16th Feb 2021 12:09
(Alliance News) - Stock prices in London were mixed at midday on Tuesday, easing from earlier highs, with miners among the blue-chip risers, as investors look ahead to the return of US equity markets after a holiday.
London's FTSE 100 index was up just 2.11 points at 6,758.22. The FTSE 250 index was down 34.16 points, or 0.2%, at 21,384.74, and the AIM All-Share index was flat at 1,228.11.
The Cboe UK 100 index was flat at 671.81 points. The Cboe 250 was up 0.2% at 18,886.02, and the Cboe Small Companies was up 0.1% at 12,748.71.
The CAC 40 index in Paris and Frankfurt's DAX 30 were both flat.
"The return of US markets from their long weekend means that the focus for all investors will be on the Biden admin's push for a big stimulus programme, while European markets struggle to maintain their momentum after yesterday's gains. The FTSE 100 has managed to make some more gains, building on the bullish surge in Monday's session, but overall Europe will look to the US for more concrete direction," said IG Group's Chris Beauchamp.
In the FTSE 100. Glencore was the best performer, up 3.0%, after the Swiss miner and commodities trader reinstated its dividend and outlined climate change goals.
Glencore is a major coal producer. It promised on Tuesday "responsible stewardship of declining coal business over time as industry decarbonises". The miner also set a net zero carbon emissions ambition for 2050. It said it will put its climate strategy to an advisory vote at its annual general meeting in April.
For 2020, Glencore reported adjusted earnings before interest, tax, depreciation and amortisation of USD11.56 billion, down 0.3% from USD11.60 billion the year before due to weaker coal prices.
The result beat the company-compiled analyst consensus for adjusted Ebitda of USD10.69 billion.
Glencore's pretax loss widened sharply to USD5.12 billion from USD888 million the prior year, driven by impairment charges which more than doubled to USD5.72 billion from USD2.32 billion.
Glencore recommended a payout of USD0.12 per share, having scrapped its dividend in August last year due to the pandemic.
"Glencore reinstated its divi at USD0.12/sh for 2021 (3.0% yield), but with spot free cash flow of USD8 billion (15% yield), commodity prices likely to continue to rise, and net debt of USD15.8 billion in the USD10-16 billion target range, there is clear upside to capital returns," said analysts at Jefferies.
Peer BHP Group was 2.5% higher, reversing earlier losses, after reporting positive interim earnings. The Anglo-Australian miner hiked its interim dividend, as profit and revenue rose on higher metal prices and strong output at several of its assets.
For the six months to the end of December, pretax profit rose 13% to USD8.83 billion from USD7.79 billion in the same period a year before, on revenue that grew 15% to USD25.64 billion from USD22.29 billion.
BHP's profit performance was helped by a rise in iron ore and copper prices, as well as record output from its Western Australian Iron Ore business and record average concentrator throughput at the Escondida copper mine in Chile. Profit from operations increased 17% to USD9.75 billion from USD8.31 billion the prior year.
BHP raised its interim dividend by 55% to 101.0 US cents from 65.0 cents the year before, while net debt as at December 31 fell 7% to USD11.84 billion from USD12.68 billion.
Glencore and BHP's positive dividend developments bode well for investors, as commodity prices rise, boosting profit and share prices across the mining sector.
Fellow Anglo-Australian miner Rio Tinto was up 1.7% ahead of its annual results on Wednesday, while Anglo American - which reports next week - was up 1.8%.
AJ Bell's Russ Mould explained: "As metal prices stay firm, capital investment plans are kept disciplined and mega-mergers seem off the menu, the miners continue to generate cash and keep their debts firmly under control (Rio Tinto is even forecast to have a net cash balance sheet in 2022). This provides plenty of scope for generous dividends and as government bond yields creep higher, central banks keep ladling out monetary stimulus and governments continue to pile on fiscal stimulus markets are wondering whether the next big story is the return of inflation.
"If so, miners could be a good place to be, as during inflationary periods - when paper money effectively loses a chunk of is purchasing power - then 'real' assets such as commodities are often seen by investors are some form of protection against this."
In the FTSE 250, Serco was up 6.3% after the UK outsourcer agreed to acquire Whitney, Bradley & Brown, a provider of advisory, engineering and technical services to the US military.
Serco bought the company for USD295 million from an affiliate of Miami, Florida-based private equity firm HIG Capital. The Hampshire-based firm said the acquisition will increase the "scale, breadth and capability" of its US defence business, providing a "strong" platform from which to address all major segments of the US defence services market.
In addition, Panmure Gordon upgraded Serco to Buy from Hold.
Rotork was up 5.1% after Jefferies raised the valve actuators maker to Buy from Hold saying its three-year turnaround plan is starting to bear fruit.
At the other end of the midcaps, Dunelm was down 9.0% at 1,281.00 pence after the homewares retailer said Deputy Chair Will Adderley sold 15 million shares via an accelerated bookbuild secondary placing.
The shares were placed at a price of 1,280p per share, with the sale valued at GBP192 million. Following the placing, the aggregate holdings of the Adderley family are 43%, Dunelm said.
"Will Adderley remains fully committed to Dunelm in his role as deputy chairman as well as a very substantial shareholder in the company and his working relationship with the company is unchanged," Dunelm said late Monday.
The pound was quoted at USD1.3940 midday Tuesday, up from USD1.3909 at the London equities close Monday.
UK Prime Minister Boris Johnson is "hopeful" that lockdown can be cautiously eased in the coming weeks, saying research on vaccines is providing "grounds for confidence".
The PM said he wants the current national lockdown to be the last - and for the unlocking to be "irreversible" - ahead of the publication of his "road map" on Monday.
Johnson will analyse data this week on coronavirus case numbers, hospital admissions, deaths and the impact of the vaccine rollout as he prepares his plan to reduce restrictions.
"Sterling continued to rally after Boris Johnson announced the UK would lead a cautious but irreversible path out of the most recent Covid-19 lockdown measures. This was after it was announced we had hit the vaccination target of 15 million. This means that in just over two months the UK has vaccinated nearly 25% of its population," said analysts at OFX.
The dollar was weak across the board. The euro was priced at USD1.2165, up from USD1.2129. Against the yen, the dollar was trading at JPY105.20, down from JPY105.36.
Brent oil was quoted at USD63.25 a barrel on Tuesday at midday, marginally lower against USD63.33 at the London equities close Monday. Gold was trading at USD1,818.32 an ounce, flat from USD1,819.49.
US equity markets reopen on Tuesday after being closed on Monday for the Presidents' Day holiday and were pointed higher amid optimism over Covid-19 vaccines and fiscal stimulus.
The Dow Jones Industrial Average was called up 0.5%, while the S&P 500 and the Nasdaq Composite both were called up 0.4%.
By Arvind Bhunjun; [email protected]
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Related Shares:
Anglo AmericanRio TintoSercoDunelmRotorkGlencoreBHP Group