ADVFN Morning London Market Report: Monday 2 August 2021

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London open: Stocks rally as deal news lifts sentiment; Meggitt surges

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London stocks rallied in early trade on Monday, having been hit last week amid concerns about China’s tech crackdown, with deal news helping to boost sentiment.

At 0845 BST, the FTSE 100 was 1% firmer at 7,100.13.

CMC Markets analyst Michael Hewson said: “Last week Asia markets saw big declines due to a regulatory crackdown in China, with the Nikkei more or less trading near to its lows this year and the Hang Seng trading at a nine-month low.

“The extent of the falls appeared to prompt a partial backtrack, or softening of tone by the Chinese authorities prompting a little bit of a rebound which appears to have continued today in Asia.”

In equity markets, shares in defence and aerospace engineer Meggitt rocketed as it agreed to be bought by US rival Parker-Hannafin for £6.3bn. Under the terms of the deal, Meggitt shareholders will receive 800p per share, which is a premium of around 70.5% to the closing share price on Friday.

GKN owner Melrose and engine maker Rolls-Royce also gained.

HSBC rose after the bank said it would reinstate dividends as first-half profits more than doubled as an ongoing restructuring and pivot to Asia continues to pay off. Reported profit before tax rose $6.5bn to $10.8bn. The bank said it will pay an interim dividend of 7 cents a share after UK regulators last year ordered banks to suspend payouts amid the coronavirus pandemic.

SSE was trading up after agreeing to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) for £1.23bn in cash.

Fund administrator Sanne rose sharply after saying it was in advanced talks with Apex Group about a possible takeover at 920p per share in cash.

Elsewhere, Volution advanced after saying it had bought Energy Recovery Industries, a maker and supplier of low-carbon, energy efficient heat exchanger cells, for an initial €23.4m.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Melrose Industries Plc +5.93% +9.50 169.60
2 International Consolidated Airlines Group S.a. +5.04% +8.48 176.58
3 Anglo American Plc +4.29% +137.00 3,327.50
4 Rolls-royce Holdings Plc +4.10% +4.09 103.80
5 Land Securities Group Plc +3.04% +21.60 731.20
6 Next Plc +2.97% +234.00 8,116.00
7 Whitbread Plc +2.86% +87.00 3,133.00
8 British Land Company Plc +2.55% +13.00 523.60
9 Itv Plc +2.50% +2.80 115.00
10 Barclays Plc +2.44% +4.26 178.76

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Pearson Plc -3.27% -28.40 841.00
2 Tui Ag -1.86% -6.30 332.80
3 Fresnillo Plc -1.52% -12.40 805.80
4 Smith & Nephew Plc -0.99% -14.50 1,447.50
5 Unilever Plc -0.76% -31.50 4,119.50
6 Rentokil Initial Plc -0.74% -4.20 562.60
7 Astrazeneca Plc -0.42% -35.00 8,233.00
8 Severn Trent Plc -0.39% -11.00 2,789.00
9 Relx Plc -0.38% -8.00 2,106.00
10 Hikma Pharmaceuticals Plc -0.38% -10.00 2,636.00

 

Europe open: Asia rebound, Meggitt deal push Stoxx to record highs

European stocks hit new highs on Monday following as Asian shares rebounded overnight and UK engineer Meggitt soared on a £6.3bn US buyout.

The pan-European STOXX 600 index rose 0.79% in early trade, having hit an all-time high of 465.84 points. Investors were eying manufacturing PMIs for July which are expected to show slowdowns in France, Spain and Italy.

British aero-engineer Meggitt was the standout gainer, soaring 59.2% after US industrial firm Parker-Hannifin said it would buy UK rival in a deal that values it at £6.3bn.

HSBC gained 1.4% after Europe’s biggest bank beat forecasts for first-half pretax profit and reinstated dividend payments.

French insurer Axa rose after it posted a 180% surge in first-half net income, while bigger rival Allianz fell after US regulators started a probe relating to Allianz Global Investors’ Structured Alpha Funds.

 

Monday newspaper round-up: Pensions, remote roles, business optimism

Employers are offering signing-on fees of up to £10,000 to tempt “gold dust” applicants as more than 1.1m jobs in the UK remain unfilled, with the pingdemic worsening a shortage of workers caused by Brexit and a lack of skills. Care home operator HC One is offering a £10,000 “welcome bonus” on two jobs for registered night nurses, both in Scotland, as private health care providers battle with a shortage of workers partly caused by EU citizens returning home. – Guardian

Hollywood’s Sunset Studios, which produced La La Land, Zoolander and the first in the X-Men franchise, has become the latest US movie production house to adopt the leafy Hertfordshire countryside as its main base outside the US. Backed by £700m from two major US investment firms, the TV and film studio complex will create more than 4,500 jobson a 37-hectare (91-acre) greenfield site in Broxbourne, close to the arc of rival studio complexes north-west of London known as Britain’s Hollywood. – Guardian

Rishi Sunak is considering a temporary suspension of the Conservatives’ “triple lock” election manifesto commitment on state pensions that would save billions by linking this year’s rise to inflation instead. The lock commits the Chancellor to lift payouts to match the highest out of average earnings, inflation or 2.5pc. However, the impact of the furlough scheme last year is likely to leave wages more than 8pc higher than last year, adding more than £7bn to the state pensions every year if fulfilled. – Telegraph

A third of new jobs in industries including marketing, software and IT are offering remote working, as bosses bow to staff demands for more flexible terms. A number of traditionally office-bound sectors have seen an increase of 20pc in remote vacancies after Covid sparked a homeworking revolution. – Telegraph

Businesses are stepping up recruitment plans and increasing wages as the recovery gathers strength but optimism in the private sector has peaked, according to a corporate survey by Lloyds Banking Group. Its monthly business barometer found that hiring intentions climbed for a sixth consecutive month to the highest level since November 2018. More than a quarter of respondents, 27 per cent, expect pay growth of 2 per cent, up from 24 per cent last month and back in line with pre-pandemic readings. – The Times

The government is considering removing restrictions on bankers’ bonuses as part of its plan to ditch EU rules and to make the City more competitive. The idea is at an early stage and not yet part of any public consultations, as officials fear scrapping the bonus cap could trigger a public backlash. But the move has support among some within the Treasury as a way to make London more attractive for senior bankers than Frankfurt, Paris or Dublin, boosting the capital’s prospects for retaining its key role in financial services. – The Times

 

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