(Sharecast News) – London stocks had extended gains by midday on Wednesday as investors bet that a Democrat-controlled Senate in the US would lead to further stimulus.
The FTSE 100 was up 2.5% at 6,775.39.
IG market analyst Joshua Mahony said: “European markets are on the rise in early trade today, with traders reacting with optimism at the Democrat victory in both remaining Senate seats in Georgia. With Biden now seemingly on course for a term where both sides of congress are majority Democrat, traders are now looking at a much more disruptive and transformative four-years than previously expected.
“From a short-term perspective, expectations of a sharp rise in financial stimulus once Biden takes office should lessen the economic hardship associated with the coronavirus. However, while we are likely to see a rise in direct payments, a decline in Nasdaq futures does highlight the feeling that Biden will be keen to lessen the influence of big tech going forward.”
On home shores, a survey released earlier showed that UK services activity dropped in December and margins came under pressure from rising costs and discounted prices.
The IHS Markit/CIPS purchasing managers’ index registered 49.4, up from November’s score of 47.6 but below the 50 mark that divides contraction from growth.
December’s result took the score for the final quarter of 2020 to 49.5 – a contraction compared with a solid recovery of 57.1 in the third quarter.
The downturn was overwhelmingly linked to business disruption, restrictions and closures caused by the Covid-19 crisis as the government imposed tighter constraints in an effort to contain a resurgence of the disease.
Tim Moore, economics director at IHS Markit, said: “The UK service sector has swung back into decline after the partial rebound seen during the third quarter of 2020, largely reflecting tighter restrictions on consumer services amid the worsening trajectory of the pandemic.
“With a third national lockdown underway, service providers will be braced for a sustained period of subdued UK economic conditions and deferred client spending in the first quarter of this year. However, business optimism on a 12-month horizon was relatively upbeat.”
In equity markets, banks were the standout gainers, benefitting from higher bond yields, with Standard Chartered, Barclays, HSBC, NatWest and Lloyds all firmer.
Oil giants BP and Shell also rallied after oil prices hit an 11-month high.
High Street bakery chain Greggs was sharply higher after it said its sales decline had slowed but warned that profits would not return to pre-Covid levels until 2022 at the earliest as it forecast a £15m loss this year and revealed 820 job losses.
Construction materials company CRH jumped amid expectations it could benefit from increased infrastructure spending in the US if Biden has a freer hand.
Marks & Spencer was in the black following reports it is close to buying Jaeger, the loss-making fashion brand hit by the Covid-19 crisis, while Vodafone was boosted by an upgrade to ‘buy’ at Berenberg.
Market Movers
FTSE 100 (UKX) 6,775.39 2.47%
FTSE 250 (MCX) 20,923.99 1.00%
techMARK (TASX) 4,184.23 0.91%
FTSE 100 – Risers
Standard Chartered (STAN) 508.20p 9.03%
Barclays (BARC) 154.02p 7.56%
HSBC Holdings (HSBA) 407.15p 7.54%
CRH (CRH) 3,360.00p 7.18%
Glencore (GLEN) 271.85p 6.99%
BP (BP.) 289.25p 6.15%
NATWEST GROUP PLC ORD 100P (NWG) 164.90p 5.67%
WPP (WPP) 821.00p 5.66%
Lloyds Banking Group (LLOY) 37.17p 5.58%
Aviva (AV.) 344.20p 4.88%
FTSE 100 – Fallers
Aveva Group (AVV) 3,423.00p -2.37%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,596.00p -1.58%
Bunzl (BNZL) 2,489.00p -1.31%
London Stock Exchange Group (LSE) 8,958.00p -0.86%
Kingfisher (KGF) 282.30p -0.74%
B&M European Value Retail S.A. (DI) (BME) 530.00p -0.67%
Unilever (ULVR) 4,416.00p -0.45%
Scottish Mortgage Inv Trust (SMT) 1,216.00p -0.41%
British American Tobacco (BATS) 2,778.00p -0.38%
Experian (EXPN) 2,840.00p -0.35%
FTSE 250 – Risers
Greggs (GRG) 1,931.00p 8.48%
Centrica (CNA) 50.86p 6.42%
Petrofac Ltd. (PFC) 158.50p 6.41%
Rank Group (RNK) 146.00p 5.80%
IP Group (IPO) 109.80p 5.37%
Energean (ENOG) 802.80p 5.17%
Virgin Money UK (VMUK) 138.25p 4.97%
Ferrexpo (FXPO) 327.60p 4.93%
Babcock International Group (BAB) 279.40p 4.76%
Carnival (CCL) 1,343.50p 4.27%
FTSE 250 – Fallers
Pantheon International (PIN) 2,440.00p -2.79%
PureTech Health (PRTC) 398.50p -2.57%
Allianz Technology Trust (ATT) 2,885.00p -2.53%
Polar Capital Technology Trust (PCT) 2,300.00p -2.34%
Kainos Group (KNOS) 1,176.00p -2.16%
Computacenter (CCC) 2,420.00p -2.10%
ICG Enterprise Trust (ICGT) 898.00p -1.75%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,596.00p -1.58%
Apax Global Alpha Limited (APAX) 192.00p -1.54%
Future (FUTR) 1,798.00p -1.32%
