FTSE 100 rise accelerates on positive manufacturing figures but Deliveroo drops again

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  • FTSE 100 climbs 41 points
  • Deliveroo down 3%
  • UK PMI best reading for a decade

9.58am: UK factories upbeat

Some positive UK manufacturing figures, albeit with a few caveats.

The IHS Markit/CIPS purchasing managers’ index for March came in at 58.9, the best reading since February 2011 and higher than the expected level of 57.9.

The report showed growth in new business from both domestic and overseas markets, but there are continued delivery delays from suppliers and disruption to production schedules.

Rob Dobson, director at IHS Markit said: “Signs of Spring have appeared in the UK manufacturing sector, with the PMI hitting its highest level in a decade. Growth of output, order books and employment all gathered momentum and optimism about the year ahead improved further.

“The domestic market remained the prime source of new orders, as companies reported that the vaccine roll-out and clients’ preparations for the loosening of lockdown restrictions underpinned the expansion. Many expect this process to be supportive during the year ahead as well, raising business optimism and jobs growth to their highest levels for seven years.

“Weak export sales and supply-chain issues are likely to remain constraints on growth moving forward, however, with shipping issues already leading to severe disruption to production schedules, raw material availability and the onward distribution of finished products to clients, especially abroad. The extent to which supply chains have worsened through much of the past year has been unsurpassed during the near three-decade survey history.”

 Sarah Banks, managing director of Freight and Logistics at Accenture Global said: “An impressive uptick in demand has led to a record surge in manufacturing output this month, which is certainly encouraging for economic recovery as a whole.

“However, reports of ongoing supply chain issues and shortages of materials have led to marked hikes in shipping costs, as manufacturers struggled to keep up with demand.”

“These figures indicate that many businesses are largely limited in their ability to respond to a modest increase in orders. As the economy rebounds, a sustained surge in demand for freight services and capacity will remain a challenge for months to come.”

Still, with European factories also upbeat, reporting their strongest growth in nearly 24 years, the market is keen to accentuate the positive. So the FTSE 100 has continued to rise, now up 41.31 points or 0.62% at 6754.94.

Deliveroo watch: the company is down 3.11% at 278.5p.

 

9.20am: Markets await manufacturing data

It was labelled the worst IPO in London’s history by the Financial Times, and immediately nicknamed Floperoo or Deliveroops.

Yes, it’s fair to say that Wednesday’s much anticipated market debut of food delivery business Deliveroo (LON.ROO) did not get off to a good start, with a 26% slump on the first day of conditional dealings.

Worries about its treatment of workers and when it would make a profit did some of the damage as did talk its shares had been priced too highly and news that several fund managers refused to get involved.

So is the second day any better? So far, not so much. Its shares are down another 5.15p or 1.79% to 282.3p compared to its flotation price of 390p. Just as well the company chose to start dealings the day before April Fool’s Day and not on it.

Neil Wilson at Markets.com said: “Several reasons are behind the poor performance. In addition to the failure to bring several large funds on board, the dual class share structure, regulatory uncertainty, general profitability concerns and a miscalculation by the bankers on the pricing in relation to wider demand in the market, it also looks like some hedge funds shorted the stock aggressively from day one. Not all stocks have a happy start to life on the stock market – just ask Tim Steiner or Mark Zuckerberg – but it’s not a great advert for London as a destination for tech listings.”

Still, investors elsewhere seem to be in a chirpier mood. The FTSE 100 is currently up 36 points or 0.54% at 6749.63.

Later this morning comes the snapshot of UK manufacturing for March, while in the US there are weekly jobless claims as well as factory data.

8.45am: Next leads FTSE risers

London’s traders opted to focus on the economic positives emanating from the UK vaccine programme rather than the lockdowns on its doorstep with Europe in the grip of a Covid third wave.

The FTSE 100 opened 24 points to the good at 6,738.12, putting it on course to end the shortened week with its head above water.

Topping the blue-chip list of risers with a 4% gain was Next (LON:NXT) whose prelims showed the retailer’s resilience as it traded profitably through the pandemic.

It has relied heavily during the crisis on its digital offering, which is among the strongest of the traditional bricks and mortar clothiers.

“Online and finance now account for over 70% of overall sales, and in the first eight weeks of its new financial year next has reported that online sales are 60% ahead of the figure from two years ago,” said Richard Hunter, head of markets at Interactive Investor.

“The company concedes that it is difficult to predict how much of the change in consumer behaviour to online will stick post-pandemic, although the possibility remains that the new behaviour will have become largely entrenched.”

IAG (LON:IAG), the owner of British Airways and Iberia, founds some support early on after a recent period of selling activity. It opened up 2.2% higher as did Rolls Royce (LON:RR.), another international travel-influenced stock.

6.50 am: Footsie called higher 

The FTSE 100 is set to start the last day of the short week in positive territory, albeit only slightly.

CFD and spreadbetting firm IG sees the blue-chip benchmark up 8 points, making a of price 6,731 to 6,734 with just over an hour to go until Thursday’s open.

On the eve of a four-day holiday weekend it promises to be a quiet, lower volume day.

At the very least it provides a breather for traders that have at time seen whipsaw volatility as sentiments have lurched from giddy optimism triggered by vaccines and economic restart plans whilst ominous commentary of new strains and future ‘waves’ has rarely felt far away.

The pendulum presently swings into a position of positivity, particularly in the United States where stimulus was the keyword the stock market rally on Wednesday.

“While markets in Europe ended the month in a fairly quiet fashion US markets had a much more positive end to proceedings, with the S&P500 edging to within touching distance of the 4,000 level, and a new record high, as a Nasdaq and Russell inspired surge saw US stocks finish the quarter in more or less the same fashion, they started it,” said Michael Hewson, analyst at CMC Markets.

“Optimism over the impact of a further $2trn stimulus package in infrastructure spending merely served to add more fuel to the fire of last month’s US$1.9trn stimulus bill, that came on top of the US$900bn that came at the beginning of the year.”

The analyst added: “There was some concern over how it would be funded, including a corporate tax hike to 28%, and other tax raising measures, however for now markets appear fairly sanguine about these, with the likes of Microsoft leading the gainers after signing a US$21.9bn deal with the US Army for augmented reality headsets.”

Wednesday’s close actually saw the Dow Jones finish in red, down 0.26% to 32,981, whilst the S&P 500 however rose by 0.36% to 3,972.

The Nasdaq advanced 201 points or 1.54% to close at 13,246.

In Asia, Japan’s Nikkei rose by 213 points or 0.73% to 29,392 and Hong Kong’s Hang Seng was up 3-6 points, 1.08%, at 28,680. The Shanghai Composite was also marked higher, adding 0.18% to trade at 3,449.

Around the markets

The pound: US$1.3764, down 0.14%

Gold: US$1,714 per ounce, up 1.81%

Silver: US$24.37 per ounce, up 1.55%

Brent crude: US$63.57 per barrel, down 0.88%

WTI crude: US$59.46 per barrel, down 1.8%

Bitcoin: US$58,864, up 0.48%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were higher on Thursday as Australia’s trade surplus dropped by A$2.1 billion in February compared to January after iron ore exports fell from record highs and tourism services dried up.

The Hang Seng index in Hong Kong gained 1.14% while the Shanghai Composite in China rose 0.29%.

In Japan, the Nikkei 225 was 0.66% higher and South Korea’s Kospi gained 0.72%.

Shares in Australia rose, with the S&P/ASX 200 closing 0.56% higher.

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Proactive Australia news:

Creso Pharma Ltd (ASX:CPH) (FRA:1X8) has utilised new technology to produce proprietary CBD-based tea products that have been launched in Switzerland with other European markets, including Germany, earmarked for near-term expansion.

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SMBSF) (FRA:SO3) has set itself up for success in 2021 following a period of significant change, as it seeks to become a zero-carbon sulphate of potash (SOP) producer.

Golden Rim Resources Ltd (ASX:GMR) has started diamond drilling on the Kouri Gold Project in Burkina Faso with a 2,000-metre, 10-hole, program at the high-grade Diabatou Gold Shoot.

Queensland Pacific Metals Ltd (ASX:QPM) (FRA:4EA) has entered into a non-binding memorandum of understanding (MoU) with Societe Le Nickel (SLN), a subsidiary of Eramet SA (EPA:ERA) (FRA:ER7) (OTCMKTS:ERMAY) group, for the supply of nickel laterite ore from New Caledonia for the TECH Project.

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) is making strong progress in preparation for drilling of the much anticipated high-impact Jewell 1-13-12 SXH well in the SWISH Area of Interest (AOI) within Oklahoma’s world-class Anadarko Basin.

Cellmid Ltd’s (ASX:CDY) renounceable rights issue has raised $3,816,369, with strong support from existing shareholders and new institutional and professional investors.

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