ADVFN Morning London Market Report: Friday 22 May 2020

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London open: Stocks fall amid Hong Kong worries


London stocks fell in early trade on Friday, taking their cue from a weak Asian session on news that Beijing is planning to impose a new security law on Hong Kong.

At 0840 BST, the FTSE 100 was down 2% at 5,893.34.

Sentiment took a hit after it emerged that China is planning to introduce a national security law on Hong Kong that would ban “treason, secession, sedition and subversion” of the central government in Beijing.

Neil Wilson, chief market analyst at, said: “Shares in Hong Kong plunged on fears Beijing’s tough stance will spark fresh pro-democracy protests, potentially leading to the kind of widescale unrest we saw last year.

“The Hang Seng slid over 5% as China imposes controversial national security legislation that bypasses local lawmakers. The move was taken as China’s National People’s Congress convenes. Carrie Lam, the Hong Kong chief executive, says the territory will fully cooperate with China.

“This is a potentially significant flash point that will stir local protests and will anger the US. At a time of already strained relations between China and the West, this decision will only isolate Beijing even more. Investors will need to add renewed Hong Kong-Beijing tensions into their mix of geopolitical risks, whilst the way it fits into the broader US-China rivalry will be closely watched.”

Also weighing on the mood was China’s decision to scrap its annual growth target for the first time due to the impact of the coronavirus pandemic.

On home shores, the latest data releases did nothing to boost investor morale. Figures from the Office for National Statistics showed retail sales tumbled 18.1% in April, marking the biggest fall since records began in 1988 amid the coronavirus lockdown. Meanwhile, government borrowing hit its highest level on record last month at £62.1bn.

In equity markets, Asia-focused PrudentialHSBC and Standard Chartered were all under the cosh.

Elsewhere, investment platform AJ Bell was sharply lower after fund manager Invesco sold a 7.6% stake in the company.

Transport operator Go-Ahead lost ground as it warned that full-year operating profit will fall short of consensus expectations due to the pandemic.

On the upside, luxury fashion brand Burberry rallied despite pulling its final dividend and saying it took a £241m hit as a result of the virus outbreak.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Intertek Group Plc +6.08% +300.00 5,238.00
2 Kingfisher Plc +4.62% +7.80 176.80
3 Easyjet Plc +4.43% +24.40 574.80
4 Bt Group Plc +3.71% +4.10 114.70
5 International Consolidated Airlines Group S.a. +3.65% +7.25 206.10
6 Rolls-royce Holdings Plc +3.51% +9.60 283.30
7 Marks And Spencer Group Plc +3.37% +3.20 98.24
8 Land Securities Group Plc +3.20% +17.20 554.20
9 Ocado Group Plc +3.13% +62.50 2,059.00
10 Next Plc +2.77% +125.00 4,637.00


Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Whitbread Plc -13.44% -382.00 2,461.00
2 Standard Chartered Plc -5.32% -22.00 391.50
3 Lloyds Banking Group Plc -4.94% -1.48 28.39
4 Fresnillo Plc -4.21% -34.00 773.00
5 Micro Focus International Plc -4.01% -17.00 407.10
6 Legal & General Group Plc -3.78% -7.30 185.70
7 Hsbc Holdings Plc -3.36% -13.85 398.90
8 Antofagasta Plc -3.33% -28.60 829.40
9 Royal Bank Of Scotland Group Plc -3.33% -3.55 103.20
10 Tesco Plc -3.11% -7.30 227.10


US close: Stocks sink on jobless data, trade tensions

Wall Street stocks closed lower on Thursday as market participants digested another jobless report from the Department of Labor and news that the Senate had passed a bill that would make listings by Chinese firms on US exchanges more difficult led to fears of a ratcheting up in trade tensions between the world’s two biggest economies.

At the close, the Dow Jones Industrial Average was down 0.41% at 24,474.12, while the S&P 500 was 0.78% weaker at 2,948.51 and the Nasdaq Composite saw out the session 0.97% weaker at 9,284.88.

The Dow closed 101.78 points higher on Thursday, carrying on a rally started earlier on the week after Moderna Therapeutics announced some early success in trials for a Covid-19 vaccine.

The session’s main focus was on unemployment claims, as initial weekly jobless claims in the States continued to rise at an accelerated but revised figures for the prior week revealed a larger than expected slowdown.

According to the Department of Labor, the pace of new claims slowed by 249,000 over the week ending on 16 May to reach 2.438m. While the surge in claims had eased significantly since the start of the pandemic, it remained far above the roughly 220,000 clip at which they had been running before it.

Also under scrutiny throughout the session was news of setbacks in certain countries that had previously been praised for their managing of the coronavirus outbreak, leaving investors concerned about a second wave of cases, as were increased US-Sino tensions as a result of an increase in rhetoric from Donald Trump and a move by the Senate to pass a bill that could potentially ban Chinese firms like Alibaba and Baidu from listing on US exchanges also weighed on sentiment.

Elsewhere on the macro front, US business activity shrank at a slightly slower clip in May than in April as the economy began to emerge from Covid-19 related lockdowns.

IHS Markit‘s composite index of manufacturing and service providers’ purchasing managers improved 9.4 points to 36.4 in May. While this was an improvement on April’s data, it was still the second-lowest reading on record in the last 11 years. The data was also consistent with indexes for Europe, Japan and Australia, indicating a global recession is firmly on the cards.

Still on data, factory activity in the US mid-Atlantic region continued to shrink at an extraordinarily sharp pace in May, the results of a closely-followed survey revealed. The Federal Reserve Bank of Philadelphia‘s manufacturing sector index improved from a reading of -56.6 for April to -43.1 in May but remained below the -40.0 level forecast by economists.

Lastly, US home sales recorded their largest drop in nearly a decade in April as the coronavirus pandemic halted the labour market and broader economy. The National Association of Realtors revealed that existing home sales had plunged 17.8% to a seasonally adjusted annual rate of 4.33m units last month, the largest percentage decline since July 2010.

Federal Reserve heads Jerome Powell, Richard Clarida, John Williams and Lael Brainard will all deliver speeches throughout the course of the day.

In corporate news, shares in tech giants Facebook and Amazon both hit all-time highs overnight after a new e-commerce venture was launched by the social media giant and the online retailer continued to operate effectively amid the Covid-19 pandemic.


Friday newspaper round-up: Hospitality sector, holiday firms, Lloyds

More than 30,000 pubs, bars and restaurants may remain permanently closed because the coronavirus shutdown has sent a wrecking ball through the UK’s hospitality trade. The grim prediction follows a week in which the Casual Dining Group, which owns the Bella Italia and Café Rouge restaurant chains, warned it was headed into administration – casting doubt over the future of its 250 restaurants. – Guardian

The UK competition watchdog is investigating package holiday firms after receiving thousands of complaints from consumers who have been unable to recoup money on cancelled breaks. The Competition and Markets Authority said it had received 60,000 complaints related to the coronavirus crisis, including difficulties getting money back and price rises. – Guardian

Chancellor Rishi Sunak is facing calls to allow Covid-19 loans to struggling firms to be converted to grants or for repayments to be linked to profits. Banks have given companies £22bn in loans under three government-backed coronavirus lending schemes, but there are growing fears that SMEs will be unable to repay or that they simply will not bother because they think the Government will not pursue the debt. – Telegraph

Lloyds bank has suffered a bruising backlash over its new three-year pay policy as more than a third of voting investors opposed the plan. The rebellion came after influential advice group ISS told shareholders that although chief executive Antonio Horta-Osorio will take home a maximum of £7m under the new policy, down from £9.8m, he has a higher chance of getting a payout in long-term bonuses. – Telegraph

Tentative signs that the worst of the economic damage has been done by the coronavirus pandemic emerged yesterday in closely-watched readings from Britain, the eurozone and the United States. Private-sector output in all three continued to fall this month but bounced back more than expected from record lows in April, three reports showed. A further report showed that new claims for unemployment benefits in the US fell for the seventh consecutive week, although they remained at an extreme level. – The Times


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