ADVFN Morning London Market Report: Tuesday 3 August 2021

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London open: Stocks edge up as investors cheer BP, StanChart earnings

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London stocks rose in early trade on Tuesday, helped along by well-received earnings from the likes of BP and Standard Chartered.

At 0855 BST, the FTSE 100 was up 0.4% at 7,109.04.

BP was the standout performer on the FTSE 100 after the oil giant said it expected to buy back about $1bn of shares each quarter and increase its dividend over the next five years as it swung to a second-quarter profit.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “BP isn’t quite throwing caution to the wind, but the company’s steady as she goes approach has been infused with optimism as higher oil prices make immediate prospects look brighter.

“With profits for the quarter coming in at $3.1 billion, the company is splashing surplus cash piled up through an annual increase in the dividend by 4% through to 2025 and $1.4 billion in share buy backs.”

Standard Chartered was also on the rise after it reported an increase in first-half profits and said it was resuming dividends against an improving economic backdrop.

Precious metals miner Fresnillo shone as it announced a jump in its interim dividend and reported earnings up 59% in the first half, supported by higher prices.

Insurer Hiscox advanced after saying it swung to an interim profit as gross premiums written rose across its divisions.

Domino’s Pizza rallied as it posted a 28% jump in first-half underlying pre-tax profit and expanded its share buyback.

Direct Line was also in the black as it reported higher interim earnings on the back of lower motor claims as the pandemic kept drivers off roads during lockdowns.

On the downside, Smiths Group was the worst performer on the top-flight index after announcing late on Monday that it had agreed to sell its medical unit to TA Associates for $2.3bn.

Rotork slumped after it announced plans for chief executive Kevin Hostetler to leave the company as the industrial instruments maker posted a 2.4% profit increase for the first half.

TP ICAP declined after it said revenues dipped in the first half amid quieter markets.

Travis Perkins fell even as the builders’ merchant lifted full-year guidance and said it would pay a special dividend as it returned to profit after a recovery in its repairs, maintenance and improvement markets .

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Direct Line Insurance Group Plc +3.57% +10.70 310.20
2 Bp Plc +3.09% +8.95 298.70
3 Hiscox Ltd +2.93% +25.40 891.00
4 Bt Group Plc +1.69% +2.95 177.65
5 Fresnillo Plc +1.39% +11.40 834.20
6 Anglo American Plc +1.36% +45.00 3,345.00
7 Sainsbury (j) Plc +1.33% +3.80 289.00
8 Standard Chartered Plc +1.28% +5.60 442.30
9 Croda International Plc +1.18% +100.00 8,594.00
10 Centrica Plc +1.15% +0.53 46.48

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Smiths Group Plc -6.49% -102.00 1,470.00
2 Pearson Plc -1.38% -11.40 815.60
3 Melrose Industries Plc -1.31% -2.20 166.20
4 Itv Plc -0.83% -0.95 113.40
5 Ashtead Group Plc -0.82% -44.00 5,324.00
6 Next Plc -0.80% -64.00 7,908.00
7 Tui Ag -0.78% -2.60 328.70
8 Carnival Plc -0.78% -11.20 1,428.60
9 Sage Group Plc -0.76% -5.40 708.20
10 Prudential Plc -0.73% -10.00 1,353.50

 

Europe open: Shares set new records on strong earnings

European shares hit fresh record highs on Tuesday, boosted by another raft of strong corporate earnings and return of dividend payouts from the likes of BP.

The benchmark Stoxx 600 was up 0.31% in early trade, hitting a record 465.94 points at 0910 BST. Major markets in Asia-Pacific were mostly lower as Hong Kong-listed Chinese online gambling shares plunged after being described as “opium” by Chinese state media.

Oil major BP rose 3.5% as it lifted its dividend and ramped up share buybacks after second-quarter profit rose to $2.8bn.

“There is little doubt that the rise in the oil price has helped BP this quarter, along with the rest of its peers, however if the company wants to meet CEO Bernard Looney’s plans for a 40% reduction in oil and gas production by 2030, then it will need to invest a lot more in renewables to be able to do that,” said CMC Markets analyst Michael Hewson.

“While shareholders will no doubt be pleased at today’s extra windfall, you have to question whether this is the best long-term use of the company’s surplus cash flow.”

In other equity news, shares in carmaker Stellantis climbed up 3.9% after it raised its full-year target on its adjusted operating profit margin.

Insurer Hiscox advanced after saying it swung to an interim profit as gross premiums written rose across its divisions.

Direct Line was also in the black as it reported higher interim earnings on the back of lower motor claims as the pandemic kept drivers off roads during lockdowns.

On the downside, Smiths Group was the worst performer on the top-flight index after announcing late on Monday that it had agreed to sell its medical unit to TA Associates for $2.3bn.

Rotork slumped after it announced plans for chief executive Kevin Hostetler to leave the company as the industrial instruments maker posted a 2.4% profit increase for the first half.

TP ICAP declined after it said revenues dipped in the first half amid quieter markets.

Shares of Dutch firm Prosus, which has a stake in Chinese tech giant Tencent, fell 5.3% as Chinese officials took aim at video game producers once again.

 

US close: Stocks mixed at the end of August’s first session

Wall Street stocks closed in a mixed state on Monday, as market participants made it through the first trading day of August.

At the close, the Dow Jones Industrial Average was down 0.28% at 34,838.16 and the S&P 500 lost 0.18% to 4,387.16, while the Nasdaq Composite managed gains of 0.06% to 14,681.07.

The Dow closed 97.31 points lower on Monday, adding to losses recorded in the final session of an otherwise strong month for major indices in July.

Concerns regarding the delta variant of Covid-19 were still lingering on Monday, even though investors placed their bets on reopening plays like Carnival and US airlines earlier in the session.

On the macro front, IHS Markit‘s manufacturing PMI reached a new series high of 63.4 in July, up from flash estimates for a print of 63.1, with both manufacturers and suppliers once again struggling to meet booming demand.

Elsewhere, the ISM’s manufacturing PMI came in at 59.9 for July, short of estimates for a reading of 60.8 but still enough to register a 14th consecutive monthly gain.

Lastly, US construction spending rose 0.1% in June, according to the Commerce Department, with an increase in private projects being offset by a drop in public sector building throughout the month.

In the corporate space, Square jumped 10.16% by the close, after the firm agreed to buy Australian installment loan provider Afterpay as part of a $29.0bn all-stock deal.

 

Tuesday newspaper round-up: Driver shortage, unemployment, commercial rents

Gaps on supermarket shelves are likely to continue for several months unless the government does more to tackle the labour crisis hitting haulage firms, suppliers have warned. Logistics and hauliers’ organisations said August would be a pinch point in the shortage as workers take summer breaks, while firms offering bonuses and sign-on fees to recruit drivers were not helping matters. – Guardian

The ending of the government’s furlough scheme will lengthen dole queues by 150,000 despite a boost to activity from the ending of lockdown that will make the UK the fastest-growing G7 nation this year, a leading thinktank has said. In its quarterly update on the UK, the National Institute of Economic and Social Research (Niesr) said it had revised up its 2021 growth forecast from 5.7% to 6.8%. – Guardian

Reese Witherspoon has sold a majority stake in her female-focused production company in a deal that values the venture at about $900m (£650m). Hello Sunshine, which produced the HBO drama Big Little Lies and The Morning Show for Apple TV+, was founded by the actress in 2016 to produce television series centred on female leads. – Telegraph

The communities secretary is facing renewed calls from commercial tenants to force landlords to waive at least 50 per cent of rent debts built up during the pandemic. The Commercial Tenants Association, which represents 500 businesses ranging from insurers to retailers, has written to Robert Jenrick proposing that the government adopt an Australia-style model to address the billions of pounds in rent debts. – The Times

The economy will grow faster than initially expected this year and policymakers should make it clear that they are ready to curb rising inflation, a leading think tank has said. In its latest forecasts, the National Institute of Economic and Social Research said that the economy would expand by 6.8 per cent this year, up 1.1 percentage points from its May report, even though the spread of the Delta variant of coronavirus has created new uncertainty. – The Times

 

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