ADVFN Morning London Market Report: Friday 10 July 2020

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London open: Stocks fall amid fears over new coronavirus cases

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London stocks fell in early trade on Friday amid ongoing concerns about a jump in new coronavirus cases.

At 0840 BST, the FTSE 100 was down 0.5% at 6,018.85.

CMC Markets analyst Michael Hewson said: “Markets in Asia have finished a choppy week very much on the back foot, as rising coronavirus cases in the US, and the southern states especially, appear to be now translating into a rise in fatality rates. The closure of schools in Hong Kong and the further tightening of virus restrictions in Australia has also fed into the underlying negative mood at the end of the week.

“Some are blaming the premature re-opening of some parts of the US economy, for the sharp rise in infections there, however some of the rise is probably more down to a lack of care in social distancing rather than the re-openings themselves, with infection rates here in Europe and the UK so far continuing to fall, despite a continued relaxation of the rules.

“As we come to the end of another choppy week, markets here in Europe have opened lower this morning, and look set to finish the week very much on the back foot, as it becomes increasingly apparent that any economic recovery is unlikely to be v-shaped in nature, with a wide range of companies starting to announce thousands of job losses this week.”

On home shores, industry data out earlier revealed that shopping habits started to show tentative signs of recovery in June as lockdown measures were eased.

The BRC-ShopperTrak for UK footfall in June was down 62.6% year-on-year, a 19 percentage point improvement on May. In the first two weeks of the month, footfall declined on average 77.1%, but that improved to a 53.3% fall in the remaining three weeks.

Non-essential shops began reopening from 12 June in Northern Ireland and from 15 June in England. They starting reopening in Scotland in the last week of the month only.

Retail parks fared better than high streets, with a decline of 33.8% in June; high streets reported a 64.5% slide.

Shopping centres – where social distancing was more challenging – reported a 68.3% decline.

Helen Dickinson, chief executive of the British Retail Consortium, said: “With lockdown easing, consumers are slowing re-emerging onto their high streets, shopping centres and retail parks. Footfall levels are still well below pre-coronavirus levels; however, the decline was softer that it was in May.

“UK recovery has been sluggish, especially compared with European standards, but retailers with stores remain hopeful that the reopening of hospitality will provide a welcome boost.”

In equity markets, insurer Hastings was under the cosh after Goldman Sachs placed 22 million shares in the company.

On the upside, Petropavlovsk advanced after one of its investors called for a shareholder meeting to remove Peter Hambro and four other directors who were installed in a boardroom coup. The Russian gold miner said it would hold a meeting at the request of Everest Alliance, which holds about 5% of the company’s shares.

Everest wants Hambro, Alya Samokhvalova, Johnny Martin Smith, Martin Smith and Angelica Phillips to leave the board after they were elected on 30 June. Everest has proposed two new directors and wants four current directors to be kept on before the meeting.

London commercial landlord Great Portland Estates was in focus after saying it had collected 69% of June rent to date including amounts covered by rent deposits as tenants felt the pressure of the coronavirus lockdown. This figure slumped to 58% when deposits were excluded with 74% collected from office tenants. Only 28% came in from retail, hospitality and leisure sectors clients, hit hardest by the shuttering.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 National Grid Plc +3.18% +27.00 877.00
2 Scottish Mortgage Investment Trust Plc +2.56% +23.00 923.00
3 Whitbread Plc +1.89% +41.00 2,205.00
4 Bunzl Plc +1.88% +40.00 2,171.00
5 Legal & General Group Plc +1.79% +3.80 216.50
6 Admiral Group Plc +1.70% +38.00 2,278.00
7 Standard Life Aberdeen Plc +1.67% +4.30 262.00
8 Hiscox Ltd +1.62% +12.80 802.00
9 Sainsbury (j) Plc +1.57% +2.95 190.35
10 Direct Line Insurance Group Plc +1.54% +4.20 277.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Carnival Plc -3.07% -29.00 915.00
2 International Consolidated Airlines Group S.a. -1.93% -4.00 203.50
3 Smith (ds) Plc -1.92% -5.20 266.00
4 Micro Focus International Plc -1.79% -6.00 329.00
5 Smurfit Kappa Group Plc -1.48% -36.00 2,402.00
6 Lloyds Banking Group Plc -1.19% -0.36 29.38
7 Associated British Foods Plc -1.11% -22.00 1,953.00
8 Burberry Group Plc -0.95% -15.00 1,561.00
9 British American Tobacco Plc -0.92% -27.00 2,893.00
10 Tui Ag -0.89% -3.20 357.20

 

US close: Mixed performance on the Street following jobless data

Wall Street stocks turned in a mixed performance on Thursday, with the Dow Jones crossing below the 26,000 barrier following this week’s jobless claims data.

At the close, the Dow Jones Industrial Average was down 1.39% at 25,706.09 and the S&P 500 was 0.56% weaker at 3,152.05, while the Nasdaq Composite saw out the session 0.53% stronger at 10,547.75.

The Dow closed 361.19 points lower on Thursday, erasing Wednesday’s gains that came amid a fresh record for new coronavirus cases in the US of 62,000.

Thursday’s main focus was this week’s jobless claims data from the Department of Labor, which fell more than expected.

Data from the Department of Labor showed that initial unemployment claims for the week ending 4 July declined by 99,000 to 1.31m – beating consensus estimates for a reading of 1.39m. The four-week moving average, which is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, fell by 63,000 to 1.43m.

Continuing claims dropped by 698,000 to 18.06m for the week ended 27 June – equivalent to 12.4% of the US workforce.

In terms of the outbreak itself, total confirmed cases of the coronavirus had topped 12m globally – with the US being home to more than a quarter.

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, cautioned on Wednesday that the US was still riding he first wave of the pandemic. “We have never gotten out of the first wave,” he said. “So I wish we would stop talking about waves and just look at the reality of where we are right now.”

In the corporate space, Microsoft shares were higher after analysts at Wedbush Ives raised the software giant’s target price to the highest on the Street, while Walgreens shares sunk after suspending its share repurchase program.

Elsewhere, Poseida Therapeutics revealed that its planned initial public offering would see the group offer 14m shares at a price of $16 each.

 

Friday newspaper round-up: No-deal Brexit, City landlords, Hinkley Point

Pub and restaurant chains traded at half their pre-pandemic levels after reopening across England last weekend, as consumers proved to be wary of visiting their local or eating out. Among those pubs that did open, sales on 4 July and 5 July were 45% below pre-Covid levels, the analysis found. According to the Coffer Peach Business Tracker, which collates sales figures from 32 pub chains, about four out of 10 chain pubs began serving drinks again last weekend after being closed for nearly four months. – Guardian

The cost of household staples, ranging from meat and cheese to school uniforms and drinking glasses, will substantially increase if there is no Brexit trade deal, British retailers have warned. With just six months to go before the UK leaves the EU entirely by exiting the single market and the European customs union, retailers fear further damage to a sector already reeling from the coronavirus crisis, with 5,600 job losses announced on Thursday from Boots and John Lewis alone. – Guardian

China’s financial watchdog is increasingly worried about speculative leverage on the soaring Shanghai and Shenzhen equity markets, fearing a repeat of the boom-bust debacle in 2015 when the crash almost spun out of control. The China Securities Regulatory Commission has blacklisted 258 brokerage houses accused of offering illegal margin accounts at 10 times leverage. It told investors to “raise their risk awareness” before the buying frenzy reaches dangerous levels. – Telegraph

The government must provide better advice about public transport and on returning to the office to end “mixed messages” about what is safe, business leaders have said. Shobi Khan, chief executive of Canary Wharf Group, the London offices landlord, said it was an “oxymoron” that people could fly to different countries but could not go into work. “There is no problem going to Spain, Italy or France, but heaven forbid you go to the office,” Mr Khan said. – The Times

The chief executive of the French company building Britain’s new nuclear reactors won boardroom approval for the project after suppressing an internal review labelling it as risk- laden, according to France’s public accounts court. The disclosure is likely to fuel disquiet on both sides of the Channel over the construction of two new generation reactors at Hinkley Point in Somerset at an estimated cost of up to £22.5 billion. – The Times

 

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