UK stocks dipped modestly in early trading on Wednesday after the International Monetary Fund (IMF) raised its global growth recovery forecast but flagged Britain’s severe pandemic impact as likely to drag on its own economic bounce-back.

The IMF now expects the global economy to grow 5.5% this year, a 0.3% increase from October’s forecast, but cut its UK estimates from 5.9% to 4.5% as virus cases continue to rise and increased curbs on travel upped the worry ante.

At 9am, the benchmark FTSE 100 was 0.15% lower at 6,644.19 with investors primed for more US tech earnings as well as the outcome of the first meeting of the Federal Reserve in 2021.

Market sentiment may also be taking a hit from the prospect of more coronavirus-related lockdowns across the UK and Europe, particularly after Britain announced the death toll from the virus had passed 100,000 yesterday afternoon.

The anticipation over earnings and the Fed meant the main US indexes finished slightly lower overnight, with the Dow Jones Industrial Average, S& P and Nasdaq all closing modestly lower overnight, despite the bright start to a busy week for tech updates with computing giant Microsoft reporting second quarter earnings that beat market expectations.

Apple, Facebook and Tesla update later Wednesday, while European Software giant SAP is due to provide a strategy update.

There is a more upbeat mood in Asia, with Japan’s Nikkei 225 up 0.3% while Hong Kong’s Hang Seng rose 0.1%.

On currency markets, the pound was relatively flat against the dollar at around $1.374, although any news from the Fed meeting later today could provide some catalysts for movement.

RESOURCES IN THE SPOTLIGHT

In company news, Precious metal miner Fresnillo (FRES) topped the blue-chip loser board with a 3.5% fall to £10.225 after forecasting lower gold output for this year than Covid-hit 2020.

This was mainly after a land slip at one of its mines in Mexico restricted operations.

Education publisher Pearson (PSON) led the FTSE 100 risers, jumping 12% to 850.2p. The company talked up its digital initiatives in an update last week.

Oil exploration company Tullow Oil (TLW) dropped nearly 2% to 30.64p even after saying it expects its operating cash flow to reach $500 million in 2021. But that is if the oil price stays above $50 a barrel, a seemingly big if.

IT skills and professional services firm FDM (FDM) nudged marginally lower, reversing 0.6% to £10.12 after it cut its final dividend amid a fall in annual earnings and revenue.

FDM declared a final dividend of 13p per share, down from 18.5p year-on-year, bringing total payouts for the year to 31.5p, down from 34.5p in 2019.

Home repairs and improvements business HomeServe (HSV) moved 1% higher to £10.91 after announcing the appointment Tommy Breen as chairman designate. He will succeed Barry Gibson.

Breen, a former chief executive of Irish marketing group DCC (DCC), would become chairman on 19 May.

Infrastructure investor 3i Infrastructure (3IN) gained 0.6% to 304.35p after it said it was on track to meet its annual dividend target amid a fall in quarterly income that nevertheless met its expectations.

3i Infrastructure was targeting a dividend of 9.8p per share for the year through March, a year-on-year increase of 6.5%.

Furniture retailer ScS (SCS) declined more than 2% to 205p despite unveiling a 14% rise in first-half gross sales thanks to its shift online during UK’s first national Covid lockdown last year.

ScS’s order intake, however, had slumped in more recent weeks due to store closures linked to the country's third lockdown.

SMALLCAP WRAP

Materials developer Scapa (SCPA:AIM) jumped 25% to 222p after the company agreed a takeover deal from rival SWM. The agreement is pitched at 210p per share, valuing the business at around £403 million, but the reaction of the share price today suggests some hope that a rival buyer offering more could yet emerge.

Driver monitoring system designer Seeing Machines (SEE:AIM) jumped 11% to 13p after signing a development deal with US microchip giant Qualcomm.

Wealth management company Brewin Dolphin (BRW) added 0.7% to 298p after it reported a 7% rise in fourth-quarter revenue, driven by a positive market performance and high commissions.

Diversified Gas & Oil (DGOC) shed 1% to 113p, even as it reported an 18% rise in annual output that it said helped its 2020 results meet market expectations.

Agricultural product supplier Wynnstay (WYN) dropped 4% to 3465p as it reported a 7.5% fall in annual profit, after sales were hit by lower commodity prices amid the pandemic.

Wynnstay, however, increased its full-year dividend 4.3% to 14.6p per share after underlying earnings were boosted by lower spending.

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Issue Date: 27 Jan 2021