ADVFN Morning London Market Report: Thursday 5 August 2021

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London open: Stocks edge lower ahead of BoE policy announcement


London stocks edged lower in early trade on Thursday as investors eyed the latest policy announcement from the Bank of England.

At 0830 BST, the FTSE 100 was down 0.3% at 7,104.92.

CMC Markets analyst Michael Hewson said: “In the UK, the virus data appears to be heading in the right direction with infections and hospitalisations both falling back, despite assertions a few weeks ago that the government was being unethical and reckless in announcing the dropping of all remaining restrictions.

“Despite this the UK economy is still in the grip of the so-called pingdemic which in itself is a brake on economy activity, particularly on services, which is something that the Bank of England may be concerned about, however with vaccination rates so high, and the removal of isolation requirements on August 16th, it’s something the central bank won’t have to worry about for much longer.

“Today’s construction PMI is expected to remain resilient with an expectation of a modest slowdown to 64.4, from 66.3.

“With that resilience in mind, today’s Bank of England meeting could offer clues as to policymakers thinking about current levels of bond buying, particularly in terms of unanimity, in light of recent shifts in thinking from the likes of Dave Ramsden and Michael Saunders.”

In equity markets, miners were among the worst performers, with Anglo AmericanRio and BHP all weaker.

Lloyds was the biggest loser on the FTSE 100 after a downgrade to ‘sell’ at Goldman Sachs, which also downgraded NatWest to ‘buy’ from ‘conviction buy’.

Frasers Group lost ground after it confirmed that plans were in place for Mike Ashley to step down as chief executive, with Michael Murray – his future son-in-law – set to take over the role in May next year. It also reported a drop in full-year profit and revenue due to the impact of Covid-related closures.

Centamin fell after the gold miner posted a 39% decline in first-half pre-tax profit.

On the upside, engine maker Rolls-Royce rallied after saying it swung to an interim profit as it continued to cut costs and looked to turn cash-flow positive during the second half of the year.

WPP was also a high riser after the advertising group upgraded its outlook and boosted shareholder returns as it swung back to profit in the first half of 2021.

British Airways and Iberia owner IAG and budget airline easyJet both flew higher on news that from next week, fully-vaccinated travellers returning to England, Scotland and Northern Ireland from France will no longer have to quarantine.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Wpp Plc +2.87% +27.00 968.00
2 Mondi Plc +2.75% +55.00 2,057.00
3 3i Group Plc +1.26% +16.50 1,323.50
4 National Grid Plc +1.24% +11.50 938.80
5 Croda International Plc +1.24% +108.00 8,826.00
6 Segro Plc +1.20% +15.00 1,262.50
7 Sse Plc +1.15% +17.50 1,542.50
8 Smurfit Kappa Group Plc +1.14% +46.00 4,086.00
9 Pearson Plc +1.12% +8.80 795.00
10 Informa Plc +1.06% +5.30 504.60


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Lloyds Banking Group Plc -3.44% -1.63 45.68
2 Anglo American Plc -1.51% -52.00 3,392.00
3 Rio Tinto Plc -1.48% -93.00 6,199.00
4 Carnival Plc -1.43% -20.20 1,397.20
5 Micro Focus International Plc -1.11% -4.60 408.30
6 Bhp Group Plc -1.01% -24.00 2,346.00
7 Hiscox Ltd -0.98% -9.00 911.00
8 Bt Group Plc -0.95% -1.65 172.60
9 Bp Plc -0.92% -2.80 300.20
10 Marks And Spencer Group Plc -0.90% -1.25 137.75


Europe open: Shares nudge record highs as earnings news helps rally

European shares nudged record highs on Thursday, continuing their rally on strong earnings news, although bourses across the region were mixed.

The pan-European Stoxx 600 index was up 0.12% in early trade. France’s CAC 40 was up 0.27%, while Germany’s DAX was flat and the UK’s FTSE 100 down slightly ahead of an interest rate decision from the Bank of England later in the day.

The bank is expected to maintain its massive stimulus program despite continued recovery from Covid-19 pandemic lows and a rebound in inflation.

In corporate news diagnostics group Eurofins saw its shares climb to the top of the Stoxx after reporting record first-half earnings and raising its full-year outlook.

Shares in German skincare manufacturer Beiersdorf gained almost 5% after strong results.

Pharmaceutical giant Merck saw its shares rise after second-quarter profits beat expectations, on the back of increased demand for lab equipment and supplies for developing Covid-19 treatments and vaccines.

French lender Credit Agricole fell despite profit for the period also doubled, reaching €1.97bn from €954m this time last year.

Paper and packaging group Mondi rose after reporting higher sales volumes and better average selling prices in its first half.

German online fashion retailer Zalando dropped 7.2% despite reporting that it expects 2021 operating profit to come in at the upper end of its forecast range as sales rose 34% in the second quarter despite the easing of coronavirus lockdowns.

Danish company Novo Nordisk rose after it raised its full-year forecast and posted above-forecast quarterly earnings on strong sales and demand for its new obesity drug.

German industrial firm Siemens climbed 3.9% as it lifted its profit guidance for the third time this year.

WPP shares rose 3% as the advertising giant upgraded its outlook and boosted shareholder returns after swinging back to profit in the first half of 2021.


US close: Mixed session on the Street as investors digest jobs data

Major indices turned in a mixed performance on Wednesday as traders thumbed over earnings from General Motors and some key jobs data from ADP.

At the close, the Dow Jones Industrial Average was down 0.92% at 34,792.67, while the S&P 500 was 0.46% weaker at 4,402.66 and the Nasdaq Composite saw out the session 0.13% higher at 14,780.53.

The Dow closed 323.73 points lower on Wednesday, while the S&P 500 fell from the fresh record close recorded in the previous session.

Throughout the session, market participants digested comments from Treasury Secretary Janet Yellen, who said that enacting Joe Biden’s trillion-dollar bipartisan infrastructure bill was key to maintaining America’s status as the “world’s pre-eminent economic power”.

The yield on the benchmark 10-year Treasury note was drawing an amount of attention as well, trading broadly flat at around 1.163% after having dipped below 1.13% earlier in the session.

Earnings were also in focus on Wednesday, with General Motors raising its full-year guidance despite missing earnings expectations for the second quarter.

On the macro front, mortgage applications fell 1.7% across the US in the week ended 30 July, after jumping 5.7% in the previous week. According to the Mortgage Bankers Association, applications to refinance a home loan decreased 1.7% and purchases also went down 1.7% despite the average fixed 30-year mortgage rate dropping below 3% for the first time since February.

Elsewhere, private sector employment in the US grew less than expected in July amid a shortage of workers, according to the latest figures from ADP. Employment rose by 330,000 from June, versus expectations for a 695,000 increase. Meanwhile, the June total of jobs added was revised to 680,000 from 692,000. Small businesses with fewer than 50 employees added 90,000 jobs, while medium businesses with between 50 and 499 employees added 132,000. Large businesses with more than 500 employees created a further 106,000 jobs.

Lastly, the Institute for Supply Management‘s non-manufacturing PMI came to a reading of 64.1 in July, the highest reading in the series’ history, up from last month’s print of 60.1 and ahead of expectations of 60.5.


Thursday newspaper round-up: Uber, pensions, tech floats

Uber is regaining much of the momentum it lost during the pandemic, announcing on Wednesday that its ride-hailing services saw a 105% increase and that revenue had more than doubled from this time last year. Revenue for the company’s most recent financial quarter totaled $3.93bn, beating analysts’ expectations and signaling an emergence from the dismal conditions at the same point last year when the pandemic was keeping most people at home. – Guardian

Boris Johnson and Rishi Sunak will urge UK pension schemes to back Britain’s “entrepreneurial spirit” with billions of pounds of savers’ funds to fuel the economy’s post-pandemic recovery in a message to investment bosses. The prime minister and chancellor will issue a joint call to action on Thursday aimed at “igniting an investment big bang” that would “unlock the hundreds of billions of pounds sitting in UK institutions”. – Guardian

The London Stock Exchange is fast-tracking rule changes that would allow high-growth companies such as the Hut Group to enter the FTSE 100 as the UK seeks to attract a rush of tech floats. FTSE Russell, a subsidiary of the London Stock Exchange Group that owns the FTSE 100, FTSE 250, and other main indices, is consulting on changes to stock market rules that would allow companies to join the blue chip series even when insiders retain substantial control of a company. – Telegraph

Sadiq Khan is being forced on to a collision course with Tube drivers over plans to overhaul Transport for London’s “expensive, unreformed and generous” pension scheme. Workers are threatening industrial action if the London mayor cuts payouts or closes the £11bn retirement fund. – Telegraph

Pret A Manger, Sheffield United FC and John Lewis are among 191 employers fined and publicly criticised for an “unacceptable” breach of unemployment law in which tens of thousands of workers were paid less than the minimum wage. The breach by Pret, the coffee and takeaway meals chain, related to childcare vouchers, it said, which had “inadvertently caused remuneration to fall below minimum levels”. – The Times


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