1st Feb 2021 12:07
(Alliance News) - Stock prices in London were sharply higher at midday on Monday with precious metal miners continuing to benefit from a rise in silver, which hit an eight-year high as Reddit users turned their attention to commodities from video game retailers.
The FTSE 100 index was up 85.12 points, or 1.3%, at 6,492.58. The mid-cap FTSE 250 index was up 219.31 points, or 1.1%, at 20,447.73. The AIM All-Share index was up 15.23 points, or 1.3%, at 1,175.90.
The Cboe UK 100 index was up 1.3% at 645.35. The Cboe 250 was up 1.4% at 18,042.31 and the Cboe Small Companies up 0.5% at 12,109.54.
In mainland Europe, the CAC 40 in Paris was up 1.5%. The DAX 30 in Frankfurt was up 1.4%.
In the FTSE 100, gold and silver miner Fresnillo was the standout performer, up 18%, while peer Polymetal International was up 7.2%, benefiting from a rise in silver prices. In the FTSE 250, Hochschild Mining was up 12%.
Spot silver was priced at USD28.49 an ounce in London at midday Monday, up from USD27.04 an ounce late Friday and USD25.38 on Wednesday last week. The precious metal breached the USD30 mark in early trade to hit its highest level in eight years as users on Reddit forum r/WallStreetBets intensified calls for a short-squeeze on the commodity.
One user on the WSB forum said: "SLV will destroy the biggest banks, not just some little hedge funds". #silversqueeze is still trending on social media platform Twitter.
WSB users aimed to cause a 'short squeeze' in the market by buying shares in the BlackRock iShares Silver Trust ETF, lifting the price of silver and forcing physical deliveries of the precious metal.
IG Group's Josh Mahony commented: "Silver appears to be the latest toy for the Reddit community, with the precious metal spiking 10% in early trading today. Fresh off a historic week that saw a host of downbeat US stocks dramatically appreciate, the latest targeting of silver prices highlights the lack of physical products to back the products currently being offered on Wall Street. iShares Silver Trust ETF enjoyed a USD1 billion inflow on Friday, with a weekend of physical silver shopping around the globe ensuring that those institutions will find it tough to source enough silver to back the latest surge in investment.
"From a market perspective, we have enjoyed a relatively positive start to the week after recent declines in anticipation of a hedge fund sell-off to pay for recent losses on the likes of Gamestop and AMC. However, while we have seen some calm instilled this morning, there is still huge risk as retail traders sees to progressively target inherent weaknesses within financial markets."
JD Sports Fashion was up 6.0% after the sportswear retailer said it has agreed to buy Baltimore, Maryland-based footwear and apparel streetwear retailer DTLR Villa for USD495 million. JD Sports said the acquisition of DTLR will enhance its presence in the north and east region of the US and complements its existing JD and Finish Line brands alongside the recent acquisition of Shoe Palace based on the west coast.
At the other end of the large caps, Pearson was the worst performer, 2.5% lower, after UBS downgraded the education publisher to Sell from Neutral.
On AIM, ASOS was up 6.3% after the online fashion retailer said it has acquired four brands from beleaguered Arcadia Group, including UK high street staples Topshop and Topman.
ASOS will pay GBP265 million for the four brands - including Miss Selfridge and HIIT as well - and also buy GBP30 million in stock upfront. HIIT was a sub-brand of menswear retailer Burton, which ASOS has chosen not to acquire. ASOS is only buying the stock and the brands, so the physical stores still will close.
The pound was quoted at USD1.3714 at midday on Monday, flat from USD1.3712 at the London equities close Friday, after disappointing UK economic data.
UK manufacturing sector activity slowed in January as temporary supply-chain disruptions caused by Covid-19 restrictions hurt orders, IHS Markit said.
The seasonally adjusted IHS Markit/CIPS purchasing managers' index fell to a three-month low of 54.1 points in January, down from December's three-year high of 57.5. Still, the latest reading beat the market forecast, cited by FXStreet, of 52.9 points. It was also above the 50.0 mark, which separates growth from decline.
Markit highlighted that the upturn in the UK manufacturing sector slowed sharply at the start of 2021.
Output growth eased and new orders fell slightly as producers faced weaker inflows of new export work and temporary supply-chain disruptions caused by Covid-19 restrictions and transport delays, mainly at ports. This followed the end of the Brexit transition period on New Year's Eve, Markit said.
The euro was priced at USD1.2080 at midday, down from USD1.2135 late Friday, despite growth in the eurozone's manufacturing economy remaining resilient in January.
Markit said the eurozone manufacturing PMI index recorded 54.8 points in January, down slightly on December's 55.2 and little-changed on the earlier flash reading. A figure above 50.0 points denotes the sector is in growth territory. Markit highlighted that January's figure was amongst the highest seen over the past two-and-a-half years.
In Germany, at 57.1 points in January, the headline IHS Markit/BME manufacturing PMI remained firmly inside growth territory, albeit down from December's near three-year high of 58.3.
Against the yen, the dollar was trading at JPY104.90, up from JPY104.75.
Brent oil was quoted at USD55.60 a barrel Monday at midday, down from USD56.00 at the London equities close Friday. Gold was trading at USD1,860.54 an ounce, up from USD1,857.20.
US stock market futures were pointed to a higher open following sharp losses suffered on Friday. The Dow Jones Industrial Average was called up 0.8%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.2%.
By Arvind Bhunjun; [email protected]
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