ADVFN Morning London Market Report: Friday 3 July 2020

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London open: Stocks steady ahead of services PMI

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London stocks were flat in early trade on Friday following solid gains in the previous session, with a fairly quiet day expected as US markets will be closed for the Independence Day holiday.

At 0900 BST, the FTSE 100 was steady at 6,238.47.

Spreadex analyst Connor Campbell said: “In a taste of what could be the tone for the rest of the session, things got off to an awfully slow start on a US-free Friday.

“Investors’ reticence is understandable. For though the US markets won’t be around to set the pace later this afternoon, news from America certainly is, with the country once against seeing a fresh record number of one-day covid-19 cases. Thursday saw a further 55,220 infections, clearing Wednesday’s high by around 2,500.

“Alarmingly for Florida, the state made up almost exactly a fifth of those cases, in a stark example of what happens when you have the laxest lockdown measures imaginable.

“Without the US to guide the way this afternoon, it is going to be interesting to see whether Europe can strike out on its own, or whether it will wait for the return of the market daddy next week.”

Market participants were mulling over the latest reading on the Chinese services sector, which showed it grew at the fastest rate in more than a decade in June.

The Caixin/Markit services purchasing managers’ index rose to 58.4 from 55.0 in May, coming in comfortably ahead of consensus expectations for a reading of 53.2 and marking the highest reading since April 2010.

A level above 50.0 signals expansion, while a reading below indicates contraction.

Total new orders rose at the quickest pace since August 2010 and new export work expanded for the first time since January, the survey found. Firms widely reported that overall market conditions had continued to improve following an easing of measures related to the coronavirus pandemic.

Meanwhile, employment fell again, albeit modestly, with some firms noting that staff had left roles voluntarily.

Business confidence hit a three-year high in June amid forecasts of further increases in customer demand.

On home shores, the latest survey from GfK showed consumer confidence was improving a little as more businesses prepare to reopen after the coronavirus lockdown, but the mood remains fragile.

In a flash report using data collected between 18 and 26 June, GfK said its long-running consumer confidence index has risen by three points over the past two weeks to -27 from -30. Four of the five measures of the index were higher.

Joe Staton, client strategy director at GfK, said: “Despite the backdrop of dire warnings about the state of the economy, large-scale job losses, the end of furlough with the prospect of further unemployment, and a possible second-wave of Covid-19, consumers appear to be slightly more confident as lockdown loosens across parts of the UK.

“After the recent near-historic low of -36 for the Consumer Confidence Barometer last month, we‘re seeing some early signs of improvement across most measures for our fourth Covid-19 flash, even though all our core scores remain negative.”

Still to come on the macro front, Markit’s UK services PMI for June is at 0930 BST.

In equity markets, commercial property owner Land Securities rose as it said it planned to reinstate dividends after half year results in November as tenants reopened premises after the easing of coronavirus lockdowns.

The company said it had received 60% of June net rent due after concessions and deferrals, compared with 94% a year ago.

Plastic and fibre product maker Essentra was in the black as it said it expected a 9% fall in interim like-for-like revenue but reported an improving sales trend over the second quarter.

Rank Group was higher as it said it will begin reopening its Mecca bingo clubs from Saturday but warned that underlying operating profit for the year ended 30 June is expected to be at the lower end of guidance.

Outside the FTSE 350, shares of CMC Markets surged after the online trading platform said 2021 net operating income will exceed the upper end of current market consensus.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Land Securities Group Plc +2.57% +14.80 589.80
2 Smurfit Kappa Group Plc +2.28% +58.00 2,606.00
3 Whitbread Plc +1.66% +39.00 2,388.00
4 Smith (ds) Plc +1.58% +4.70 301.40
5 Auto Trader Group Plc +1.52% +8.00 532.80
6 Easyjet Plc +1.26% +8.60 692.80
7 Crh Plc +1.19% +34.00 2,893.00
8 Mondi Plc +1.18% +17.50 1,502.00
9 Compass Group Plc +1.14% +13.00 1,158.00
10 Smiths Group Plc +1.12% +15.50 1,402.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Rolls-royce Holdings Plc -2.60% -7.60 284.90
2 Rsa Insurance Group Plc -2.34% -9.90 413.50
3 Standard Chartered Plc -2.31% -10.20 432.00
4 Prudential Plc -2.20% -27.00 1,201.50
5 Next Plc -2.03% -102.00 4,928.00
6 Taylor Wimpey Plc -2.02% -2.90 140.35
7 Carnival Plc -2.00% -20.50 1,005.00
8 Evraz Plc -1.94% -5.60 282.40
9 Royal Bank Of Scotland Group Plc -1.92% -2.40 122.60
10 Hiscox Ltd -1.86% -15.00 791.00

 

US close: Stocks record modest gains going into Independence Day long weekend

Wall Street stocks closed higher on Thursday as market participants digested a slew of data from the Department of Labor and some positive news regarding a coronavirus vaccine candidate.

At the close, the Dow Jones Industrial Average was up 0.36% at 25,827.36, while the S&P 500 was 0.45% firmer at 3,130.01 and the Nasdaq Composite saw out the session 0.52% stronger at 10,207.63.

The Dow closed 92.39 points higher on Thursday, erasing losses recorded in the prior session that came despite “encouraging” clinical trial data from Pfizer and BioNTech for one of their Covid-19 vaccine candidates, although the S&P 500 and Nasdaq Composite continued to push higher.

Sentiment continued to be boosted by the clinical trial results during the last day’s trading for the week, with Pfizer and BioNTech providing hope to investors that normality could indeed return at some point. While the data had not yet been reviewed by a medical journal, meaning that it was still in the very early stages, market participants were seemingly excited by the progress in developing a drug to defeat Covid-19 all the same.

News that health officials in the US were planning to ramp-up the collection of blood plasma from recovered Covid-19 patients was also in focus. The Wall Street Journal, which cited people familiar with the discussions, said the talks were part of a large-scale effort to build supplies of the promising experimental treatment. According to some accounts, so-called convalescent plasma had proven to be the sole effective treatment during the catastrophic 1918 pandemic.

Investors were also digesting a flurry of data from the Department of Labor, including the closely-watched monthly non-farm payrolls report, which revealed that hiring in the States continued to recover at a faster-than-expected clip in June, resulting in a sharp drop in unemployment. According to the Department of Labor, non-farm payrolls in the US jumped by 4.8m in June – well ahead of the 3.0m expected and bringing the unemployment rate to 11.1%.

Also in focus, weekly jobless claims in the States continued to drift lower last week, but only slightly once again and by less than economists had forecast. According to the Department of Labor, initial unemployment claims for the week ending on 27 June decreased by 55,000 to reach 1.427m (consensus: 1.341m).

Elsewhere on the macro front, the US trade deficit widened by 9.7% in May to $54.6bn, according to the Bureau of Economic Analysis, with exports falling 4.4% to $144.5bn and imports declining 0.9% to $199.1bn.

Another report revealed business activity in the New York Metropolitan area moderated its contraction pace in June compared with May, according to the Institute for Supply Management. The ISM-New York Report on current business conditions improved significantly to 39.5 in June – up 20 points month-on-month.

Lastly, factory orders rose 0.8% in May to record their first growth in three months, according to the Commerce Department, well and truly short of the 9.7% increase expected by economists.

In the corporate space, shares of Tesla rocketed to a fresh record high on the back of better-than-expected delivery numbers for the second quarter, while Coty shares were up 3.01% at the close after naming a new CEO and chairman.

 

Friday newspaper round-up: Quarantine, Casual Dining, UK economic activity

English holidaymakers will be able to visit Spain, Italy, France and Germany without having to quarantine for 14 days on their return and travel restrictions on up to 60 other countries and territories are also set to be lifted. The government’s rule change will come into effect on 10 July with the transport secretary, Grant Shapps, describing it as a major step in “reopening the nation”. – Guardian

HSBC and Standard Chartered risk being caught up in the geopolitical struggle between the US and China after the US House of Representatives passed legislation targeting Chinese officials involved in implementing a national security law in Hong Kong. Banks who do business with officials involved in the security law could face sanctions, amid concerns the security law could be used to crack down on dissent in Hong Kong. More than 370 people were arrested in Hong Kong on Wednesday after the new powers were introduced. Guardian

The owner of Caf̩ Rouge and Bella Italia has collapsed into administration, leading to the permanent closure of 91 restaurants with more than 1,900 redundancies. Casual Dining Group is the latest firm to fall victim to the coronavirus crisis in a week where 12,000 jobs have already been axed, with the high street and aviation industry bearing the brunt of the pain. РTelegraph

The former chief executive of Barclays has told the High Court that the financier Amanda Staveley was not a credible investor and that she overstated her role in its 2008 emergency capital raising. John Varley said in his witness statement that Ms Staveley was only a “semi-principal” in the negotiations due to her connection to Sheikh Mansour of the Abu Dhabi royal family. – The Times

Britain’s economy is regaining momentum as the lockdown is lifted, real-time data suggests. According to Jefferies, the American investment bank, economic activity is 52 per cent below its pre-Covid level but its UK Economic Activity Radar has risen by 2 points over the past week. – The Times

 

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