ADVFN Morning London Market Report: Friday 7 August 2020

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London open: Stocks edge higher, geopolitical and trade tensions exert drag

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London equities are trading slightly in the green at the end of the week following a renewed push higher overnight on Wall Street.

Yet investor sentiment was wobbly early in the session after the Trump administration’s decision to impose a ban on US residents and businesses from working with Chinese apps TikTok and WeChat starting 45 days from now.

The news out of Washington came amid concern over the US-China phase one trade deal as well negative ‘markt chatter’ regarding the new free trade deal recently inked with Mexico.

A mixed reading on Chinese foreign trade for July and hesitancy ahead of the all-important monthly US non-farm payrolls report due out later in the afternoon were also dragging on shares.

Against that backdrop, the top-flight index was adding three points or 0.05% to 6,029.69.

The year-on-year rate of growth in Chinese exports picked up from 0.5% for June to 7.2% in July (consensus: -0.5%) in US dollar terms, but that for imports slipped from 2.7% to -1.4% (consensus: 0.9%), trade customs revealed.

Despite the dip in imports, which is directly tied to domestic demand, Capital Economics’s Martin Rasmussen judged that China’s recovery was set to continue “in coming months” thanks to the stimulus put in place by Beijing and given the continued acceleration in credit growth.

The boost to exports from foreign demand for Covid-19-related equipment on the other hand was likely to fade, Rasmussen added.

On a positive note, house prices across the UK hit their highest mark in the history of the Halifax house price index in July, adding to the emerging view that the market is experiencing a surprising spike post lockdown.

House prices hit an average of £241,604 across the UK in July – up 1.6% month-on-month and 3.8% higher year-on-year as pent-up demand from lockdowns continues to be released into a largely open housing market, with a low supply of available homes also helping to exert upwards pressure on house prices. followed by July’s non-farm payrolls numbers in the States at 1330 BST.

Monthly US non-farm payrolls data were scheduled for release in July, with the ‘whisper’ number at around 1.1m, according to Bloomberg.

Hargreaves beats on top line growth, AuA

Hargreaves Lansdown posted a much better than expected full-year performance, contributing to a hike in its dividend payout. Revenues over the year ending on 30 June grew by 15% to £550.9m (consensus: £531m), driving an 11% jump in underlying profits before tax to £339.5m. Assets under Administration meanwhile printed at £104bn (consensus: £102.6bn) thanks to better market performance.

Online real estate agency Rightmove posted a sharp fall in half-year profits and agency branches, reflecting the impact of the coronavirus lockdown as it reported a cautiously optimistic outlook from trading in July. Operating profit fell 43% to £61.7m on revenue of £98m, a fall of 34%. Membership numbers for agency branches and new home developments combined were 3.3% lower since the start of the year to 19,158. Broken down that revealed a 3.5% decline in agency branches together with a 2.1% fall in new homes developments.

TP ICAP reported an improvement in underlying revenue in its first half on Friday, to £990m for the six months ended 30 June, from £922m a year earlier. The FTSE 250 company said its operating profit was up marginally to £159m from £158m, while basic earnings per share were 19.9p, rising from 19.3p. It said a 5.6p per share interim dividend would be paid on 6 November, in line with the interim dividend last year.

Standard Life Aberdeen proposed an unchanged dividend as the investment manager reported a 30% drop in first-half profit and declining revenue. Adjusted pretax profit for the six months to the end of June fell to £195m from £280m as fee-based revenue dropped 13% to £706m. The company proposed an interim dividend of 7.3p a share – the same as a year earlier.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Hikma Pharmaceuticals Plc +11.17% +241.00 2,398.00
2 Rightmove Plc +8.79% +50.80 628.60
3 Hargreaves Lansdown Plc +4.71% +86.00 1,911.00
4 Ocado Group Plc +2.31% +51.00 2,255.00
5 St. James’s Place Plc +2.01% +19.80 1,003.00
6 Phoenix Group Holdings Plc +1.86% +13.20 721.40
7 Auto Trader Group Plc +1.56% +8.60 558.80
8 Astrazeneca Plc +1.39% +117.00 8,536.00
9 Berkeley Group Holdings (the) Plc +1.34% +59.00 4,447.00
10 Mondi Plc +1.33% +19.50 1,489.00

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Easyjet Plc -5.04% -29.80 561.20
2 International Consolidated Airlines Group S.a. -4.43% -8.25 177.85
3 Carnival Plc -3.17% -28.00 855.00
4 Rolls-royce Holdings Plc -3.16% -8.00 245.10
5 Land Securities Group Plc -2.86% -16.60 563.20
6 Centrica Plc -2.80% -1.32 45.85
7 Bp Plc -2.68% -7.90 287.35
8 Coca-cola Hbc Ag -2.30% -50.00 2,122.00
9 Tui Ag -2.09% -6.60 309.40
10 Barclays Plc -2.06% -2.18 103.66

 

US close: Stocks continue rally following surprise jobless figures

Wall Street stocks closed higher on Thursday after this week’s initial jobless claims report revealed a surprise decline to their lowest level since the onset of the pandemic and a tech rally late in the session gave indices a boost.

At the close, the Dow Jones Industrial Average was up 0.68% at 27,386.98, while the S&P 500 was 0.64% firmer at 3,349.16 and the Nasdaq Composite saw out the session 1.00% stronger at 11,108.07.

The Dow closed 185.46 points higher on Thursday, continuing on the upward trajectory seen in the previous session as investors thumbed through a slew of data and earnings releases.

Market participants were reading over some new jobless claims figures from the Labor Department that revealed jobless claims in America unexpectedly broke significantly lower last week. Initial unemployment claims for the week ending on 1 August fell by 249,000 to 1.18m, while secondary unemployment claims also decreased – down 844,000 to 16.1m.

Gains were initially capped as traders were still keeping a keen eye on Washington for clues regarding the next Covid-19 stimulus package. While the Trump administration appeared to make a slight compromise on its opposition to continued federal support for unemployment benefits, offering to extend extra federal unemployment insurance at $400 per week until December, the two parties have still been unable to reach a final deal.

Senate majority leader Mitch McConnell said lawmakers were still at odds over how much stimulus was appropriate, while House Speaker Nancy Pelosi took aim at Republicans in another interview.

Elsewhere, Johns Hopkins reported 52,800 new US cases Covid-19 cases on Wednesday, down 25.4% from the 70,800 recorded at the same time a week ago.

“This looks great, but the rate of decline probably is substantially overstated, because the number of new tests yesterday fell by 20.3% compared to a week ago, the seventh straight decline,” said Pantheon Macroeconomics’ Ian Shepherdson.

However, despite unresolved tensions on the Hill, tech stocks rallied later in the session, with FacebookAppleNetflixAmazon and Microsoft all closing higher.

Back on the macro calendar, US employers made another 262,649 job cuts in July as the Covid-19 pandemic continued to weigh on demand – another indication that the labour market recovery could now be slowing down. Layoffs reported by global Challenger, Gray and Christmas were 54% higher month-on-month – the third-largest monthly total since the coronavirus pandemic began.

 

Friday newspaper round-up: France quarantine, Fulham Shore, NHS, News Corp, Travelex, TikTok

British tourists planning to visit France are being warned that they may have to quarantine on their return amid fears of a second wave of coronavirus there. Holidaymakers should only book trips that can be easily rearranged at 24 hours’ notice, a senior aviation source said last night, adding that France was “bubbling” with cases. – The Times

A restaurateur who used the early 1990s recession to rapidly expand Pizza Express is hoping to pull off the same feat again with dining chains Franco Manca and The Real Greek. David Page, boss of AIM-listed Fulham Shore, said he has been inundated with requests from landlords to take on sites left empty by rival chains that have fallen victim to the coronavirus lockdown. – Telegraph

The NHS will be inflicting pain, misery and risk of death on tens of thousands of patients if it again shuts down normal care when a second wave of Covid-19 hits, doctors’ and surgeons’ leaders are warning. They are urging NHS bosses not to use the same sweeping closures of services that were introduced in March to help hospitals cope with the huge influx of patients seriously ill with Covid. – Guardian

The Bank of England has warned lenders not to be tempted to turn off the credit taps this autumn, saying businesses face a £200 billion cash shortfall and need financial support. In evidence that Threadneedle Street is concerned banks might call in loans or fail to extend credit in order to conserve capital, the Bank argued it was in the “collective” best interests of the sector to keep lending. – The Times

The “Dominic Cummings effect” has resulted in a big loss of public confidence in the Government, with trust not yet having recovered, new analysis shows. On May 22, it was reported that Dominic Cummings, the chief adviser to Boris Johnson, had breached lockdown rules to drive 264 miles from his London home to Durham while suffering coronavirus symptoms. – Telegraph

News Corp has posted a US$1.5bn loss, with its Australian and United Kingdom newspaper businesses suffering sharp declines in revenue and its Foxtel pay-TV business in Australia bleeding subscribers, new financial results for 2019-20 show. The global media giant released its financial results for 2019/20 on Thursday in the US. The reports paint a grim picture across the last quarter and year, with the exception of its Dow Jones business. – Guardian

Microsoft is exploring the possibility of buying TikTok’s entire global business as part of talks about a deal with the parent company of the popular video-sharing app. The software giant has been in talks with Bytedance, the Chinese owners of TikTok, to acquire its services in the US, Canada, Australia and New Zealand, but had ruled out anywhere else. – The Times

Troubled foreign exchange provider Travelex has struck a rescue deal to stay afloat, but with the loss of more than 1,300 UK jobs. Administrators PwC said that a pre-pack administration sale of certain Travelex entities in the UK had been reached, saving 1,800 jobs across the country. – Telegraph

Sky News’ ambitious plan to launch a new global rolling news channel in conjunction with the US network NBC has been abandoned, leaving behind dozens of recently hired journalists and a half-built TV studio in London. NBC Sky World News was due to launch this summer and promised to hire hundreds of staff with a brief to challenge the dominance of CNN in the world of global TV news. – Guardian

Thousands more pupils could get the right of appeal over their A-level grades next week after a key concession by the exam regulator. Schools will have greater scope to challenge results on behalf of entire year groups after the move by Ofqual. Exams were cancelled this year and teachers had to provide grades for each child and put them in ranked order within the class. – The Times

The Navy could be called in to help reduce the number of illegal migrants crossing the Channel after 235 reached the UK in a new record for a single day. Priti Patel, the Home Secretary, has ordered a review of the UK’s current sea capability in the Channel, which could see the Navy recalled to help tackle the situation for the first time since her predecessor, Sajid Javid, requested military aid last January. – Telegraph

The UK’s financial watchdog has warned high-cost lenders about irresponsible repeat lending and exploitative marketing that risks pushing vulnerable borrowers into a cycle of debt. The Financial Conduct Authority warnings follow a review of the high-cost, short-term credit industry that involved the borrowing history of 250,000 customers who had taken out payday loans, guarantor loans, doorstep credit or rent-to-own products. – Guardian

 

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