ADVFN Morning London Market Report: Tuesday 14 July 2020

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London open: Stocks fall as investors mull GDP figures


London stocks fell in early trade on Tuesday as sentiment took a hit after California rolled back on its reopening plans and following the release of disappointing UK GDP data.

At 0840 BST, the FTSE 100 was down 1% at 6,117.38, while sterling was 0.3% lower versus the dollar at 1.2519.

Worries about the coronavirus pandemic continued to play on investors’ minds after California reimposed restrictions on indoor activities due to a surge in new cases.

CMC Markets analyst Michael Hewson said: “Despite making yet another record high in the Nasdaq yesterday US markets rolled over into the close, closing sharply lower, as concerns that the continued rise in infection cases will prompt more US states to push back their re-opening plans as California followed Texas and Arizona in shutting downs bars, restaurants and cinemas, as hospitalisations soared.”

On home shores, figures out earlier from the Office for National Statistics showed the UK economy grew 1.8% on the month in May. This was a big improvement on April’s 20.3% slump but well below consensus expectations of 5.5% growth.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “GDP languished 24.5% below January’s pre-Covid peak in May, as the maintenance of a strict lockdown to curb Covid-19 prevented the economy from recovering meaningfully.”

In equity marketsHalma was under the cosh as it reported record annual profit and revenue underpinned by acquisitions, but warned that adjusted pre-tax profit for FY2021 will fall 5% to 10% on the year.

Online grocer Ocado was in the red even as it posted a rise in half-year revenue as Britons turned to home deliveries during the coronavirus lockdown. The company said revenue for the six months to May 31 increased 27.2% to £1.02bn.

On the upside, AO World rallied after saying it experienced strong demand during the Covid-19 crisis but was cautious about the outlook as it reported a smaller annual loss. The online household appliance retailer’s operating loss for the year to the end of March narrowed to £3.8m from £13m as total revenue rose to £1.05bn from £902.5m.

AO said the crisis had converted many customers to online shopping but warned that shrinking economies, fewer housing transactions and a hard Brexit could hit sales.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Wpp Plc +1.89% +11.20 604.60
2 Sainsbury (j) Plc +1.76% +3.45 199.30
3 Royal Dutch Shell Plc +1.69% +20.60 1,238.40
4 Royal Dutch Shell Plc +1.64% +21.00 1,300.20
5 Bt Group Plc +1.62% +1.80 112.90
6 Imperial Brands Plc +1.31% +18.50 1,425.50
7 Morrison (wm) Supermarkets Plc +1.30% +2.40 187.65
8 Bp Plc +1.25% +3.70 300.35
9 Itv Plc +0.92% +0.62 68.18
10 Sse Plc +0.75% +10.00 1,337.50


Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Halma Plc -5.81% -133.00 2,158.00
2 Scottish Mortgage Investment Trust Plc -5.47% -52.50 906.50
3 Persimmon Plc -3.46% -92.00 2,564.00
4 Hargreaves Lansdown Plc -3.05% -49.00 1,557.00
5 Rightmove Plc -2.94% -16.60 547.60
6 Tui Ag -2.81% -10.60 366.60
7 Intercontinental Hotels Group Plc -2.75% -107.00 3,778.00
8 Taylor Wimpey Plc -2.51% -3.60 140.10
9 Coca-cola Hbc Ag -2.41% -50.00 2,022.00
10 Micro Focus International Plc -2.41% -7.70 311.70


US close: Markets finish mixed as Covid cases continue rising

Wall Street stocks closed in a mixed state on Monday, after another record spike in new Covid-19 cases in Florida at the weekend.

The Dow Jones Industrial Average ended the session up 0.04% at 26,085.80, while the S&P 500 slipped 0.94% to 3,155.22 and the Nasdaq Composite was 2.13% weaker at 10,390.84.

It was a turbulent session for the Dow, which had opened more than 300 points higher before climbing even further, followed by a sharp drop in afternoon trading.

A rosier sentiment had initially carried over from Friday, as news about a potential coronavirus treatment bolstered investor sentiment around prospects for the economic recovery.

The southern state of Florida reported a total of 15,299 new Covid-19 cases on Sunday, marking the single highest single-day total for any US state since the pandemic began, while the US as a whole has reported more than 60,000 new cases every day for the last three days.

“Traders are a little bullish on the back of the Pfizer-BioNTech story,” said CMC Markets analyst David Madden earlier, referring to the development of a potential Covid-19 treatment by the two American drugmakers.

“The health crisis is still a serious issue but for now, it is taking a backseat to the possibility that big pharma companies might be able to tackle the problem.

“Florida has been one of the worst-hit states, and it has seen a 4.7% increase in the number of new cases, and while its seven day average is 4.4%.”

Tech stocks turned around sharply to close lower, having enjoyed some bumper gains at the open, with Apple closing down 0.46%, Amazon falling 3%, Netflix sliding 4.23%, and Tesla 3.08% weaker.

Pfizer and BioNTech, meanwhile, were both well into the green by 4.08% and 10.55% respectively, after the pharma groups said two of their vaccine candidates to protect against the coronavirus had received fast track designation status from the Food and Drug Administration.

Investors were also looking ahead to the start of earnings season this week, with JPMorganCitigroup and Wells Fargo all set to report second-quarter earnings in about 24 hours time.

Of the three banking giants, JPMorgan was up 1.43%, while Citigroup slipped 0.84% and Wells Fargo was off 0.24%.

Chipmakers were in focus after Analog Devices made an offer to buy Maxim Integrated as part of a $21bn all-stock deal, with the former falling 5.82% and the latter rising 8.11%.

PepsiCo was up 0.33% after reporting that while second-quarter beverage revenues had taken a hit as a result of the coronavirus outbreak, snack food stockpiling helped the company beat expectations and provide a small boost to risk appetite.


Tuesday newspaper round-up: Nationwide, Covid debt, Heathrow

Rishi Sunak’s multibillion-pound economic response to Covid-19 has been criticised for lacking transparency by the incoming head of the Treasury’s independent tax and spending watchdog. Richard Hughes, the economist picked by the chancellor to lead the Office for Budget Responsibility, told MPs on the Commons Treasury committee that taxpayers lacked enough information to know whether the measures outlined by Sunak at last week’s summer statement would be cost effective. – Guardian

Nationwide building society has returned to the high loan-to-value mortgage market, cutting the deposits it requests from first-time buyers following last week’s announcement of a stamp duty holiday. But in a sign that lenders are uncertain about the direction of the housing market, it has capped loans at 90% and introduced new hurdles for would-be borrowers. – Guardian

A massive write-off of toxic Covid debt may be the only way to save the economy from stagnation as thousands of businesses struggle to survive, the new head of the spending watchdog has warned. – Telegraph

The government has been accused of dragging its feet on corporate reforms and changes to the regulation of auditing months after it was urged to make progress in light of the failure of Thomas Cook. Darren Jones, chairman of the Commons business select committee, said the business department needed to show “far more urgency” after it declined to give a date for primary legislation on audit reform. – The Times

The government has to trust Heathrow to be able to manage Covid-19 monitoring if it wants to kickstart the UK economy and get the aviation industry and long-haul travel back up in the air. That is the plea from Britain’s biggest airport as it reported that in June passenger traffic through Heathrow was down 95 per cent year on year. – The Times


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