FTSE 100 comes out positive but US stocks mixed as investors eye Coinbase listing

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  • FTSE 100 closes up 49 points
  • US markets diverge
  • Tesco leads UK fallers

12.10pm: Stocks mixed across the Atlantic

London’s leading index closed 49 points higher, 0.7%, at 6,940, while the FTSE 250 added 87 points, 0.4%, to 22,355.

Tesco PLC (LON:TSCO) struggled, as shares fell more than 2% to £227.4 after the grocery store chain reported a 20% drop in annual profits.

Across the pond, the Dow jumped 197 points, 0.6%, to 33,874 at midday. Meanwhile, the Nasdaq Composite slipped 52 points, 0.4%, while the S&P 500 was up less than a point to 4,142.

The small-cap focused Russell 2000 jumped 41 points, 1.8%, to 2,270.

“The strong outlook for the US economy laid out in this afternoon’s results has revived the rally in small cap stocks, as flows head back to the physical economy and some of the heat comes out of the recent revival in mega-cap tech names,” IG Chief Market Analyst Chief Beauchamp wrote. “It is still very early days of course, but markets have navigated the initial challenge of earnings season relatively well.”

4.15pm: Nasdaq slips as investors await Coinbase start

Cryptocurrency exchange Coinbase Global Inc  is expected to begin trading on Nasdaq at around $350 a share shortly after a bit of a delay.

This values the business at more than $90bn and the stake held by chief executive Brian Armstrong at  $13.9bn. It compares to the so-called reference price of $250 put on it by Nasdaq on Tuesday.

Ahead of the launch, Russ Mould, investment director at AJ Bell said: “Cryptocurrencies have taken off in the past few years and investor appetite grows stronger for different ways to play the game. Coinbase’s share price performance is likely to be as volatile as cryptos themselves.”

Some of the excitement in Coinbase seems to have spilled over to other markets, or at least to the Dow Jones Industrial Average. It has added 225 points or 0.67% to 33,902, helped by bumper results from Goldman Sachs, but the S&P 500 is up only 0.09% and the Nasdaq Composite is down 0.18% (perhaps because of the delay in trading Coinbase?)

In the UK the FTSE 100 is up 0.66% or 45.38 points at 6935, close to the day’s peak.

Miners are among the biggest risers in the leading index on hopes that a global recovery will lead to increased demand for commodities, while Tesco PLC (LON:TSCO) is holding on to its place as the biggest faller, down 5.45p or 2.35% to 226.65p after its disappointing results.

3.19pm: Goldman shares jump after bumper results

US markets have caught fire suddenly – or at least the Dow has –  as investors decide they like the look of Goldman Sachs‘ results.

The bank’s shares are up 3.5% following the figures, helping the Dow Jones Industrial Average to a 177 point or 0.53% rise to 33,855.05 after a very subdued start to trading. Equipment maker Caterpillar is also an influence, up 1.5% ahead of results at the end of the month.

Meanwhile the S&P 500 has added 0.15% and the Nasdaq Composite is up 0.19%.

Back in the UK, the FTSE 100 is up 31.85 points or 0.46% at 6922.34.

2.40pm: Wall Street little moved at the opening bell

The main indices on Wall Street had moved very little in either direction on Wednesday as traders digested the start of earnings season in combination with ongoing worries over the status of the COVID-19 vaccine effort.

In the first minutes of trading, the Dow Jones Industrial Average was up just 0.05% at 33,692, while the S&P 500 was down 0.07% at 4,138 and the Nasdaq fell 0.05% to 13,987.

Given the mixture of sentiment, with vaccine issues seemingly offsetting strong earnings from a number of major banks pre-open, investors seem content to mostly sit on their hands.

Back in London, the FTSE 100 was continuing to rise into late afternoon and was up 33 points at 6,923 just before 2.40pm.

2.32pm: UK banks slip

UK banks are failing to get a lift from the good results from JP Morgan and Goldman Sachs.

NatWest (LON:NWG) has fallen 0.91% or 1.8p to 1964p while Lloyds Banking Group PLC (LON:LLOY) has lost 0.72% or 0.32p at 43.44p.

Barclays PLC (LON:BARC) has drifted 0.34p or 0.18% lower to 186.48p while HSBC (LON:HSBA) is off 0.31% or 1.3p at 425.6p.

12.42pm: US banks beat expectations

Wall Street is set for another mixed start after Tuesday’s mixed performance.

The Dow Jones Industrial Average is set for another dip at the open, with futures showing a 13 point or 0.06% slip to 33,664. But the S&P 500 is forecast to add to its record level of Tuesday with a 0.08% gain and the tech-heavy Nasdaq Composite is expected to rise 0.28%.

Investors continue to be concerned about possible problems with the vaccine rollout after the Johnson and Johnson news of minor blood clot incidents with its jab.

But the hefty reporting season has got off to a good start with better than expected results from Goldman Sachs and JP Morgan.

 

$GS | Goldman Sachs Q1 Earnings
-Q1 Adj. EPS $18.60 (est $10.07)
-Q1 Revenue $17.70 Bln (est $12.55 Bln)
-Q1 FICC Sales & Trading Revenue $3.89 Bln (est $2.89 Bln)
-Q1 Investment Banking Revenue £3.57 Bln (est $2.68 Bln)

— LiveSquawk (@LiveSquawk) April 14, 2021

 

$JPM | JPMorgan Q1 Earnings
– Q1 Adj. EPS $4.50 (est $3.01)
– Q1 Revenue $33.12 Bln (est $30.42 Bln)
– Q1 Investment Banking Revenue $2.85 Bln (est $2.46 Bln)

— LiveSquawk (@LiveSquawk) April 14, 2021

Sophie Griffiths, market analyst at Oanda, said: “[Bank] earnings come against a backdrop of rising expectations for a strong US economic recovery, optimism which has already driven the rally in banks’ share price to outperform the broader market two-fold. The narrative has changed from last year’s if-and-when the recovery takes hold, to the current question of how long will the expansion run?”

Later comes the Beige Book, the latest report on US economic conditions from the Federal Reserve. Investors have been keen to know the Fed’s response to rising bond yields amid fears of inflationary pressures, but so far the central bank has shrugged them off. Fed chair Jerome Powell is set to give a speech later on Wednesday so it will no doubt be scrutinised for further signs of his view on inflation.

And also coming up is the IPO of cryptocurrency exchange Coinbase, which will be widely watched for what it might indicate about Bitcoin and its ilk.

Meanwhile the FTSE 100 is near its high for the day, up 27.7 points or 0.4% at 6918.19.

11.37am: Oil firms lifted by crude price gains

Commodity companies are giving some support to the market, following a rise in oil prices.

Brent crude has added 1.66% to $64.73 a barrel after the International Energy Agency raised its predictions for oil demand by 230,000 barrels to 96.7mln barrels a day on growing hopes for a global economic recovery from the pandemic.

So BP PLC (LON:BP.) is 0.5% or 1.5p better at  299.75p while Royal Dutch Shell PLC (LON:RDSB) has seen its B shares rise 0.57% or 7.6p to 1336.2p.

The increase in these market heavyweights has helped keep the FTSE 100 in positive territory, with the leading index up 11.2 points or 0.16% at 6901.69.

But enthusiasm is being dampened by renewed worries about vaccines after Tuesday’s news that Johnson & Johnson‘s jab had seen blood clotting issues – albeit minor.

Joshua Mahony, senior market analyst at IG, said: “The European Commission have apparently decided against renewing the vaccination contracts with AstraZeneca and Johnson & Johnson when they run out, highlighting the risk of a slower paced vaccination programme as regulators strike off treatments with any serious side effects.”

Despite these worries and the potential for further disrupution to travel plans, airlines are climbing higher. Easyjet PLC (LON:EZJ) is up 31p or 3.36% to 955p after it said its first quarter losses would be less that previously predicted, despite the pandemic wreaking havoc. British Airways owner International Consolidated Airlines PLC (LON:IAG) is also on the rise, up 2.32p or 1.14% at 205.72p.

10.23am: Luxury goods group positive after LVMH update

Burberry PLC (LON:BRBY) is among the day’s risers, lifted by a forecast beating performance from luxury goods peer LVMH. The French group said first quarter sales were up 30% compared to a year ago when the first pandemic lockdowns began. Its performance has been boosted by strong sales in the US and China.

The read-through to Burberry has helped push its shares up 34p or 1.65% to 2095p, despite its own problems in China.

 Russ Mould, investment director at AJ Bell, said: “Burberry was back in fashion as investors flocked to the luxury goods sector following LVMH’s very strong update yesterday. The latter’s first quarter sales were ahead of expectations, fuelling investor optimism that other names such as Burberry could also be in the same sweet spot.

“A lot of people will have saved cash during the pandemic and there is an expectation for a big spending spree as countries ease lockdown restrictions.”

Overall the FTSE 100 is edging higher, up 15.9 points or 0.23% at 6906.39.

9.35am: Supermarkets in focus

Sainsbury (LON:SBRY) is being caught in a two-way pull.

On the one hand the 20% fall in annual profits at Tesco (LON:TSCO) has had an impact on the whole sector.

But while Tesco shares are down 3.47% at 224.05p, Sainsbury is off just 1.07% or 2.6p at 240.2p.

Part of the explanation for the relative difference must be that Sainsbury is now the subject of takeover speculation again.

The catalyst was news that Czech billionaire Daniel Kretinsky has raised his stake in the supermarket from just over 3% to 9.99% through his Vesa investment group. He bought the extra shares over the weekend from the supermarket’s long term investor the Qatar Investment Authority, which as a result has reduced its own shareholding to 15.02%. Vesa originally bought shares at around 190p each last September.

Whether this does signal a possible bid is a moot point.

Analysts at UBS said: “QIA’s stake reduction from 22% to 15% seems to coincide with the simultaneous increase in Vesa stake of 3% to 10%. We see this as a small positive This removes a potential overhang of QIA stake as that is absorbed by a willing buyer who could look to raise the stake further and as such we see it as a modest positive.

“There was a brief statement from Vesa back in September when they said they saw Sainsbury as ‘an attractive investment opportunity for the long run’ fitting in with their key area of interest in food retail. We await any further such statement from Vesa and will look for any clues as to their intentions at this time.”

Meanwhile the FTSE 100 continues to drift for another day, up just 4.68 points or 0.07% at 6895.17.

8.45am: Leading shares range-bound

To paraphrase Lady Macbeth it was a case of ‘out damned clot’ as the world’s stock markets fixated on further vaccine roll-out problem and Johnson & Johnson became the second drug company to report issues with its jab.

The success, or otherwise, of the global inoculation programme is pivotal to a return to economic growth – or so Wednesday’s narrative went.

On Thursday we’ll be back to fretting about inflation, while by Friday there may jobs data that brings on a state of irrational exuberance.

The fact is nothing has really happened this week – just as not a great deal has occurred since the end of January, for the Footsie at least.

It has remained range-bound with 6,500 as its base, and 7,000 as its cap; however, the nerves seem to set in around the 6,900 mark.

Copper-bottomed investment?

There is a conversation to be had around copper, which is nudging towards February’s high backed by demand from China.

Goldman Sachs metals strategist Nicholas Snowdon, speaking at the virtual World Copper Conference on Tuesday, re-asserted his view that the natural resources sector is at the start of a super-cycle with the red metal set to lead the way.

Top of the morning’s leader board with a 1.9% gain was Antofagasta (LON:ANTO), the Chilean specialist in this area of mining.

Glencore (LON:GLEN), which trades the metal, was up 1.3%, with its ascent further aided by a Goldman upgrade to ‘buy’.

Tesco (LON:TSCO) led the fallers table, dropping 3.8% in the wake of a kicking to its annual profits, which were down around a fifth year on year. Sainsbury (LON:SBRY), off 1.4%, suffered collateral damage.

6.50 am: Dull start predicted 

The FTSE 100 is expected to open little changed on Wednesday as investors seem to sit back and await direction after Tuesday’s vaccine news.

Spread-betters IG are expecting the blue-chip index to start effectively unchanged from its closing level on Tuesday when it ended one point higher at 6,890.

Investors seem to be willing to sit on their hands and wait for the latest round of vaccine issues to play out after Johnson & Johnson pre-emptively suspended the rollout of its coronavirus vaccine amid reports of blood clots, which could prove a major setback for global vaccination efforts.

The vaccine troubles made for a mixed session on Wall Street overnight, with the Dow Jones Industrial Average closing down 0.2% at 33,677 while the Nasdaq rose 1.05% to 13,996 and the S&P 500 climbed 0.33% to a record high of 4,141.

The picture was similarly varied in Asia this morning, with Japan’s Nikkei 225 down 0.3% while Hong Kong’s Hang Seng was up 1.42%.

On currency markets, the pound was up 0.27% against the dollar at around US$1.378, although there could be some movement later today with a speech expected by Federal Reserve chair Jerome Powel ahead of the central bank’s latest Beige Book.

Around the markets:

Sterling: US$1.378, up 0.27%

Brent crude: US$64.13 a barrel, up 0.7%

Gold: US$1,742 an ounce, up 0.5%

Bitcoin: US$64,193, up 6.3%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly higher on Wednesday as investors watched for market reaction to the US FDA’s decision to temporarily halt using Johnson & Johnson’s COVID-19 vaccine after six women in the country developed a rare blood-clotting disorder.

The Hang Seng index in Hong Kong gained 1.45% while the Shanghai Composite in China rose 0.31%.

In Japan, the Nikkei 225 fell 0.35% but South Korea’s Kospi advanced 0.40%.

Shares in Australia were stronger, with the S&P/ASX 200 trading 0.63% higher.

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