ADVFN Morning London Market Report: Monday 25 July 2022

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London open: Stocks edge down ahead of busy week

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London stocks edged lower in early trade on Monday as investors eyed the latest policy announcement from the US Federal Reserve later in the week and a raft of corporate updates.

At 0905 BST, the FTSE 100 was down 0.3% at 7,256.16.

Richard Hunter, head of markets at Interactive Investor, said: “The latest Federal Reserve decision on interest rates will be announced on Wednesday, with the likelihood of a further 0.75% hike very much baked into the cake. There is also the release of the second-quarter US GDP number, which could show another negative reading.

“With a packed corporate calendar ahead, including results from the likes of AppleAmazonMeta PlatformsMicrosoft and Alphabet, the indices have been unable to shake off recessionary fears. In the year to date, the Dow Jones is down by 12%, the S&P500 by 17% and the Nasdaq by 24%.

“Nor is the earnings reporting pace slowing in the UK, with numbers expected from the likes of Shell and Unilever, as well as updates from Lloyds BankingBarclaysStandard Chartered and NatWest. For the banks, eyes will be on whether any credit quality deterioration is being experienced and, of equal importance, whether the banks will be setting aside further cautionary provisions after beginning a new trend at the firs-quarter numbers. More positively, the banks are expected to remain awash with capital, providing the possibility of further shareholder returns either through buybacks or additional dividend payments.”

In equity markets, oil giants Shell and BP gushed lower as oil prices fell.

Telecoms group Vodafone dipped as it reported a rise in first-quarter revenues, driven by growth in the UK, but reported a fall in Germany, its biggest market.

On the upside, molten metal flow engineer Vesuvius surged after saying that full-year trading profit was set to be towards to the top of the range of analyst expectations following better-than-expected trading in May and June.

Ferrexpo was boosted by an upgrade to ‘outperform’ at Credit Suisse, while Oxo and Mr Kipling owner Premier Foods also rallied after agreeing to buy Asian meal kits and accompaniments brand The Spice Tailor for an initial £43.8m in cash.

Airtel Africa gained after its Kenyan subsidiary bought 60-megahertz of additional spectrum for $40m as part of an effort to support its 4G network capacity expansion in the market for both mobile data and fixed wireless home broadband capabilities.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Bt Group Plc +2.62% +4.65 181.85
2 Standard Chartered Plc +2.55% +14.60 587.40
3 Itv Plc +1.85% +1.30 71.50
4 Marks And Spencer Group Plc +1.66% +2.40 147.20
5 Hsbc Holdings Plc +1.61% +8.30 523.50
6 Centrica Plc +1.56% +1.36 88.52
7 Bhp Group Limited +1.53% +33.00 2,189.00
8 Barclays Plc +1.31% +2.06 159.90
9 Lloyds Banking Group Plc +1.24% +0.54 43.77
10 Gsk Plc +1.19% +20.80 1,764.00

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Carnival Plc -3.53% -24.40 667.60
2 Flutter Entertainment Plc -2.25% -186.00 8,090.00
3 Ocado Group Plc -2.20% -17.40 774.20
4 Scottish Mortgage Investment Trust Plc -1.90% -15.80 815.60
5 Bae Systems Plc -1.46% -11.40 768.60
6 Intertek Group Plc -1.39% -63.00 4,454.00
7 Segro Plc -1.34% -14.50 1,065.50
8 Croda International Plc -1.30% -92.00 6,958.00
9 Tui Ag -1.27% -1.70 131.70
10 Antofagasta Plc -1.16% -12.50 1,063.50

 

US close: Stocks lower as earnings heavy week comes to an end

Wall Street stocks closed lower on Friday as a busy week for corporate earnings drew to a close.

At the close, the Dow Jones Industrial Average was down 0.43% at 31,899.29, while the S&P 500 was 0.93% softer at 3,961.63 and the Nasdaq Composite saw out the session 1.87% weaker at 11,834.11.

The Dow closed 137.61 points lower on Friday, taking a bite out of gains recorded in the previous session.

Corporate earnings continued to be the session’s primary focus on Friday, with shares in Snapchat parent company Snap losing more than a quarter of their value in extending trading after the group posted second-quarter results overnight that failed to meet expectations on the Street and said it now plans to slow hiring.

Elsewhere, Twitter said on Friday that it swung to a loss of $270.0m in the second quarter as revenue dipped 1% to $1.18bn, with the social media platform highlighting uncertainty surrounding the pending acquisition by Tesla owner Elon Musk.

American Express posted a huge earnings beat, driven by strong customer spending throughout the quarter, while Verizon cut full-year forecasts after posting a huge wireless miss.

Also drawing an amount of investor attention was news that Ukraine and Russia had agreed to sign a deal to restart their grain exports after the cessation thereof caused a threat to soft commodities’ supply.

On the macro front, business activity in the US shrank unexpectedly in July for the first time since mid-2020, with S&P Global‘s services sector purchasing managers’ index declining from a reading of 52.7 in June to 47.0 in July – short of consensus estimates for a print of 51.0.

The comparable PMI for manufacturing fared a tad better than expected, printing at 52.3, down from June’s level of 52.7 but above the 52.0 forecast by economists, while a composite index tracking output levels in both factory and services fell from 52.3 to 47.5.

 

Monday newspaper round-up: Airport workers, supercars, National Grid

More than two in five airport workers are considering quitting, research suggests, which could escalate delays already seen at terminals due to low staffing numbers. A survey of 1,700 workers by the UK jobs site CV-Library found reasons for wanting to leave the industry included wanting better pay and less stress. However, only 5% of respondents blamed the current situation at UK airports, where there have been long delays in recent months. – Guardian

Wealthy people in the UK are splashing out on more luxury supercars than ever before, official figures show. More than 18,000 supercars – such as Ferrari, Bugatti, Aston Martin, Maserati and Koenigsegg models – were registered at UK addresses in 2021, a 19% increase on 2020. Prices range from hundreds of thousands to more than £1m each, but concerns about the economy and the cost of living crisis for people on more modest incomes has done nothing to dampen enthusiasm for the trophy vehicles. – Guardian

National Grid was forced to issue an emergency appeal to Belgium to keep Britain’s lights on as the market was roiled by surging prices ahead of a looming winter crisis. The power network’s electricity system operator (ESO) issued an emergency instruction to operators of the Nemo cable running between Belgium and the UK to make sure supplies were sent to Britain last week, after failing to secure enough in the normal market. – Telegraph

Britain’s next prime minister must accelerate the pursuit of trade deals to prevent a further sharp rise in costs as global supply chains are overhauled, according to the country’s leading business group. Tony Danker, director-general of the CBI, warned that the West’s shift away from countries including Russia and China risked becoming “incredibly expensive” for consumers as companies stopped sourcing goods from the “cheapest and most economically efficient” markets. – The Times

The number of jobs being advertised offering bonuses has more than doubled since the start of last year, as employers seek to fill staff shortages without committing to inflation-proof pay rises. Mounting concerns that the UK is headed into an economic downturn have led companies to contain costs while trying to attract talent amid record levels of vacancies. – The Times

 

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