesday, having hit its highest level since early 2018 against the dollar earlier on Wednesday following well-received UK inflation figures.
UK inflation beat expectations for December, figures from the Office for National Statistics showed on Wednesday, as the pace of price increases doubled from November.
UK consumer prices rose 0.6% year-on-year in December, double the 0.3% rate seen in November. On a monthly basis, prices rose 0.3% in December, rebounding from November's 0.1% decline.
Annually, consensus had expected the inflation rate to come in at 0.5% and the monthly reading at 0.2%, according to FXStreet, with the figures beating forecasts on both counts.
Sterling hit an intraday high of USD1.3719 - its highest level since April 2018.
Commenting on the data, analysts at FXPro said: "These are quite low inflation numbers for normal times, but strong for the current situation. Investors and traders have stepped up their buying of the pound following this data, indicating strong demand, and an opportunity for sellers to pass on costs to consumers.
"This is an important signal of the health of the economy and removes some of the risk that the Bank of England will soon go for more stimulus. The weaker dollar and strong data helped GBPUSD return to the upside from the lower end of the rising channel above 1.37, meeting few technical resistance as far as 1.40."
The euro stood at USD1.2100 at the European equities close, down from USD1.2127 late Tuesday, ahead of the European Central Bank's interest rate decision on Thursday.
After December's monetary policy actions, the European Central Bank is set for a quieter start to the new year as the eurozone tackles a resurgence in coronavirus infections and mass vaccine roll-out.
The ECB Governing Council meets this week in Frankfurt, announcing its latest policy decision at 1245 GMT on Thursday. This will be followed by a press conference with President Christine Lagarde at 1330 GMT.
The ECB is widely expected to keep interest rates and other aspects of monetary policy unchanged after raising up its pandemic bond-buying programme last month.
"With trade weighed EUR below its 6-month average and the ECB already announcing new easing measures in Dec, little suggests that the January ECB meeting should affect the euro much. We don't expect a meaningful shift in verbal intervention. As the USD decline is expected to resurface in coming months and quarters, EUR/USD should move to 1.30 by the year-end," said analysts at ING.
Against the yen, the dollar was trading at JPY103.55, down from JPY103.91 late Tuesday.
On the US corporate front, Morgan Stanley reported strong growth in the final quarter of 2020 as the investment bank benefited from increased client activity and a "constructive market environment".
In the three months to December 31, the New York-headquartered investment bank recorded net attributable income of USD3.39 billion, up from USD2.24 billion the year before.
The stock was down 0.1% in New York.
Brent oil was quoted at USD56.30 a barrel at the equities close, up sharply from USD55.93 at the close Tuesday.
Gold was quoted at USD1,865.55 an ounce at the London equities close, higher against USD1,839.70 late Tuesday, amid dollar weakness.
"Precious metals were supported above all by a weaker US dollar, which fell further on the back of renewed strength for stock markets amid as US indices climbed to new records amid ongoing reflation trade. This pushed FX investors into foreign currencies as well as gold and silver," explained ThinkMarkets analyst Fawad Razaqzada.
The economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT.
The UK corporate calendar on Thursday has trading updates from accounting software provider Sage Group, stockbroker AJ Bell and from merchant bank Close Brothers. Contract-for-difference provider IG Group reports interim results.
By Arvind Bhunjun; [email protected]
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