ADVFN Morning London Market Report: Wednesday 5 August 2020

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London open: Stocks rise on US stimulus hopes; gold hits new high


London stocks rose in early trade on Wednesday amid expectations of further coronavirus stimulus in the US, as gold prices hit a new high.

At 0840 BST, the FTSE 100 was up 0.8% to 6,083.72.

Naeem Aslam, chief market analyst at Ava Trade, said: “Republicans and Democrats are under pressure to resolve their differences over another coronavirus aid package. Steven Mnuchin, the US Treasury secretary has indicated that a deal can be reached by the end of this week and this is keeping the hopes alive among investors.”

Precious metals miners PolymetalFresnillo and Hochschild were among the top gainers as gold prices hit $2,030 an ounce, rising above $2,000 for the first time.

Elsewhere, Hastings surged after it agreed terms on a £1.6bn takeover from a consortium led by Finnish insurer Sampo and its biggest shareholder, Rand Merchant Investment Holdings. The company also reported an increase in first-half profits as higher premium and an improved loss ratio offset the impact of claims inflation due to the coronavirus pandemic.

Coca-Cola HBC was trading up as the bottling group reported a decline in first-half profit and revenue due to Covid lockdowns but said trading was beginning to recover from April lows.

Gambling software company Playtech rallied as it hailed a resilient first half, while bookmaker William Hill was higher as it swung to a half-year profit, driven by a strong performance in its online division.

On the downside, Legal & General was under pressure as the insurer left its interim dividend unchanged and reported a 73% fall in first-half profit caused by low interest rates and investment losses.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Easyjet Plc +8.99% +49.60 601.20
2 International Consolidated Airlines Group S.a. +7.87% +13.80 189.20
3 Evraz Plc +5.96% +17.60 312.80
4 Bp Plc +4.90% +14.65 313.90
5 Rolls-royce Holdings Plc +4.73% +11.60 256.90
6 Carnival Plc +4.43% +37.40 881.40
7 Fresnillo Plc +4.35% +55.00 1,320.00
8 Coca-cola Hbc Ag +4.13% +84.00 2,117.00
9 Tui Ag +3.37% +10.60 324.80
10 Kingfisher Plc +3.27% +8.20 259.10


Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Legal & General Group Plc -2.82% -6.20 213.90
2 Diageo Plc -2.02% -55.00 2,666.00
3 Mondi Plc -1.30% -18.50 1,405.50
4 Hsbc Holdings Plc -1.26% -4.25 332.45
5 Schroders Plc -1.21% -36.00 2,935.00
6 Croda International Plc -0.38% -22.00 5,716.00
7 Informa Plc -0.31% -1.20 385.10
8 Phoenix Group Holdings Plc -0.21% -1.40 672.40
9 Reckitt Benckiser Group Plc -0.21% -16.00 7,788.00
10 Rightmove Plc -0.11% -0.60 568.20


US close: Stocks finish higher as investors await stimulus news

Wall Street’s main stock market gauges finished higher on Tuesday, buoyed by reports of possible further fiscal stimulus in the pipeline and some positive news on the pandemic front.

The Dow Jones Industrial Average ended the session up 0.62% at 26,828.47, the S&P 500 added 0.36% to 3,306.51, and the Nasdaq Composite was 0.35% firmer at 10,941.17.

Sentiment was positive from the start of the session, after Donald Trump said overnight that he might use his executive powers to extend augmented unemployment insurance benefits, a now-expired moratorium on evictions, and to declare a holiday on payroll taxes.

House of Representatives Speaker Nancy Pelosi and US Treasury Secretary Steve Mnuchin, were due to meet on Tuesday to discuss the details of a possible fourth round of fiscal stimulus further, with both sides having said that some progress was made during similar talks on Monday.

As at the close, no news had emerged from such talks.

Some observers said that Democrats and Republicans remained far apart on their positions, with the former pushing for $1trn in extra aid for state and local governments and the latter seeking protections for employers against lawsuits related to Covid-19.

There was some good news on the pandemic front, however, with data published overnight revealing a 19.2% fall in new Covid-19 infections to 45,600, for the biggest week-on-week decline since late July, and with new cases down in 32 states as well as the District of Columbia.

“There were plenty of corporate stories today, but the lack of a deal between Republicans and Democrats in relation to the $1trn Covid-19 pandemic package has kept sentiment at bay,” said CMC Markets analyst David Madden.

“The relationship between the US and China has come under extra pressure as President Trump has [threatened to] ban TikTok in the US, and Microsoft is looking to acquire the group’s US unit.

“The Chinese government feels the Trump administration is giving a US company the greenlight to pick-off the business,” Madden said, adding that dealers were cautious that Beijing would strike back in some shape or form.

On the economic front, the Commerce Department reported a 6.2% month-on-month increase in factory orders to reach an annualised rate of $437.21bn, higher than consensus forecasts for an improvement of 5.0%.

Among the corporate results that investors were expected to be following most closely were those from Walt Disney and animal protein alternative developer Beyond Meat, which were due out after the close.

Shares in Walt Disney closed up 0.81%, and those in Beyond Meat were 5.9% firmer.


Wednesday newspaper round-up: CEO pay, Virgin Atlantic, Disney

Just 36 out of the UK’s 100 biggest companies reduced their chief executive’s pay in order to help their firm navigate the coronavirus pandemic and economic crisis, according to an analysis of executive pay that found FTSE-100 CEOs are now handed, on average, the same as nearly 120 full-time workers. Research by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre published on Wednesday shows that the majority of FTSE 100 companies did not cut top executive pay, despite many of the firms turning to the taxpayer to pay the wages of furloughed workers. – Guardian

Virgin Atlantic has declared itself bankrupt and is seeking protection from creditors in the US, according to a court filing in New York on Tuesday. The airline is seeking the protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country. The announcement comes little more than a month after Virgin Atlantic announced it had secured funding to survive for another 18 months. – Guardian

Disney has posted its first loss in almost two decades after the coronavirus crisis created a perfect storm for the entertainment giant, in which most of its key businesses ground to a near-halt. – Telegraph

Frasers Group has agreed to open its first regional store since the Covid-19 outbreak at a retail park in Leicester. Mike Ashley’s retail group, formerly known as Sports Direct, is leasing 90,000 sq ft to create a “sports and lifestyle destination” at Fosse Park, which is owned by the Crown Estate, the Queen’s property company. – The Times

Travel restrictions are hampering efforts to get test flights arranged for Boeing’s revamped 737 Max aircraft, European regulators have warned. The European Union Aviation Safety Agency gave the update in the wake of the ruling by the Federal Aviation Administration, its American counterpart, on Monday that there was still more work to be done before the ban on flights could be lifted. – The Times


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