BHP listing shift set to trigger funds rush

By Tom Westbrook

SYDNEY (Reuters) – A change in corporate structure at BHP Group is likely to unleash a wave of selling in London and an even bigger buying surge in Sydney, with investors braced for a potentially bumpy end to the world’s biggest listed miner’s dual listing.

Shareholders on Thursday approved a company proposal to abandon a two-decade-old structure with listings in London and Sydney in favour of a single primary listing in Australia as part of a sweeping overhaul of BHP founded 137 years ago as Broken Hill Proprietary in Australia.

BHP Group Plc will drop out of the FTSE 100 and other related indexes, while beefing up the size and value of the Australian listing from January 31, when the changes take full effect.

The plan, unveiled in August last year, aims to make it easier for BHP to allocate capital and analysts expect it foreshadows future acquisitions and dealmaking.

The Australia-listed entity will swell from about 6.5% to comprise 10.7% of the S&P/ASX 200 index, based on an estimate from financial services firm Wilsons Advisory.

That means index-tracking funds will need to sell BHP in London and buy more of it in Sydney and possibly quickly, brokers said, while active managers who wish to remain overweight will also need to add eventually.

“Everyone’s trying to work out if the market is long or short (Australia-listed) BHP Ltd, come implementation day,” said John Lockton, head of Australian equities at Wilsons Advisory in Sydney.

He expects buying in Australia “will swamp forced selling” in London. “I think for the most part it will basically happen on the day, but there will be some trying to pre-empt … after (Thursday’s) vote,” he added.

The deal could prompt the sale of about 140 million London-listed shares – worth 3.5 billion pounds ($4.8 billion) at Wednesday’s closing price – based on an estimate by advisory firm Grant Samuel in a report commissioned by BHP.

Wilsons estimates probable buying of between 90 million and 250 million shares in Sydney.

BHP has yet to announce the results of its shareholder vote, although proxy tallies show that scrapping the dual listing won overwhelming support. It had been unanimously recommended by the company board. BHP was not immediately available for comment on Thursday.

BIGGER AUSTRALIAN

S&P Dow Jones Indices had said it will increase BHP’s weighting in the ASX 200 on Jan. 31 and FTSE Russell has said it will delete BHP from its UK index series on the same day.

There are signs some investors have moved in advance.

A discount on the London shares has evaporated in recent months as investors have bought into the cheaper stock ahead of its conversion into Australia-listed shares.

Passive investment giant Vanguard, already the biggest owner of BHP’s Australian shares, said it will be able to purchase London stock ahead of Jan. 31 on behalf of Australian funds.

Short interest in the Aussie shares has also more than doubled to 9.5% since plans for the corporate structure changes were announced last August, based on regulatory data. Turnover has increased, possibly as funds buy in but hedge against any hitches in the deal.

“I’d expect that to unwind pretty quickly,” said Mathan Somasundaram, chief executive of Sydney-based research firm Deep Data Analytics

When the dust settles, index funds will also be owning a re-shaped ASX 200 with even more exposure to resources and especially iron ore and its biggest buyer – China.

“It reinforces the value nature of that equity bourse versus something like the Nasdaq,” said George Boubouras, head of research at K2 Asset Management in Melbourne, a BHP shareholder, referring to the concentration of miners and financials which account for more than half the index.

“It may be the type of equity bourse you want to be holding in calendar 2022 in a global rising interest rate environment.”

($1 = 0.7338 pounds)

(Reporting by Tom Westbrook. Editing by Jane Merriman)

Oil stocks, GSK weakness pull FTSE 100 lower; Deliveroo jumps

By Shashank Nayar

(Reuters) -London’s FTSE 100 inched lower on Thursday on weakness in oil stocks and GlaxoSmithKline, while food delivery platform Deliveroo jumped on order growth hitting the top of its outlook range.

The blue-chip index eased 0.3%, weighed down by oil majors Royal Dutch Shell and BP as they tracked lower crude oil prices. [O/R]

GlaxoSmithKline fell 1.9% and was the second-biggest loser on the FTSE 100 after consumer goods giant Unilever late on Wednesday effectively ended its pursuit of a business that the pharmaceuticals company plans to spin off later this year.

However, the blue-chip index is set to gain for the fifth consecutive week, helped by strength in commodity-linked shares and banking stocks, significantly outperforming the pan-European STOXX 600.

Food delivery company Deliveroo rose 5.6% on strong fourth-quarter order value growth, resulting in it hitting the top of its outlook range for the year.

“The effective lockdown conditions created by Omicron undoubtedly helped (Deliveroo), but with restrictions starting to be lifted, this supportive trend is rapidly moving into the rear-view mirror,” Russ Mould, investment director at AJ Bell, said.

British Prime Minister Boris Johnson on Wednesday announced the end of COVID-19 measures including mandatory face masks in England.

The domestically focussed mid-cap index was flat.

Primark owner Associated British Foods dropped 1.5% after it said the spread of the Omicron coronavirus variant dented shopper numbers in December.

Premier Foods was the top midcap gainer, up 6.4%, and said it expects full-year profits above market expectations, as its trademark Mr Kipling brand delivered its best-ever Christmas sales.

(Reporting by Shashank Nayar in Bengaluru; Editing by Shounak Dasgupta)

Analysis-Dollar churns as investors bet on growth outside U.S

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – Currency market investors are less sure about the U.S. dollar’s outlook now than they have been for many months, prompting sharp gyrations by the greenback last week despite red hot inflation data and a hawkish Federal Reserve.

“Everybody had been positioned for a stronger dollar” going into the new year, said Jack McIntyre, portfolio manager at Brandywine Global. Then last week, the U.S. Dollar Currency Index, which tracks the greenback against six major currencies, fell as much as 1.2% before paring loses to finish the week down 0.6%.

The drop came after Fed Chair Jerome Powell said the U.S. economy is ready for the start of tighter monetary policy and data that showed the largest annual rise in inflation in nearly four decades.

Dollar bears view the recent volatility as evidence that a lot of good U.S. economic news was already priced in after international Monetary Market speculators exited 2021 with a net long position in the dollar valued at about $20 billion, close to the most bullish in two years.

(GRAPHIC: USD positions, https://fingfx.thomsonreuters.com/gfx/mkt/akpezelqevr/USD%20positions.JPG)

For months, the dollar had been supported by the idea that monetary policy in the United States was likely to normalize at a faster pace than in many advanced economies. Now investors are growing more confident about other parts of the world, and looking for economies where growth could surprise to the upside.

Goldman Sachs recently said the euro area will outgrow the U.S. economy over the next two years.”I think we are seeing a transition in currency markets. It’s less to do with relative monetary policy and more about relative growth,” McIntyre said.

“It’s not going to a straight line .. but at the end of 2022 the dollar will be weaker,” McIntyre, who after having been generally neutral on the dollar for months has started selling dollars to fund the purchase of higher yielding currencies.

McIntyre said he is long the Australian dollar and the Swedish krona.

Investors were not rushing to buy dollars even as short-term U.S. Treasury yields climbed. A year-opening selloff in bond markets sent 2-year yields up by about 23 basis points this year. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, noted that flies in the face of the trend during 2021.

“This might signal a regime change in which the dollar peaks and begins reflecting a compression in relative growth and real yields versus the rest of world,” Shalett said in a note.

The dollar could come under more pressure if global stocks start attracting money away from the United States, said Brian Rose, senior economist at UBS Global Wealth Management, noting the greenback was supported last year by strong capital flows into Wall Street.

International stock indexes that are off to a strong start this year include India’s S&P BSE Sensex, up 4.3%, the UK’s blue-chip FTSE 100 index, with a 2.4% gain and Hong Kong’s Hang Seng Index, up 3.1%. The S&P 500 Index is down 4.0%.

“International investors hold a huge amount of dollar assets,” Rose said. “We have thought for a long time that the dollar is vulnerable to capital flows suddenly reversing.”

Paresh Upadhyaya, director of currency strategy at Amundi Pioneer, believes the dollar’s safe haven-allure may falter if COVID-19 becomes less deadly and investors are less worried about severe economic ramifications.

“If we make that transition, all of a sudden the risks to growth diminishes,” Upadhyaya said.

“The dollar loses that flight to quality sheen,” he said.

HEALTH WARNING

Upadhyaya, however, has a health warning for those looking to jump on the dollar bear market band wagon, he said.

Markets may have not factored in the full extent of possible Fed hawkishness, including the potential some investors see for a 50-basis point interest rate hike as soon as March, Upadhyaya said.

“Given how fast the Fed were to react in terms of easing policy …I also wouldn’t rule out the possibility that the Fed may hike aggressively,” he said.

A more aggressive Fed could also bolster dollar-focused carry trades, a strategy where investors sell low-yielding currencies to buy a higher yielding one and pocket the difference, analysts at HSBC said in a note last week.

Indeed, some investors used last week’s dollar weakness as a buying opportunity.

“We have see some clients opportunistically buying dollars on this pullback,” Peter Ng, senior FX trader at Silicon Valley Bank, said.

Despite the dollar’s recent wobble, the spread between Treasury and German 10-year yields is at 185 basis points, about as favorable it was to the dollar as it was two months ago. “It has been a tough start to 2022 for the USD, but we view the fashionable disregard for relative monetary policy as unsustainable,” analysts at HSBC said.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Saikat Chatterjee; Editing by Ira Iosebashvili and David Gregorio)

FTSE 100 jumps on mining boost, Burberry’s strong forecast

By Shashank Nayar

(Reuters) -London’s FTSE 100 ended higher on Wednesday, aided by gains in miners and consumer staples, with strong profit forecasts from luxury brand Burberry and education group Pearson providing a further fillip to sentiment.

After falling as much as 0.5%%, the blue-chip FTSE 100 index reversed course to end 0.4% higher, with major miners and consumer companies such as Diageo and Unilever among top gainers.

British consumer price inflation rose more than expected to 5.4% in December, official data showed, adding pressure on the Bank of England (BoE) to raise interest rates again next month.

“The view that the current high readings are transitory is starting to sound a bit hollow,” said Alan Custis, managing director at Lazard Asset Management. “We would expect inflation to peak nearer 7% in 2022, which will keep the pressure on the BoE to continue increasing interest rates.”

Signs of inflationary pressures and labour market strength drove investors to ramp up rate hike bets, pushing the UK’s benchmark bond yield to its highest since March 2019, while shorter-duration yield touched October 2018 highs.

Meanwhile, BoE Governor Andrew Bailey said that he was concerned inflation pressures might prove longer-lasting than previously forecast, citing surging energy costs and signs that cost pressures are feeding into wage demands.

Burberry gained 6.3% after the luxury brand said its annual profit would beat market expectations as the company’s full-price sales accelerated in the third quarter.

Pearson gained 4.4% after it raised its forecast for full-year adjusted operating profit in a boost to management efforts to restructure the business.

Meanwhile, Unilever PLC gained 4.5% after the Dove soap maker said on Wednesday it would not increase its 50-billion-pound ($68 billion) proposal to buy GSK’s consumer healthcare business.

The domestically focussed mid-cap index was 0.0 flat, with WH Smith Plc jumping 7.1% on expectations of a resumption in the recovery of its travel markets even as the retailer said it was experiencing a “small impact” from the Omicron coronavirus variant.

(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Shounak Dasgupta, Subhranshu Sahu, William Maclean)

Consumer companies, rate hike jitters push FTSE 100 lower

By Shashank Nayar

(Reuters) -London’s FTSE 100 ended lower on Tuesday weighed down by shares of consumer companies and industrial stocks, while improving employment conditions in the UK and rising U.S. Treasury yields signalled growing bets of tighter monetary policies.

The blue-chip index fell 0.6%, with consumer-focussed companies such as Diageo and Unilever and industrial stocks under pressure.

Nasdaq traders were braced for a fresh pounding on Tuesday as a seven-year high for oil prices drove up global borrowing costs to pre-COVID levels, with even sub-zero German Bund yields at the brink of positive territory again. [MKTS/GLOB]

“The recent swings in the U.S. Treasury have created a flutter in the global financial markets with market participants bracing for the beginning of a tighter monetary policy era, most likely from March 2022,” said Kunal Sawhney, chief executive at research firm Kalkine.

Meanwhile, data showed British employers added a record 184,000 staff to their payrolls in December, showing little sign of being affected by the impact of the Omicron coronavirus variant.

“Employment data for the quarter to November and the inflation (CPI) data slated to be released tomorrow could become a trigger for the next rate hike in February,” Sawhney added.

The FTSE 100 has outperformed the wider STOXX 600 since the beginning of this year as bets on increased interest rates lifted bank stocks and higher oil prices supported energy shares.

Unilever extended declines from the previous session, and was down 4.0%, near a five-year low, as the company signalled on Monday it would pursue a deal for GSK’s consumer business, calling it a “strong strategic fit”.

The domestically focussed mid-cap index fell 1.0%

THG dropped 9.6% after the online retail platform warned its adjusted core earnings margin would fall short of market expectations due to adverse currency movements.

Just Group gained 8.2% as the insurer said its retirement income and new business profits grew last year.

(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Uttaresh.V, Shounak Dasgupta and Jonathan Oatis)

European shares gain with focus on UK M&A, Credit Suisse slips

By Sruthi Shankar

(Reuters) -European stocks rose on Monday, with deal talks involving British consumer companies boosting the bluechip FTSE 100, while shares in Swiss bank Credit Suisse slipped after its chairman quit following an internal probe into his personal conduct.

The pan-European STOXX 600 index rose 0.8%, with Asian markets choppy after China’s central bank cut some key lending rates after mixed economic data, while a U.S. holiday made for thin trading. [MKTS/GLOB]

Media, technology and retail stocks were the top gainers among European sectors, up between 1.1% and 1.6%.

Lifting UK’s FTSE 100, GlaxoSmithKline jumped 4.4% after it confirmed over the weekend that it had rejected Unilever’s 50-billion-pound offer for its consumer healthcare business.

Unilever slid 6.5% to touch March 2020 lows after it signalled on Monday it would pursue the deal, calling it a “strong strategic fit”.

“The negative share price reaction probably reflects investor fears that Unilever is going to come back with a higher offer and potentially pay too much,” said Russ Mould, investment director at AJ Bell.

Meanwhile, Credit Suisse slipped 1.4% after Chairman Antonio Horta-Osorio quit following an internal probe into his personal conduct, including breaches of COVID-19 rules.

New chairman Axel Lehmann said Credit Suisse will stick to its strategic overhaul despite Horta-Osorio’s exit, which comes less than a year after he was hired to help the bank deal with the implosion of collapsed investment firm Archegos and the insolvency of British supply chain finance company Greensill Capital.

Europe’s wider banking index gained 0.4%.

“We see the resignation as a negative outcome for Credit Suisse,” JPMorgan analysts said. “While the company indicates it will continue to execute its strategy, we believe the ongoing turnover with management changes brings further uncertainty.”

European stocks notched record highs at the start of the year, but trading hit a turbulent patch in recent days as investors priced in an aggressive tightening of U.S. monetary policy, while fears remain around the Omicron coronavirus variant slowing economic growth in the short-term.

Sabadell rose 2.7% after HSBC upgraded the stock to “buy” from “hold”, as the brokerage sees the Spanish lender’s return on equity improving at a faster pace than its peers.

EDF slipped 1.7%, extending losses after Friday’s 15% fall as HSBC downgraded the French utility’s stock, saying it will face “double trouble” of higher costs and lower prices caused by government intervention and lower nuclear output.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

The Week Ahead – Earnings, Central Bank Chatter and a Busy Economic Calendar in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 63 stats in focus in the week ending 21st January. In the week prior, 44 stats had been in focus.

For the Dollar:

Key stats include Philly FED Manufacturing and initial jobless claims due out on Thursday.

Other stats include NY Empire State Manufacturing and housing sector data. These stats should have a muted impact on the markets, however.

In the week ending 14th January, the Dollar Spot Index fell by 0.58% to 95.165.

For the EUR:

ZEW Economic Sentiment figures for Germany and the Eurozone will be the key stats early in the week.

Finalized December inflation figures for member states and the Eurozone in the week will also draw interest.

At the end of the week, however, expect Eurozone consumer confidence figures to also influence. The markets will be looking for the effects of rising consumer prices on sentiment.

On the monetary policy front, the ECB monetary policy meeting minutes are due out on Thursday, with ECB President Lagarde scheduled to speak on Friday.

For the week, the EUR rose by 0.44% to $1.1411.

For the Pound:

It’s an important week ahead on the economic calendar.

On Tuesday, claimant counts and the UK’s unemployment rate will be in focus.

Inflation and retail sales figures due out on Wednesday and Thursday will also be key, however.

The stats through the week should give the BoE the numbers it needs to decide what’s next on the policy front.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak on Wednesday.

The Pound rose by 0.64% to end the week at $1.3675.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

Inflation figures will be in focus on Tuesday, ahead of retail sales and employment figures on Friday.

With the markets expecting a hawkish BoC, this week’s stats could seal the fate of the Loonie near-term.

The Loonie ended the week up 0.72% to C$1.2552 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Westpac consumer sentiment and employment figures will be in focus. While consumer sentiment is important, expect the employment numbers to be key. Another sharp pickup in hiring could force the RBA to reconsider its current stance on cash rates.

The Aussie Dollar rose by 0.36% to $0.7207.

For the Kiwi Dollar:

Business confidence figures for the 4th quarter get things started on Tuesday. We have seen business confidence wane recently, so the markets will be expecting some weak numbers.

Of greater significance will be electronic card retail sales figures due out on Wednesday.

At the end of the week, Business PMI numbers will also draw interest, however.

The Kiwi Dollar ended the week up by 0.37% to $0.6804.

For the Japanese Yen:

It’s a relatively quiet week ahead. Key stats are limited to trade data on Thursday and inflation figures on Friday. We don’t expect the numbers to move the dial, however.

On Tuesday, the BoJ also delivers its first monetary policy decision of the year. No surprises are expected…

The Japanese Yen rallied by 1.19% to ¥114.190 against the U.S Dollar.

Out of China

It’s a big week, with 4th quarter GDP numbers due out on Monday. Expect the numbers to set the tone for the week. Disappointing growth figures could bring into question market optimism towards the global economic outlook.

Other stats on Monday include fixed asset investments, industrial production, and retail sales figures. Barring dire numbers, however, these should have a limited impact on the markets.

On the monetary policy front, the PBoC will also be setting loan prime rates on Thursday.

The Chinese Yuan ended the week up by 0.39% to CNY6.3528 against the U.S Dollar.

Geo-Politics

Nothing new to consider in the week ahead, with China and Capitol Hill and Russia continuing to be the key areas of focus.

COVID-19

COVID-19 news updates will remain a key area focus. Risk aversion could hit should a new strain of the virus appear in a developed economy.

Corporate Earnings

It’s also corporate earnings season, with a number of big names releasing results that could test support for riskier assets.

The Weekly Wrap – U.S Inflation and FED Commentary Delivered a Choppy Week for the Markets

The Stats

It was a quieter week on the economic calendar, in the week ending 14th January.

A total of 44 stats were monitored, which was down from 63 stats in the week prior.

Of the 44 stats, 19 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. 6 stats were in line with forecasts in the week.

Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 25 stats, 23 reflected a deterioration from previous.

For the Greenback, it was back into the red. In the week ending 14th January, the Dollar Spot Index fell by 0.58% to end the week at 95.167. A 0.65% slide on Wednesday did most of the damage as the markets responded to U.S inflation figures. In the week prior, the Index had risen by 0.07% to 95.739.

Out of the U.S

It was a big week for the Dollar. In the first half of the week, FED Chair Powell testimony and December inflation figures were key drivers.

While the FED Chair talked of the need to hike rates, there was no mention of the need for more than 3 this year. This was taken as a positive for the riskier assets and negative for the Dollar.

On Wednesday, another spike in inflation failed to spook the markets. This was in spite of the U.S annual rate of inflation at its highest since 1982. An easing in energy prices for the first time since the uptrend was taken as a sign of a possible topping out.

Jobless claims failed to impress on Thursday, with initial jobless claims increasing from 207k to 230k in the week ending 7th January.

Retail sales figures for December wrapped things up on Friday. In December, retail sales fell by 1.9% versus a forecasted 0.1% decline. Core retail sales tumbled by 2.3% versus a forecasted 0.2% rise.

Out of the UK

Retail sales were in focus early in the week. In December, the BRC Retail Sales Monitor was up 0.6% year-on-year versus a forecasted 0.3% increase. In November, retail sales had been up by 1.8%.

More significantly, however, were manufacturing production and GDP numbers at the end of the week.

The stats were skewed to the positive, supporting the more hawkish outlook on BoE monetary policy.

Manufacturing production rose by 1.1% in November versus a forecasted 0.2%. In October, manufacturing production had risen by 0.1%.

Month-on-month, the economy grew by 0.9% in November, following 0.2% growth in October, which was also Pound positive.

In the week, the Pound rose by 0.64% to end the week at $1.3675 In the week prior, the Pound had risen by 0.41% to $1.3588.

The FTSE100 ended the week up by 0.77% following a 1.36% gain from the previous week.

Out of the Eurozone

Key stats included Eurozone unemployment, industrial production, and trade data for November.

The stats were skewed to the positive. The Eurozone’s unemployment rate fell from 7.3% to 7.2%, with industrial production up 2.3% in the month. Production had fallen by 1.3% in October.

Trade data was EUR negative, however, while finalized inflation figures for France and Spain had a muted impact on the EUR. The Eurozone’s trade balance narrowed from a €3.3bn surplus to a €1.5bn deficit in November. It was the Eurozone’s first goods trade deficit since January 2014.

From the ECB, the Economic Bulletin sent mixed signals, while suggesting that inflation was more than just transitory.

For the week, the EUR rose by 0.44% to $1.1411. In the week prior, the EUR had fallen by 0.08% to $1.1361.

The DAX30 slipped by 0.40%, with both the CAC40 and the EuroStoxx600 ending the week down by 1.05% respectively.

For the Loonie

There were no material stats for the markets to consider. The lack of stats left market sentiment towards BoC monetary policy to influence, with the markets expectations of an imminent move delivering support.

An upswing in crude oil prices in the week was also Loonie positive.

In the week ending 14th January, the Loonie rallied by 0.72% to C$1.2552 against the Greenback. In the week prior, the Loonie had fallen by 0.05% to C$1.2643.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar rose by 0.36% to $0.7207, with the Kiwi Dollar gaining 0.37% to end the week at $0.6804. A Friday sell-off limited the upside for the week.

For the Aussie Dollar

Retail sales and trade data were in focus, which delivered mixed results.

Key, however, was a 7.3% jump in retail sales in November versus a forecasted 3.9% increase. In October, retail sales had risen by 4.9%.

Australia’s trade surplus narrowed from A$11.22bn to A$9.423bn in November. Economists had forecasted a surplus of A$10.60bn.

For the Kiwi Dollar

Economic data was limited to building consents, which had a muted impact on the Kiwi Dollar in the week.

For the Japanese Yen

There were no material stats to provide the Yen with direction in the week.

The Japanese Yen rallied by 1.19% to ¥114.190 against the U.S Dollar. In the week prior, the Yen had fallen by 0.42% to ¥115.560.

Out of China

It was a relatively busy week on the economic data front. Inflation and trade data were in focus in the week.

In December, inflationary pressures eased, with China’s annual rate of inflation softening from 2.3% to 1.5%. China’s annual wholesale rate of inflation softened from 12.9% to 10.3%. These were positive for riskier assets, however.

Trade data was upbeat for December. China’s USD trade surplus widened from $71.72bn to $94.46bn. Exports were up 20.9% year-on-year, while imports increased by 19.5%. Exports been up by 22.0% and imports up by 31.7% in November.

In the week ending 14th January, the Chinese Yuan rose by 0.39% to CNY6.3528. In the week prior, the Yuan had ended the week down by 0.34% to CNY6.3778.

The Hang Seng Index ended the week up by 3.79%, while the CSI300 slid by 1.98%.

Weak global mood hits UK shares, Cineworld marks box office recovery

By Sruthi Shankar

(Reuters) – UK shares slid on Friday, reflecting the weaker mood in global markets over fears about faster U.S. rate hikes, although data pointing to a much stronger-than-expected economic recovery in November helped limit losses.

The blue-chip FTSE 100 slipped 0.3%, tracking global equities as investors considered imminent U.S. interest rate hikes and the uncertainty of their impact on the economy.

Still, the FTSE 100 recorded a fourth consecutive weekly gain, with energy stocks outpacing other sectors as crude prices were boosted by supply constraints and a weaker dollar. [O/R]

Data showed Britain’s economy grew by a much stronger-than-expected 0.9% in November, finally taking it above its size just before the country went into its first COVID-19 lockdown.

“The figures show the economy was in good shape during November though the surge of Omicron during December and January is likely to put downward pressure on the figures over the next couple of months,” said Dan Boardman-Weston, chief investment officer at BRI Wealth Management.

“The Bank of England will continue to face pressure to raise interest rates further if the economy continues to be so strong.”

The FTSE midcap index slipped 0.9% and posted its worst weekly decline since November, with homebuilders turning into a weak spot in recent days following a slew of discounted stock placements and weak trading updates.

Cineworld shares rose 4.0% as the company’s box office sales recovered in December due to the success of Marvel superhero film “Spider-Man: No Way Home”.

Discount retailer B&M European Value Retail fell 5.3% after its share sale announcement.

Electricals retailer Currys fell 6.9% as it trimmed its full-year profit guidance after what it called a “challenging” technology market at Christmas.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Subhranshu Sahu and Alison Williams)

Countryside Properties, M&S drag British midcaps lower; banks lift FTSE 100

By Shashank Nayar

(Reuters) – London’s FTSE 250 index slipped on Thursday, dragged down by shares of Countryside Properties and Marks & Spencer, while a rise in heavyweight financial and commodity stocks helped the FTSE 100 edge higher.

The domestically-focussed mid-cap index closed 0.4% lower, with homebuilder Countryside Properties dropping 20.6% to the bottom of the index after a disappointing trading update and as its chief executive stepped down.

Marks & Spencer slipped 7.9% after the retailer nudged up its full-year forecast for profit before tax to be at least 500 million pounds ($686 million) versus a prior estimate of about 500 million pounds.

Laura Hoy, an analyst at Hargreaves Lansdown said, M&S shares had “climbed markedly higher since the start of the pandemic, and it will take a lot more than a nudge to profits to sustain those expectations.”

Tesco, Britain’s biggest retailer, also raised its profit outlook on stronger than expected Christmas sales, but along with other retailers it warned of pain to come from higher freight costs, wage hikes for warehouse workers and more expensive raw materials.

Its shares slipped 0.9%

“This response seems a little churlish but may have more to do with the fact that the shares are close to their highest levels in 11 months and it certainly doesn’t mean they can’t go higher longer term,” CMC Markets analyst Michael Hewson said about Tesco.

Tesco and M&S have gained nearly 20% and 75.1% over the past year, respectively, marking a strong recovery from the pandemic-induced sell-off.

The FTSE 100 ended 0.2% higher, boosted by HSBC, Prudential, Barclays and Lloyds Group.

The blue-chip index is on track for its fourth consecutive week of gains as heavyweight energy, mining and banking stocks have helped it outperform both the wider European index and Britain’s mid-cap index this year.

Oilfield services and engineering firm Wood Group jumped 20.5% after it said selling a division under its consulting business was the best option to deliver value for shareholders.

(Reporting by Shashank Nayar and Devik Jain in Bengaluru Editing by Amy Caren Daniel and Mark Potter)

FTSE 100 gains as miners, strong earnings support

By Shashank Nayar

(Reuters) -London’s FTSE 100 ended higher on Wednesday, led by mining and oil giants following a global rally in risk assets, while a slew of positive earnings updates including a forecast lift from supermarket group Sainsbury’s also aided the mood.

The blue-chip index gained 0.8%, with heavyweight metal miners BHP Group, Glencore, Antofagasta and Anglo American jumping about 3% on hopes of more economic support in China, the world’s top metal consumer. [.SS] [METL/]

Overall, global equities took comfort from less hawkish comments by U.S. Federal Reserve Chairman Jerome Powell on Tuesday after fears about quicker U.S. interest rate rises had dented markets in recent sessions. [MKTS/GLOB]

Sainsbury’s gained 3.1% after it raised its full-year profit forecast by at least 9% following stronger-than-expected food sales over Christmas, even though it fell short of its stellar 2020 festive performance.

“Sainsbury’s is sliding down the value chain to appeal to cost-conscious shoppers,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.

“It’s a relief to see the group target a more specific market, and this approach could certainly help in an inflationary environment as incomes don’t stretch as far.”

The domestically focused mid-cap index advanced 0.1%, with homeware retailer Dunelm up 5.1% among the top gainers after it said it expected its full-year profit to be “materially ahead” of market expectations.

The FTSE 100 has gained about 1.5% so far this year, outperforming the wider European stock aggregate, which is down 1%. A heavy presence of banking shares, which have surged this year as investors ramp up rate hike expectations, has helped the index’s outperformance.

Among other earnings updates, recruiter PageGroup lifted its full-year profit forecast for the third time in six months, buoyed by a surge in demand for long-term hiring and staff shortages, however its shares ended 0.6% down.

JD Sports Fashion fell 3.3% to give back early gains even as it raised its annual profit forecast ahead of market expectations.

(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Subhranshu Sahu and Hugh Lawson)

UK stocks edge higher, cybersecurity firm Darktrace soars on forecast lift

By Shashank Nayar

(Reuters) -London’s blue-chip index rose on Tuesday, as global equities paused after a recent sell-off on concerns about tighter monetary policies, while midcap stocks bounced off near three-week lows.

The internationally focussed FTSE 100 ended 0.6% higher, still lagging its European peers such as Germany’s DAX and France’s CAC 40 that have been hit hard recently due to a bigger exposure to technology firms. [.EU]

Darktrace surged 6.9% and was among the top gainers on the mid-index after raising its full-year outlook for revenue and earnings margin following strong customer growth and retention in the first half of the year.

“UK’s market is less exposed to tech stocks and with the sector inherently being more volatile given their nature, taking that away from the FTSE 100 gives it a more stable personality right now,” said Stuart Cole, head macro economist at Equiti Capital.

“We have the Bank of England and its willingness to further tighten policies following its December hike … there is a sense that monetary normalisation is on the cards.”

Investors have increased bets of an interest rate hike as early as next month after the Bank of England surprised with a rate hike in December. Rate-sensitive banks have outperformed with a near 10% gain so far in 2022.

Gaming companies Entain and Flutter rose more than 1% after Citigroup published bullish views on the sector amid prospects for U.S. regulation of online sports betting.

Robert Walters rose 4.0% after the recruitment firm forecast annual profit to exceed current expectations and posted higher net fees as it benefited from businesses ramping up hiring.

The FTSE 250 mid-cap index climbed 0.1% after sinking to its lowest since Dec. 22 in the previous session.

Marks & Spencer rose 1.3% after data from market researcher NielsenIQ showed it was Britain’s fastest growing food retailer in the Christmas quarter.

(Reporting by Sruthi Shankar, Shashank Nayar and Amal S in Bengaluru; Editing by Shounak Dasgupta and Lisa Shumaker)

Housebuilders dent London’s FTSE 100 even as consumer staples gain

(Reuters) -UK’s blue-chip index ended lower on Monday as housebuilders were hit by $5.4 billion in costs to remove cladding from buildings, while a weaker pound lifted consumer staples.

The FTSE 100 ended 0.5% lower following weekly gains spurred by a rotation into sectors such as banks, oil & gas and mining as investors priced in faster interest rate hikes by major central banks.

Large dollar earners including Diageo, Unilever, British American Tobacco, Reckitt Benckiser gained between 0.7% and 2%, lifted by the weaker pound.

Berkeley Group, Barratt Developments, Persimmon and Taylor Wimpey were down between 3.0% and 2.8% after Britain ordered housebuilders to pay around $5.4 billion to help remove dangerous cladding from buildings following a deadly 2017 London fire.

Housing minister Michael Gove set an early-March deadline for the industry to agree to a fully funded plan of action, including a dedicated fund to deal with unsafe cladding.

“The housebuilders have benefited from generous incentives, such as Help to Buy and the mortgage guarantee scheme, in recent years. However, state support is not a one-way street and the sector needs to do its bit to look after its customers,” said Russ Mould, investment director at AJ Bell.

Persimmon had the least risk due to its low exposure, while Barratt, Bellway, Berkeley & Taylor Wimpey all had the higher risk of a more meaningful step up in provisions, Jefferies analysts said.

Housebuilders Redrow, Countryside Properties, Bellway and Vistry Group dropped between 2.8% and 4.4%, while the FTSE 250 index slipped 1.5%, recording its fourth consecutive-session in losses.

Big banks such as HSBC, Barclays and Standard Chartered rose about 1% each, building on last week’s gains.

Plus500 rose 3.1% after the online trading platform said it expects annual results to exceed market expectations, even as it reported slower fourth-quarter growth.

Biotech firm Avacta Group slumped 33.4% after it said it was halting sales of its COVID-19 antigen lateral flow test, AffiDX, to replace antibodies in the device and boost its ability to detect the Omicron variant at lower viral loads.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shounak Dasgupta, William Maclean)

The Week Ahead – Central Bank Chatter, COVID-19, and Stats from China and the U.S Key

On the Macro

It’s a quieter week ahead on the economic calendar, with 49 stats in focus in the week ending 14th January. In the week prior, just 63 stats had been in focus.

For the Dollar:

December inflation figures will be in focus on Wednesday along with wholesale inflation numbers on Thursday. Expect plenty of interest in the numbers, with inflation key to the FED’s policy moves for the year.

On Thursday, jobless claims will also draw interest ahead of retail sales and consumer sentiment figures on Friday.

With the markets now zoomed in on the FED, FED Chair Powell is due to give testimony on Tuesday before the Committee on Banking, Housing, and Urban affairs. Expect plenty of market interest, with FOMC member chatter in the week also needing consideration.

In the week ending 7th January, the Dollar Spot Index rose by 0.05% to 95.719.

For the EUR:

Unemployment and industrial production figures for the Eurozone will be the key stats early in the week. On Friday, Eurozone trade data will also draw interest.

Finalized member state inflation figures due out in the week should have a muted impact, however, barring any upward revisions.

On the monetary policy front, the markets will be looking for any shift in ECB stance on inflation. ECB President Lagarde is scheduled to speak in the week.

For the week, the EUR slipped by 0.08% to $1.1361.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Industrial and manufacturing production figures are due out on Friday along with GDP and trade data.

Expect the GDP and manufacturing production figures to be key.

The Pound rose by 0.41% to end the week at $1.3588.

For the Loonie:

It’s a particularly quiet week ahead on the economic calendar.

There are no major stats due out of Canada to provide the Loonie with direction. With no stats to consider, the Loonie will be in the hands of crude oil prices and market risk sentiment.

The Loonie ended the week down 0.05% to C$1.2643 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

Retail sales and trade data will be in focus on Tuesday. Expect retail sales to be the key stat, however.

The Aussie Dollar slid by 1.13% to $0.7181.

For the Kiwi Dollar:

Economic data is limited to building consents that should have a muted impact on the Kiwi Dollar.

The Kiwi Dollar ended the week down by 0.69% to $0.6779.

For the Japanese Yen:

There are no material stats for the markets to consider. A lack of stats will leave the Yen in the hands of market risk sentiment and yield differentials.

The Japanese Yen fell by 0.42% to ¥115.560 against the U.S Dollar.

Out of China

Inflation figures for December will draw interest on Wednesday. Expect any market pickup in inflationary pressure to test support for riskier assets. At the end of the week, trade data will also influence. Weak numbers could point to further supply chain disruption stemming from the Omicron strain.

The Chinese Yuan ended the week down by 0.34% to CNY6.3778 against the U.S Dollar.

Geo-Politics

Nothing new to consider in the week ahead, with China and Capitol Hill and Russia continuing to be the key areas of focus.

COVID-19

COVID-19 news updates will remain a key area focus. Risk aversion could hit should a new strain of the virus appear in a developed economy.

The Weekly Wrap – COVID-19, Economic Data, and FED Monetary Policy Delivered a Choppy Week

The Stats

It was a particularly busy week on the economic calendar, in the week ending 7th January.

A total of 63 stats were monitored, which was up from 15 stats in the week prior.

Of the 63 stats, 34 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There 6 stats that were in line with forecasts in the week.

Looking at the numbers, 25 of the stats reflected an upward trend from previous figures. Of the remaining 38 stats, 31 reflected a deterioration from previous.

For the Greenback, it was back into the green. In the week ending 7th January, the Dollar Spot Index rose by 0.07% to 95.739. A 0.60% slide on Friday limited the upside, however. In the previous week, the Dollar Spot Index declined by 0.36% to 95.670. While finding strong support from the more hawkish FOMC meeting minutes on Wednesday, disappointing NFP numbers on Friday weighed.

Out of the U.S

Private sector PMIs and labor market stats were in focus ahead of Friday’s all-important nonfarm payrolls.

The stats were skewed to the negative, with private sector growth slowing. In December, the ISM Manufacturing PMI fell from 61.1 to 58.7. More significantly, the ISM Non-Manufacturing PMI declined from 69.1 to 62.0.

Labor market stats were also skewed to the negative in the week. In November, JOLT’s job openings stood at 10.562m, which was down from 11.091m in October. Initial jobless claims increased from 200k to 207k in the week ending 31st December.

More significantly, however, was a modest 199k increase in nonfarm payrolls in December. Economists had forecast a 400k rise. The markets were likely expecting more following an 800k increase in nonfarm payrolls according to the ADP. In spite of the lower number, the U.S unemployment rate fell from 4.2% to 3.9%.

On the monetary policy front, the FOMC meeting minutes were also in focus mid-week. The U.S equity markets responded negatively to more hawkish minutes than expected, which drove demand for the Dollar. The minutes revealed that the FED may need to lift rates sooner than had been previously priced in.

Out of the UK

Finalized private sector PMIs were in focus, with the stats Pound positive for the week. In December, the manufacturing PMI rose from 57.6 to 57.9, with the services PMI up from 53.2 to 53.6. As a result, the composite PMI increased from 53.2 to 53.6. All 3 were revised up from prelim figures.

In the week, the Pound rose by 0.41% to end the week at $1.3588 In the week prior, the Pound had rallied by 1.09% to $1.3532.

The FTSE100 ended the week up by 1.36% following a 0.17% gain from the previous week.

Out of the Eurozone

Private sector PMIs for the Eurozone and member states, inflation, and the German economy were in focus.

Manufacturing sector growth remained relatively stable in December, while the services sector took a hit.

The Eurozone’s manufacturing PMI fell from 58.4 to 58.0, while the services PMI declined from 55.9 to 53.1. As a result, the Eurozone Composite PMI fell from 55.4 to a 9-month low 53.3.

For Germany, retail sales, unemployment, and industrial production figures were all upbeat for November. With the sharp rise in Omicron cases late in the year, however, the numbers had a relatively muted impact on the EUR. A sharp narrowing in Germany’s trade surplus also failed to move the dial.

On the inflation front, however, the prelim numbers pointed to another pickup in inflationary pressure in December.

While France’s annual rate of inflation held steady at 2.8%, Germany’s picked up from 5.2% to 5.3%. Italy’s annual rate of inflation accelerated from 3.7% to 3.9%. As a result, the Eurozone’s annual rate of inflation ticked up from 4.9% to 5.0%. The uptick will likely put more pressure on the ECB to make a move, particularly after the FED’s shift in stance on interest rates.

For the week, the EUR slipped by 0.08% to $1.1361. In the week prior, the EUR had risen by 0.45% to $1.1370.

The EuroStoxx600 slipped by 0.40%, while the CAC40 and the DAX30 ended the week up by 0.91% and by 0.40% respectively.

For the Loonie

Trade data, together with employment and Ivey PMI numbers were in focus. The stats were skewed to the positive for the Loonie.

In November, Canada’s trade surplus widened from C$2.26bn to C$3.13bn. Employment rose by a further 54.7k in December, after a 153.7k jump in November. As a result, Canada’s unemployment rate fell from 6.0% to 5.9%.

The only negative for the Loonie was a sharp fall in the Ivey PMI from 61.2 to 45.0 in December.

Adding support to the Loonie in the week, was a pickup in crude oil prices. WTI Crude ended the week up by 4.91% to $78.9 per barrel.

In the week ending 7th January, the Loonie slipped by 0.05% to C$1.2643 against the Greenback. In the week prior, the Loonie had rallied by 1.39% to C$1.2637.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slid by 1.13% to $0.7181, with the Kiwi Dollar falling by 0.69% to end the week at $0.6779.

For the Aussie Dollar

There were no major stats to provide direction.

For the Kiwi Dollar

It was also a quiet week for the Kiwi Dollar, with no major stats for the markets to consider.

For the Japanese Yen

Finalized private sector PMIs, household spending, and inflation were key stats in the week.

It was a mixed set of numbers, however. The all-important services sector PMI fell from 53.0 to 52.1, with household spending also on the slide. In November, household spending fell by 1.2%, month-on-month.

Inflation figures were positive, however, with Tokyo’s core annual rate of inflation picking up from 0.3% to 0.5% in December.

The Japanese Yen declined by 0.42% to ¥115.560 against the U.S Dollar. In the week prior, the Yen had fallen by 0.61% to ¥115.080.

Out of China

It was a relatively quiet week on the economic data front. Private Sector PMIs were back in focus.

In December, the Caixin Manufacturing PMI rose from 49.9 to 50.9, with the services PMI increasing from 52.1 to 53.1.

In the week ending 7th January, the Chinese Yuan fell by 0.34% to CNY6.3778. In the week prior, the Yuan had ended the week up by 0.18% to CNY6.3561.

The Hang Seng Index ended the week up by 0.41%, while the CSI300 slid by 2.39%.

FTSE 100 ends third week higher on gains in banks, mining stocks

(Reuters) -The FTSE 100 rose on Friday to end the first week of the year higher on support from heavyweight banking and mining stocks, while investors sought to interpret mixed U.S. jobs data and its impact on Federal Reserve policy.

The commodity-heavy FTSE 100 ended 0.5% higher, rising for a third consecutive week with banks and miners leading gains.

Barclays and HSBC Holdings were among the top boosts on the index, tracking gains in benchmark bond yields. Miners Anglo American and BHP Group were the top gainers on strong metal prices.

UK bond yields rose for a fourth straight week and bank stocks recorded their biggest weekly rise in nearly 14 months after the Bank of England’s first rate hike in mid-December and hawkish comments from the U.S. Fed bolstered rate expectations.

The latest U.S. payrolls report showed weaker-than-expected jobs growth, while the unemployment rate fell to pre-pandemic levels of 3.9%.

The UK’s benchmark index this week outperformed its European peers and the domestically focussed midcap index, with both the STOXX 600 and FTSE 250 ending the first week of the year lower.

“The FTSE 100 has underperformed over the past two years, so it’s less susceptible to the big sell-off seen in some of the more highly valued areas of the market this week,” Michael Hewson, chief market analyst at CMC Markets UK, said.

The domestically focussed mid-cap index declined 0.3%.

Aston Martin jumped 6.6% after sales to dealers in 2021 surged 82%, even as the British luxury automaker forecast lower-than-expected annual adjusted core earnings.

C&C Group fell 2.7% after the drinks maker’s December sales lagged expectations due to pandemic-related curbs in the UK and Ireland.

British advertising group M&C Saatchi dropped 12.4% after it said it did not see much merit in a possible all-share takeover instigated by its biggest investor.

Software entrepreneur Vin Murria outlined plans for a tie-up with an associated acquisition vehicle on Friday.

(Reporting by Bansari Mayur Kamdar and Shashank Nayar in Bengaluru; Editing by Shounak Dasgupta and Jan Harvey)

UK stocks fall as hawkish Fed triggers global sell-off

By Bansari Mayur Kamdar

(Reuters) -UK shares dropped on Thursday, tracking a fall in global equity markets after minutes of the U.S. Federal Reserve’s December meeting showed the central bank’s hawkish stance toward interest rate hikes as it looks to tame high inflation.

The FTSE 100 ended 0.9% lower, with industrial and healthcare stocks being the top drags, down 2.6% and 1.3% respectively.

Global equities sold off after it emerged that U.S. central bank policymakers said in their meeting last month that a “very tight” job market and unabated inflation might require the Fed to raise interest rates sooner than expected.

Banking stocks gained 2.1% as UK 10-year yields rose, fuelled by rate hike expectations.

“If you’re looking for a value play at the moment, the UK is quite attractive,” said Oliver Blackbourn, portfolio manager at Janus Henderson Investors.

“It tends to do well in these sorts of environments because of factors like its currency which tends to be sort of risk-on and also the mix of sectors in the UK market today is really helping.”

The FTSE 100 gained 14.3% in 2021, lagging European and U.S. peers, but Blackbourn said he expects UK stocks to start catching up as markets move toward more value-oriented segments from growth sectors such as technology.

The domestically focussed mid-cap index declined 1.5%, with travel and leisure stocks falling 1.6%.

Britain’s services sector grew in December at the slowest pace since the country was last in lockdown, as the spread of the Omicron variant of the coronavirus hammered hospitality and travel, a survey showed.

Three leading British retailers Next, Greggs, and B&M on Thursday underscored the threat they face from inflation this year, with their bosses battling to remain competitive as consumer finances come under pressure and prices surge.

Dr. Martens slumped 10.7% after bookrunner Goldman Sachs International said Permira Funds sold about 65 million shares of the boot maker.

Food-to-go retailer Greggs fell 8.0% after saying surging cases of Omicron were putting pressure on its store staff, though it was manageable from a business perspective.

(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Subhranshu Sahu, Vinay Dwivedi, Elaine Hardcastle)

Commodity-linked stocks lift UK’s FTSE 100 after dull start

By Bansari Mayur Kamdar

(Reuters) -UK’s blue-chip index extended gains for the second straight session on Wednesday, as a rally in oil and mining stocks helped counter early gloom amid concerns about tighter U.S. monetary policy.

After falling as much as 0.2%, the FTSE 100 reversed course to gain 0.2%, closing at its highest since February 2020, While the domestically focussed mid-cap index fell -0.5%.

Base metal miners rose 1.9% leading gains on the index. Oil majors BP and Royal Dutch Shell gained about 1.5%, extending gains from the previous session, after OPEC+ producers stuck to an agreed output target rise for February. [O/R]

“Demand for oil has held up and is proving able to largely withstand the latest coronavirus wave… suggesting a global economy that is becoming more adept at dealing with the problems caused by the virus,” said Stuart Cole, macroeconomist at Equiti Capital.

Prime Minister Boris Johnson said on Tuesday that England could withstand a surge in COVID-19 infections without shutting down the economy as Britain reported another record daily high in cases, fuelled by the Omicron variant.

U.S. stocks were flat or down and Treasury yields largely unchanged Wednesday morning following earlier gains to start the new year and ahead of key Federal Reserve meeting minutes to be released later in the day. [MKTS/GLOB]

“Evidence of a more robust response being contemplated by the FOMC (Federal Open Market Committee) could see equity markets struggle a bit today,” Cole added.

Some positive brokerage action offset losses on the FTSE 100.

London Stock Exchange Group gained 1.7% after Citigroup upgraded its shares to “buy”, while online grocer Ocado and plumbing products distributor Ferguson added 4.9% and 0.5%, respectively, following rating upgrades by Berenberg.

(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Shounak Dasgupta and Jonathan Oatis)

Apple retreats again, after valuation tops $3 trillion again

By Medha Singh and Noel Randewich

(Reuters) – Apple Inc’s stock market value peaked on Tuesday for a second day above a $3 trillion, but the iPhone maker’s shares again failed hold that gain by the session’s end.

Apple shares ended down 1.3% at $179.70, leaving its market capitalization at $2.95 trillion.

On Monday, Apple’s stock market value rose briefly above $3 trillion for the first time ever, and it repeated that again on Tuesday before losing ground. The world’s most valuable company has yet to end a session at that level.

Apple accounts for nearly 7% of S&P 500 index’s value, according to Refinitiv data, the highest for a single stock in the index at a time when the benchmark is perched at a peak.

Surging demand for iPhones, MacBooks and iPads during the pandemic helped push the Cupertino, California company’s market capitalization past $2 trillion in August 2020.

“Apple has been one of the key pandemic trades for a lot of people and as we exit the pandemic. … the iPhone maker is going to struggle a little bit,” warned Edward Moya, senior market analyst at Oanda in New York.

Apple’s massive share repurchases in recent years have also fueled its stock rally.

The company has bought back $348 billion worth of shares in the five years through the September quarter of 2021, reducing its share count by 23% over that period, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

“You know there’s going to be buying,” Silverblatt said. “From an investor point of view, it’s very important.”

With Tesla now the world’s most valuable automaker as Wall Street bets heavily on electric cars, many investors expect Apple to launch its own vehicle within the next few years as it looks to reduce its current reliance on iPhones for about half of its revenue.

Notably, Apple is worth more than any of Europe’s main regional indexes including Britain’s FTSE 100, France’s CAC 40, Germany’s DAX, Spain’s IBEX 35 and Italy’s FTSE MIB.

Apple’s stock is now up 1% in 2022 after gaining 34% last year. It is trading at about 31 times expected 12-month earnings, which is expensive compared to its five-year average of 20 times expected earnings, according to Refinitiv data.

(Reporting by Medha Singh and Bansari Mayur Kamdar in Bengaluru, additional reporting by Julien Ponthus in London, Caroline Valetkevitch in New York and Noel Randewich in Oakland, California; Editing by Sriraj Kalluvila)

FTSE 100 hits fresh 1-1/2 year high in upbeat start to the year

By Bansari Mayur Kamdar

(Reuters) -Britain’s FTSE 100 rose on Tuesday in the first trading session of 2022, after its best annual gain in five years, following signs the Omicron coronavirus variant is less likely to derail the global economic recovery.

The blue-chip FTSE 100 gained 1.6%, closing at its highest since February 2020, while the domestically focussed mid-cap index advanced 1.8% in a catch-up rally after a long holiday weekend.

Financials led gains, with banking and life insurance stocks adding 4.8% and 3.2% respectively.

“A higher rate cycle always calls for a better performance for the banks as it’s going to be helpful in their profits, especially their interest rate margins,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

The yield on two-year British government bonds hit its highest since late October after Prime Minister Boris Johnson said new measures were not needed now to fight the Omicron variant.

London-listed airline stocks soared, with Wizz Air, EasyJet and British Airways-owner IAG gaining between 7.5% and 10%, after Hungary-based Wizz Air reported strong load factor data.

Prime Minister Boris Johnson was due to hold a COVID-19 news conference later in the day, amid a surge of the Omicron variant that has led to record high coronavirus cases and hit staffing numbers at hospitals.

The FTSE 100 gained 14.3% in 2021, its best annual performance since 2016, helped by gains in commodity-linked and industrial stocks.

British retailers gained 1.0%, tracking global sentiment, even though footfall in shops in the days after Christmas was 24.5% lower than the same week in 2019, Springboard analysts said.

British manufacturing grew slightly more quickly than originally thought in December and pandemic-related supply chain problems eased a bit, taking some of the heat out of rising input prices, a survey showed on Tuesday.

(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Shounak Dasgupta and Alex Richardson)