15th Mar 2021 07:00
(Alliance News) - Stocks in London are expected to get the new week off to a positive start, helped by promising industrial data from China, but central banks are expected to dominate headlines the rest of the week.
IG says futures indicate the FTSE 100 index of large-caps to open 30.13 points, or 0.4%, higher at 6,791.60 on Monday. The FTSE 100 index closed up 24.51 points, or 0.3%, at 6,761.47 on Friday.
"This morning's European open is expected to pick up where we left off last week, despite a lacklustre Asia session which saw the latest Chinese retail sales and industrial production data get off to a reasonably strong start for 2021," CMC Markets analyst Michael Hewson said.
The Japanese Nikkei 225 index closed 0.2% higher Monday. In China, the Shanghai Composite is down 1.3%, while the Hang Seng index in Hong Kong is up 0.3%. The S&P/ASX 200 in Sydney ended slightly higher.
China's industrial output and retail sales surged in the first two months of the year, official data showed Monday, underscoring the country's recovery from the coronavirus pandemic.
Industrial production spiked a forecast-busting 35% on-year, the biggest bounce in decades, while retail sales also beat expectations with 34% growth.
But the National Bureau of Statistics said the latest surge was in part due to distortions from last year's "low base in the same period".
Both indicators plunged in the early months of 2020 after Covid-19 surfaced in central China and spread rapidly around the country.
But the world's second-largest economy became the first to bounce back after imposing strict lockdowns and virus control measures, clocking a full-year economic growth of 2.3%.
"After removing the base effect, the growth of main indicators is stable and macro indicators are in a reasonable range," said the NBS.
Data for January and February were released together to eliminate the influence of uncertainties brought about by China's Lunar New Year holiday, which typically falls within this period.
Industrial output in the first two months rose 17%.
Industrial activity was likely boosted by the fact that many migrant workers were discouraged from returning to their hometowns because of Covid-19 restrictions, meaning some factories remained open through the holiday or reopened sooner.
"We expect activity to remain strong in the near-term, as the easing of virus restrictions boosts consumption and fiscal stimulus among key trading partners should keep exports strong," said Capital Economics senior China economist Julian Evans-Pritchard.
In the US on Friday, Wall Street ended mostly higher after US President Joe Biden finally signed his enormous coronavirus stimulus package into law, while a spike in bond yields hurt the tech sector. The Dow Jones Industrial Average advanced 0.9% and the S&P 500 by 0.1%. The Nasdaq Composite, however, gave back 0.6%.
CMC's Hewson said: "There appears to be increasing optimism that with the signing last week of the USD1.9 trillion stimulus deal, which made it through both US houses undiluted, that we look set for a big economic rebound in the second half of this year, with the risk we could also see a sharp rise in inflationary risk, which might force the US Federal Reserve to tighten monetary policy sooner rather than later."
He noted, however: "Rising bond yields, with the US 10-year yield now above 1.62%, and at a one year high, have served to cast doubt about the longer-term sustainability of some of the more expensive areas of the US market, and through we did see the Nasdaq break a run of three successive weeks of losses, the continued rise in US long term yields is prompting some anxiety about sky high valuations across a number of areas."
Sterling was quoted at USD1.3910, down from USD1.3985 at the London equities close on Friday.
UK house prices climbed again in March, property listing site Rightmove said on Monday, as buyer demand reached record levels.
The average price of new property coming to the market was 0.8% higher monthly in March at GBP321,064. Annually it was up 2.7%.
"With demand being driven by the side effects of the lockdowns and the additional spur of government incentives, we anticipate further price rises during the traditional spring selling season," Rightmove said.
The housing market found support in UK Chancellor of the Exchequer Rishi Sunak's budget statement earlier in March. Sunak extended the stamp duty holiday on UK house purchases until the end of June. He also outlined a mortgage guarantee scheme to help buyers with small deposits get on the property ladder.
The euro traded at USD1.1931 early Monday, lower than USD1.1940 late Friday. Against the yen, the dollar rose to JPY109.29 versus JPY109.00.
German Chancellor Angela Merkel's conservatives suffered heavy losses in two key regional elections Sunday, as voters punished the party for a series of pandemic setbacks and a face-mask procurement scandal.
Merkel's centre-right Christian Democratic Union was headed for its worst-ever score in the southwestern states of Baden-Wuerttemberg and Rhineland-Palatinate, according to estimates from public broadcasters ARD and ZDF.
Both votes were viewed as a snapshot of the national mood ahead of a general election on September 26 – when Merkel's successor will be chosen.
Gold was quoted at USD1,724.80 an ounce early Monday, higher than USD1,710.65 on Friday. Brent oil was slightly higher at USD69.70 versus USD69.63 late Friday.
AstraZeneca on Sunday has insisted its coronavirus vaccine is safe, after concern around blood clots prompted Ireland to become the latest European country to suspend use of the jabs.
A review of available safety data in more than 17 million people who have been vaccinated across the UK and EU has shown no evidence of an increased risk, the pharmaceutical giant said. People across the UK are still being urged to get their vaccine.
The decision followed reports of serious clotting in adults in Norway which left four people in hospital.
The number of cases of blood clots reported is lower than the hundreds of cases that would be expected among the general population, AstraZeneca's Chief Medical Officer Ann Taylor said.
Flutter Entertainment is considering spinning out US sports betting subsidiary FanDuel as a separately traded company on a US stock exchange, CNBC reported late Friday.
The London-listed bookmaker confirmed the television news report, according to several other media reports, saying in a statement: "Flutter regularly evaluates its organisational and capital structure to assess how best to position itself to deliver upon the group's strategy.
"Options including the listing in the US of a small shareholding in FanDuel are being considered but no decision has been made at this time. Should a decision be made to proceed with a listing in due course, an announcement will be made as appropriate."
It is a quiet day in the international calendar on Monday, with only the NY Empire state manufacturing index at 1330 GMT of any note.
Focus for the rest of the week, central banks - and inflation worries - will be in central focus, as we get three more major central banks rate decisions: the US Federal Reserve on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday.
Speaking in a note on Friday, BD Swiss analyst Marshal Gittler said: "The Fed and Bank of England meetings should be fairly routine, while the outcome of the Bank of Japan meeting looks to be unusually complicated and uncertain."
The UK corporate calendar on Monday has annual results from Ascential and SThree.
By Paul McGowan; [email protected]
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