ADVFN Morning London Market Report: Tuesday 19 July 2022

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London open: Stocks fall as investors mull jobs data

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London stocks fell in early trade on Tuesday following a late selloff on Wall Street, as investors digested the latest UK jobs data.

At 0835 BST, the FTSE 100 was down 0.4% at 7,195.59.

US markets closed down on Monday as investors were spooked by reports that Apple was planning to slow hiring and spending into 2023 in a number of key areas.

Richard Hunter, head of markets at Interactive Investor, said: “Quite apart from the company’s influence given its size – its market value is currently over $2.4 trillion – it is also seen as a strong indicator of consumer spending intentions.

“The news sent its shares down by over 2%, but equally importantly provided another stark reminder of the fact that corporates could be feeling the squeeze against a backdrop of high inflation and tightening margins.”

On home shores, meanwhile, the latest data from the Office for National Statistics showed that employment picked up in the three months to May but real pay fell at the fastest rate since records began.

Average total pay growth was 6.2%, down from 6.8% in April, while regular pay growth excluding bonuses was 4.3%, up a touch from 4.2%. Adjusted for inflation, however, total pay fell by 0.9% and regular pay was down 2.8% – the biggest fall since records began in 2001.

The data also showed that the unemployment rate was steady at 3.8% in the three months to May.

Meanwhile, the number of people in employment rose by 296,000. This was well ahead of consensus expectations of 170,000 and marked the biggest jump since the three months to August 2021.

David Freeman, head of labour market and household statistics at the ONS, said: “Following recent increases in inflation, pay is now clearly falling in real terms both including and excluding bonuses. Excluding bonuses, real pay is now dropping faster than at any time since records began in 2001.”

In equity markets, miners were under the cosh as metals prices dropped, with Anglo American and Antofagasta among the biggest losers.

On the upside, 4Imprint surged after it said 2022 operating profit was set to be “materially” above consensus analyst forecast, and not less than $75m.

Informa rallied as it backed its full-year expectations and hailed strong first-half revenues.

Darktrace was also in the black as it said full-year core earnings margins were set to be above expectations, as customer numbers increased.

Biffa gained as the waste management company said it had won a 10-year contract to provide logistics, sorting and counting services for the UK’s first Deposit Return Scheme (DRS) for drinks containers in Scotland.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Gsk Plc +27.69% +384.80 1,774.60
2 Informa Plc +3.99% +21.40 558.40
3 Direct Line Insurance Group Plc +1.27% +2.45 196.10
4 Barclays Plc +1.23% +1.90 156.12
5 Melrose Industries Plc +1.22% +2.00 165.35
6 Land Securities Group Plc +1.14% +7.80 691.00
7 Imperial Brands Plc +0.91% +17.00 1,877.00
8 British Land Company Plc +0.91% +4.20 465.10
9 Lloyds Banking Group Plc +0.89% +0.38 43.16
10 Standard Chartered Plc +0.81% +4.60 570.60

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Flutter Entertainment Plc -2.95% -232.00 7,640.00
2 Carnival Plc -2.50% -18.20 710.40
3 Scottish Mortgage Investment Trust Plc -1.83% -14.60 784.60
4 Ocado Group Plc -1.77% -13.80 766.00
5 Spirax-sarco Engineering Plc -1.53% -165.00 10,620.00
6 Rightmove Plc -1.45% -8.80 596.80
7 Ashtead Group Plc -1.36% -53.00 3,851.00
8 Ferguson Plc -1.30% -124.00 9,402.00
9 Auto Trader Group Plc -1.22% -7.20 580.80
10 Bhp Group Limited -1.19% -25.50 2,109.50

 

US close: Stocks reverse gains to finish in the red

Wall Street stocks had reversed their fortunes to close weaker on Monday, as a busy week of earnings kicked off with updates from some of the nation’s biggest banks.

At the close, the Dow Jones Industrial Average was down 0.69% at 31,072.61, as the S&P 500 lost 0.84% to 3,830.85 and the Nasdaq Composite shed 0.81% to 11,360.05.

The Dow closed 215.65 points lower on Monday, reversing the gains it recorded on Friday as market participants digested earnings from some big names.

“After rallying into the end of the week some slowdown might have been anticipated,” said IG chief market analyst Chris Beauchamp earlier.

“The potential for a severe disruption to European gas supplies is the major headache right now, although it is far from clear why Russia would play this card and leave itself out of options to influence European governments.”

On the macro front, the National Association of Home Builders‘ housing market index extended losses for a seventh month in July to hit 55, the lowest reading since May 2020, down from 67 in June and much lower than forecasts for a print of 65.

Also in focus earlier, the spread between two-year and 10-year Treasury notes remained inverted early on Monday, often cited as a sign of a coming recession, with the two-year note yielding 3.149% and the ten-year note yielding 2.974%.

Corporate earnings were again the session’s primary focus, with Bank of America eking out gains of 0.03% after it posted slightly worse-than-expected second-quarter profits and revenues in what it termed a “weakened capital markets environment”.

Elsewhere, Goldman Sachs added 2.51% after it beat analysts’ estimates for its second-quarter earnings and sales thanks to a better-than-expected performance across the franchise.

The bank also upped its quarterly dividend payment.

 

Tuesday newspaper round-up: Petrol prices, Heathrow chaos, SoftBank

Motorists can expect reductions of about £1.50 a tank after fuel prices dropped from record highs seen in recent months. According to the AA motoring group, average pump prices for petrol have fallen since the start of the month, when prices were 191.53p a litre for petrol and 199.07p a litre for diesel. – Guardian

Plans to install millions of heat pumps to replace gas boilers are “insufficient” and risk missing the Government’s net zero targets, National Grid has warned. The UK is currently installing just 60,000 pumps per year, 90pc less than the Government’s target of installing 600,000 heat pumps annually by 2028, National Grid’s electricity system operator (ESO) said. – Telegraph

The chairman of Heathrow has launched a searing attack on “slasher” airlines for failing to attract enough baggage handlers at the airport by paying higher wages. Lord Paul Deighton has leapt to the defence of under-fire Heathrow chief executive John Holland-Kaye by laying the blame on airlines for the travel chaos witnessed at airports this year. – Telegraph

The Japanese owner of Arm, the British chip designer, has reportedly paused talks with the UK government about an initial public offering in London because of the UK’s political upheaval. Boris Johnson, the prime minister, has personally courted SoftBank and Masayoshi Son, its billionaire founder, in an attempt to get the Cambridge-based technology company partially listed in the capital. But the collapse of Johnson’s government, along with the departure of key ministers involved in the talks, has prompted SoftBank to put the discussions on hold, according to the Financial Times. – The Times

LV= is under pressure to disclose whether it will hand its outgoing boss a payoff after announcing that he will leave following the collapse of the plan last year to sell the mutual insurer to a private equity firm. Members of the customer-owned insurer have been calling for Mark Hartigan to step down ever since they rejected the takeover by Bain Capital in December. On Sunday it emerged that Hartigan would go and LV= confirmed yesterday that the search for a new chief executive was under way. – The Times

 

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