ADVFN Morning London Market Report: Wednesday 8 July 2020

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London open: Stocks edge lower ahead of mini budget


London stocks edged lower in early trade on Wednesday amid worries about a rise in coronavirus cases in the US and Australia, as investors eyed Chancellor Rishi Sunak’s mini budget.

At 0845 BST, the FTSE 100 was down 0.2% at 6,175.54.

Sunak is expected to announce a £2bn temporary job scheme for under-25s, a stamp duty holiday, a £3bn green investment package and a temporary VAT reduction.

Spreadex analyst Connor Campbell said: “As the US reaches 3 million Covid-19 cases domestically, and Australia imposes a hard border between New South Wales and Victoria, investors couldn’t shake their re-lockdown concerns on Wednesday.

“It’s not the case numbers and return to stricter measures in and of themselves that are bothering investors, but rather the dampening effect they will have on the chances of a swift and sturdy global economic recovery.

“The UK index could have plenty more movement in it, given that today sees Chancellor Rishi Sunak’s summer statement, or ‘mini-budget’. Alongside the already-announced – or, rather, already-leaked – £1.57bn arts package, there are reports detailing a whole host of different options Sunak could unveil.”

He said what is actually announced could dictate where the FTSE ends the day, though the pound may well steal some of the index’s thunder, having been boosted on Tuesday by news that the UK’s chief Brexit negotiator David Frost and Michel Barnier were having dinner at No.10 ahead of informal Brexit talks.

In equity markets, Asia-focused HSBC was the standout loser on the FTSE 100 following a report that the US could target Hong Kong’s currency peg with the dollar as a response to China’s new security law.

“Should the peg disappear it could further destabilise Hong Kong and increase currency impacts on earnings,” said London Capital Group analyst Jasper Lawler.

Bus and rail operator FirstGroup slumped as it pulled guidance and said it swung to a full-year loss as coronavirus lockdowns in the UK and US hit operations. National Express was also in the red.

Victrex, a supplier of high-performance polymer solutions, was also trading down after it reported an 18% decline in third-quarter revenues and said Covid-related headwinds began to impact its performance in May and June after a broadly stable performance in April.


Top 10 FTSE 100 Risers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Micro Focus International Plc +7.20% +25.40 378.20
2 London Stock Exchange Group Plc +2.44% +202.00 8,490.00
3 Rolls-royce Holdings Plc +2.20% +6.10 283.60
4 Coca-cola Hbc Ag +2.14% +43.00 2,049.00
5 Diageo Plc +1.90% +52.00 2,782.00
6 British American Tobacco Plc +1.66% +51.00 3,116.00
7 Rentokil Initial Plc +1.62% +8.40 526.60
8 Spirax-sarco Engineering Plc +1.60% +160.00 10,185.00
9 Halma Plc +1.33% +31.00 2,362.00
10 Fresnillo Plc +1.15% +10.20 895.40


Top 10 FTSE 100 Fallers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Hsbc Holdings Plc -3.69% -14.60 380.55
2 Easyjet Plc -3.67% -25.80 677.20
3 Wpp Plc -3.52% -22.00 602.80
4 International Consolidated Airlines Group S.a. -3.22% -7.10 213.50
5 Burberry Group Plc -2.24% -36.00 1,574.00
6 Carnival Plc -2.01% -19.40 943.40
7 British Land Company Plc -2.01% -7.80 380.20
8 Land Securities Group Plc -1.80% -10.20 555.80
9 Ashtead Group Plc -1.74% -48.00 2,713.00
10 Melrose Industries Plc -1.72% -2.05 116.90


US close: Stocks slump following Monday’s bumper rally

Wall Street stocks closed weaker on Tuesday following a strong rally seen during the previous session.

The Dow Jones Industrial Average ended the session down 1.51% at 25,890.18, the S&P 500 lost 1.08% to 3,145.32, and the Nasdaq Composite was off 0.86% at 10,343.89.

It was a weaker Tuesday in general for the Dow, which had opened 195.54 points lower, reversing some of the gains recorded in the previous session as major indices shook off concerns around a continued rise in new Covid-19 cases across the United States.

However, while investors were seemingly able to shake off those fears on Monday, concerns around the global economic outlook as a result of the pandemic were weighing on sentiment on Tuesday after the Organisation for Economic Cooperation and Development stated unemployment would reach its highest level since the Great Depression – and may not return to pre-outbreak levels until 2022.

A general sense of dread coming into second-quarter earnings season also seemed to be impacting sentiment, with fast-food chain Shake Shack warning of a 39% sales drop in June alone not helping matters much.

On the macro front, the government’s Job Openings and Labor Turnover Survey revealed job openings had unexpectedly increased in May as the economy awoke from its slumber.

The number of available positions rose by 400,000 to 5.4m during the month, well ahead of the median forecast of 4.5m.

Federal Reserve Bank of Atlanta President Raphael Bostic said a surge in new Covid-19 cases had made American business owners “nervous again”.

“We are hearing it more and more as we get more data – people are getting nervous again, business leaders are getting worried.

“Consumers are getting worried, and there is a real sense this might go on longer than we have planned for,” Bostic said in webcast remarks.

In the corporate space, Amazon shares closed down 1.86% after hitting $3,000 each for the first time on Monday, while Novavax shares surged 31.62% after the White House awarded the pharma group a $1.6bn contract to develop a Covid-19 vaccine.

Shares in tech giants Microsoft and Apple reversed earlier gains by the closing bell, finishing down 1.16% and 0.31%, respectively.


Wednesday newspaper round-up: Boohoo, DHL workers, Lansdowne Partners

Next, Asos and Amazon have decided to pull all Boohoo clothing from sale as growing anger over workers’ pay and conditions at the company’s suppliers resulted in £1.5bn being wiped from the fast fashion brand’s value in two days. Allegations that some factories in Leicester that sell clothes to Boohoo pay as little as £3.50 an hour and failed to protect workers from coronavirus emerged last week. On Tuesday, the three online retailers were joined by and Zalando, a European e-commerce giant that had €6.4bn sales in 2019, in removing Boohoo clothes from sale. – Guardian

Thousands more UK workers involved in making Jaguar Land Rover vehicles are set to lose their jobs, despite the embattled car industry returning to production after coronavirus shutdowns. Logistics giant DHL has notified unions that 2,200 workers, around 40% of those currently employed on its JLR contract, will be laid off. – Guardian

The number of jobseekers has surged at its fastest pace since 2009 as the coronavirus lockdown recession has hit jobs hard, recruiters have warned. Salaries for new starters are falling as more applicants chase fewer jobs, as employers across all industries cut back hiring, according to the Recruitment and Employment Confederation and KPMG. – Telegraph

Almost 70,000 small businesses hoping to secure emergency government credit have had their hopes dashed after a banking service said that it could not secure the necessary funds. Tide said that it had frozen lending under the Bounce Back Loan Scheme because third-party funders would not support the scheme. – The Times

Lansdowne Partners plans to close its main hedge fund in a move that will significantly scale back the firm’s short-selling activities. The group, one of the hedge fund industry’s biggest names, has told its investors that it will shut its $2.8 billion Developed Markets Fund after a prolonged period of underperformance. – The Times


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