ADVFN Morning London Market Report: Tuesday 21 June 2022

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London open: Stocks rise but Ocado slumps after share placing

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London stocks rose in early trade on Tuesday, taking their cue from a mostly positive session in Asia.

At 0840 BST, the FTSE 100 was up 0.3% at 7,145.39.

Richard Hunter, head of markets at Interactive Investor, said: “Left to their own devices following a public US holiday, global markets made a tentative recovery from the recent unrelenting pressure, even if such relief has tended to be brief over recent months.

“At this early stage, US futures are also pointing higher to the reopening of trade later, although the pervasive sense of caution remains.

“For the UK, the calendar remains a central focus with updates over the course of the week which may underline the increasing pressure facing the economy. Updates on inflation, the Retail Price Index, retail sales and consumer confidence carry a strong theme and will provide some indication into the current sentiment among consumers.

“Recent numbers from various retailers have, on the whole, underlined the current woes where an increasing stranglehold on customer wallets is beginning to wash through.”

In equity markets, miners were among the top gainers following heavy losses in the previous session, with AntofagastaRio Tinto and Glencore all higher.

Oil giants BP and Shell were also on the front foot as oil prices rose.

DS Smith gained as the packaging business posted significantly improved full-year profits despite “another year of volatile trading conditions”.

Telecom Plus – better known under its trading name Utility Warehouse – rallied after it reported record full-year results amid strong demand, and lifted its FY23 profit expectations.

Educational publisher Pearson was boosted by an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank, while Spire Healthcare shot up after an initiation at ‘buy’ at Berenberg.

On the downside, Ocado slumped after the online supermarket said it had raised £575m in a share placing to fund its expansion. Just over 72.3m new ordinary shares were placed at 795p per share, with existing and new institutional investors. The placing price represents a discount of around 9.4% to the closing share price on Monday.

The online supermarket also raised an additional £3m selling shares to management and in an offer to retail investors.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Melrose Industries Plc +2.86% +4.35 156.70
2 Antofagasta Plc +2.83% +36.50 1,327.50
3 Barratt Developments Plc +2.53% +11.50 465.90
4 Taylor Wimpey Plc +2.44% +2.85 119.80
5 Standard Chartered Plc +2.28% +13.80 617.80
6 Burberry Group Plc +2.26% +37.00 1,677.50
7 Rio Tinto Plc +2.24% +115.00 5,240.00
8 3i Group Plc +1.92% +20.50 1,087.00
9 Mondi Plc +1.92% +28.00 1,488.50
10 St. James’s Place Plc +1.88% +21.00 1,137.00

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Ocado Group Plc -4.24% -37.20 840.40
2 Carnival Plc -1.07% -7.80 719.80
3 Tui Ag -0.97% -1.60 163.50
4 Spirax-sarco Engineering Plc -0.88% -82.00 9,198.00
5 Associated British Foods Plc -0.88% -14.50 1,632.50
6 National Grid Plc -0.87% -9.00 1,029.00
7 Centrica Plc -0.82% -0.66 79.98
8 Intercontinental Hotels Group Plc -0.67% -29.00 4,312.00
9 Admiral Group Plc -0.46% -10.00 2,147.00
10 Sainsbury (j) Plc -0.43% -0.90 207.50

 

US close: Dow Jones extends losses

Wall Street stocks delivered a mixed performance on Friday as fears of a potential economic slowdown continued to weigh on sentiment.

At the close, the Dow Jones Industrial Average was down 0.13% at 29,888.78, while the S&P 500 was 0.22% firmer at 3,674.84 and the Nasdaq Composite saw out the session 1.43% stronger at 10,798.35.

The Dow closed 38.29 points higher on Friday, extending heavy losses recorded in the previous session following rate hikes from the Federal Reserve, Swiss National Bank, and the Bank of England.

The blue-chip Dow Jones slipped below 30,000 for the first time in almost 18 months on Thursday, with the average on track for its 11th negative week in the last 12, while the S&P 500 was down 6% week-on-week, setting it on a course for its worst weekly performance since March 2020.

Quadruple witching also drew an amount of investor attention on Friday, with the final session of the week marking the simultaneous expiration of stock index futures, single-stock futures, stock options, and stock index options.

On the macro front, policymakers at the US central bank said they were “acutely” focused on maintaining price and financial stability, with the latter of key importance for meeting the Federal Reserve’s mandate of achieving 2.0% inflation and full employment. In remarks prepared for a speech at a research conference sponsored by the Fed board, chairman Jerome Powell also highlighted how price stability encouraged other countries to hold and use US dollars.

Elsewhere, industrial production increased 5.8% year-on-year in May following a 6.3% rise in April, according to the Federal Reserve, with the mining sector recording the biggest increase at 9%, followed by utilities at 8.4% and manufacturing at 4.8%.

Finally, the Conference Board‘s leading index decreased by 0.4% in May to 118.3, fuelled by tumbling stock prices, a slowdown in housing construction, and gloomier consumer expectations.

No major corporate earnings were released on Friday.

 

Tuesday newspaper round-up: Energy price cap, Palantir, Newport Wafer Fab

The energy price cap could reach nearly £3,000 in the Britain at the beginning of October, with the planned increase possibly being more than £1,000 according to a new forecast. It is expected to rise to £2,980.63 for the next period, which runs between October and December, after another spike in wholesale demand prices last week. – Guardian

For a company tipped to provide the NHS’s new overarching data platform, it is appropriate that Palantir Technologies is named after an all-seeing orb. Palantir, which draws its name from the powerful crystal balls deployed in JRR Tolkien’s The Lord of the Rings, is the favourite to win a £360m contract for the NHS’s Federated Data Platform (FDP). Covering everything from individual patients’ data to vaccination programmes, waiting lists and medical trials, the FDP will aggregate data from multiple sources and different formats on to a single platform. – Guardian

The Bank of England must prop up the pound with a rapid increase in interest rates or risk a further surge in inflation, a senior policymaker has warned. Catherine Mann, a member of the Bank’s rate-setting Monetary Policy Committee (MPC), said that Britain is falling behind the US after the Federal Reserve embarked on a vigorous round of rate increases. – Telegraph

The Government could be forced to pay a compensation bill as big as the entire defence budget if a legal challenge launched today over the rejigging of the retail prices index succeeds. Analysts estimate that the Treasury could in theory be forced to pay compensation of as much as £40 billion to holders of index-linked government bonds tied to the RPI if the Government loses. – The Times

The owner of Britain’s largest microchip manufacturer has rejected suggestions that it is controlled by China. The takeover of Newport Wafer Fab by Nexperia, a subsidiary of the Chinese smartphone maker Wingtech Technology, is the subject of a national security investigation which could potentially lead to the £63 million takeover being unwound. – The Times

 

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