FTSE 100 little changed despite resurgence of aerospace-related stocks

• FTSE 100 down 6 points
• AstraZeneca little changed after a spate of regulatory announcements
• Former Post Office boss resigns from boards of Morrisons and Dunelm

London has got off to a quiet start to the week despite the best efforts of AstraZeneca PLC (LON:AZN), which has issued three releases.

The FTSE 100 was down 7 points (0.1%) at 6,932, despite investors deciding that aerospace-related stocks are back in favour again.

Aeroplane engine builder and maintainer Rolls-Royce Holdings PLC (LON:RR.), up 3.8% at 105.66p, was the top blue-chip riser, followed by British Airways owner International Consolidated Airlines SA (LON:IAG), which is up 3.3% at 203.25p.

Meanwhile, AstraZeneca PLC (LON:AZN) falls 0.2% to 7,553p, pretty much in line with the wider market after it said Selumetinib has been recommended for EU approval for paediatric patients with neurofibromatosis type 1 and plexiform neurofibromas.

The pharma giant also said its Tagrisso (osimertinib) treatment has been recommended for marketing authorisation in the European Union for the adjuvant treatment of adult patients with early-stage (IB, II and IIIA) epidermal growth factor receptor-mutated (EGFRm) non-small cell lung cancer (NSCLC) after complete tumour resection with curative intent.

Finally, it said the MELODY Phase III trial for nirsevimab met its primary endpoint of a statistically significant reduction in the incidence of medically attended lower respiratory tract infections (LRTI) caused by a respiratory syncytial virus (RSV) compared to placebo in healthy late preterm and term infants (35 weeks or more) during their first RSV season.

All good stuff but the market seems entirely focused on AstraZeneca’s COVID treatments at the moment, even though the company is selling the vaccine at cost.

Shares in Morrison (Wm) Supermarkets PLC (LON:MRW) are 0.4% firmer at 280p ahead of the release of market share data for the grocery sector tomorrow.

Over the weekend, Paula Vennells, the former boss of the Post Office, resigned from the board (and also from the board of another retailer, Dunelm) in the wake of the decision on Friday by judges to quash the convictions against 39 sub-postmasters who were accused by the Post Office of theft and false accounting; the discrepancies were in fact the result of faults in the information technology (IT) system designed by Fujitsu, the Japanese IT firm that keeps getting lucrative government contracts despite a reputation for incompetence that would discourage even Frank Spencer’s wife.

“It is obvious that my involvement with the Post Office has become a distraction from the good work undertaken by the boards I serve,” Vennells said.

“Paula Vennels’s decision to step down from the boards of Dunelm and Morrisons demonstrates the influence of three little letters and should fire a warning shot across the bows of all companies,” said Danni Hewson, a financial analyst at AJ Bell.

“ESG [Environmental, Social and Governance] has power, and whilst much of the focus has been on the environmental credentials of businesses it’s the S and G that have quietly been taking hold. Deliveroo’s IPO [initial public offering] might have been a different tale if it hadn’t been caught up in a row about employee rights and companies considering large pay rewards will find the shareholder bar this year is considerably higher than in the past,” Hewson said.

“It’s no longer enough to talk the talk on ESG, companies have to walk the walk and they will be judged harshly by investors and consumers if they fail to own up to or learn from their mistakes,” she concluded.

The FTSE 100 nudged into the red as local political issues trumped global recovery hopes on the first session back after the weekend.

Prime Minister Boris Johnson is playing Westminster ‘whack-a-mole’ as pressure mounts over the funding of his Downing Street flat with Labour calling for an inquiry.

The PM also faces the prospect of a Dominic Cummings tell-all at a Commons committee next month, while his former armed forces minister continues to chip away at the Johnson administration.

Not only that, there is the continuing fall-out from David Cameron’s lobbying on behalf of failed Greensill Capital, which has also blown up to taint the PM.

Richard Hunter, head of markets at Interactive Investor, is less interested in what happens in that patch of land slightly south and west of central London and says the week ahead is all about data.

“Quite apart from a raft of corporate earnings [see below] with the tech sector being in particular focus, the latest US GDP reading is expected, while the Federal Reserve meeting could provide further clues on the economic direction they are anticipating,” he said.

“The data will follow on from more strong readings in factory activity and new housing sales which helped the S&P500 to another record closing high on Friday.

“As comparatives become easier over this quarter and indeed the next, as the full effects of the pandemic last year are lapped in company numbers, a meaningful return towards normality is expected. At the same time, companies will have nowhere to hide if they miss expectations, especially set against share prices will have been reflecting hopes of a strong return to form.”

On the market, publisher Pearson (LON:PSON) delivered a reasonably solid increase (5%) in underlying revenues during the first three months. The shares advanced 3.4% on the back of the update.

Among the mid-caps, Tate & Lyle (LON:TATE) was the top performer with a 6.2% advance after it confirmed it was in talks to sell a controlling stake in the sweeteners business.

6.50 am: Subdued start predicted

The FTSE 100 looks set to make a subdued start to proceedings, with traders ignoring the upward pull of Asia and instead focusing on the political turmoil at home.

Chickens appear to be coming home to roost for Boris Johnson with former chief of staff, Dominic Cummings, reportedly ready to use his appearance before a Commons committee next month to challenge the PM’s handling of the pandemic.

There is then the immediate issue of how the upgrade to his Downing Street flat was paid for along with criticism from former armed forces minister, Johnny Mercer, which has also played out in the weekend press.

In Asia earlier, the markets were buoyant as recovery hopes continued to drive sentiment in this part of the world.

US futures, meanwhile, pointed to a positive start on Wall Street.

Looking ahead, the week’s big corporate news will be out of Silicon Valley.

There are quarterlies from Google owner Alphabet (NADAQ:GOOG), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN).

Here it home we have updates from Shell (LON:RDSA), BP (LON:BP.), GlaxoSmithKline (LON:GSK) and Whitbread along with the major banks.

Around the markets

• Pound US$1.3903 (+0.19%)
• Bitcoin US$52,513.63 (+5.26%)
• Gold US$1,782.60 (+0.28%)
• Brent crude US$65.77 (-0.51%)

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Monday as India recorded its highest number of new COVID-19 cases and deaths, at 352,991 and 2,812, respectively.

The Hang Seng index in Hong Kong rose 0.10% while the Shanghai Composite in China slipped 0.01%.

In Japan, the Nikkei 225 rose 0.41% and South Korea’s Kospi gained 0.67%.

Shares in Australia dipped, with the S&P/ASX 200 trading 0.13% lower.

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Proactive Australia news:

Chase Mining Corporation Ltd (ASX:CML) is trading higher as it welcomes the start of drilling by Red Fox Resources Pty Ltd at the Gipsy Creek Copper-Gold Project in the Cloncurry district of northwest Queensland.

Red River Resources Ltd (ASX:RVR) has received encouraging initial results from its first-pass reverse circulation (RC) drilling program at the New Homestead and Don gold prospects, part of its Thalanga Operations in northern Queensland.

Aurumin Ltd (ASX:AUN) has started reverse circulation (RC) drilling at its 100%-owned Mt Palmer Project, about 40 kilometres east-southeast of Southern Cross in Western Australia’s Goldfields.

Kazia Therapeutics Ltd (ASX:KZA) (NASDAQ:KZIA) (FRA:NV9) recently announced an agreement with Evotec SE (FRA:EVT) to in-license the global rights to EVT801, a novel inhibitor of vascular endothelial growth factor receptor 3 (VEGFR3).

Fe Limited (ASX:FEL) is progressing its JWD West Wiluna Iron Ore Project in Western Australia, having begun work this week to refurbish offices and other infrastructure at the existing exploration camp with the goal to begin early site works by the end of the month.

Paradigm Biopharmaceuticals Ltd (ASX:PAR) is making headway with its investigational new drug (IND) application for its proposed pivotal clinical trial treating subjects with Zilosul® for pain associated with knee osteoarthritis (OA).

Fenix Resources Ltd (ASX:FEX) shipped a total of 220,000 tonnes of iron ore from the Iron Ridge Project at an average price of US$156/tonne during the March quarter with the ramp-up now complete.

Matador Mining Ltd (ASX:MZZ) (FRA:MA3) is seeking to broaden its investor base by listing on multiple international platforms to complement its Australian Securities Exchange listing.

Story by ProactiveInvestors