ADVFN Morning London Market Report: Tuesday 26 July 2022

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London open: Stocks in the black as miners, Unilever rally


London stocks rose in early trade on Tuesday, bucking the broader trend as strength in the mining sector and some well-received results from Unilever helped to underpin the mood.

At 0850 BST, the FTSE 100 was up 0.5% at 7,342.46, with the US Federal Reserve’s two-day policy meeting set to kick off later.

CMC Markets analyst Michael Hewson said: “It’s been a mixed start to the day for European markets with the FTSE100 edging higher after some positive earnings updates, while markets in Europe are under pressure as investors absorb what yesterday’s news from Gazprom is likely to mean when it comes to gas supplies over the next few days.”

As far as the Fed is concerned, Rabobank expects the target range for the federal funds rate to be increased by 75 basis points to 2.25-2.50%. Meanwhile, the balance sheet reduction schedule is expected to remain unchanged.

“There will be no update of economic projections, so we only have the formal statement and Powell’s press conference to look forward to. While FOMC speakers have pushed against a 100 bps rate hike this month, Powell may shed more light on the rate path beyond July, especially in relation to the stronger-than-expected CPI print on July 13,” it said.

“With headline inflation rising to 9.1% in June from 8.6% in May, against a Bloomberg consensus expectation of 8.8%, markets initially increased their speculations on a 100 bps hike in July. However, although the FOMC may not be ready to take a 100 bps hike, they may want to take a few more big rate steps in the remainder of the year.”

In equity markets, miners were the standout gainers as metals prices rose, with AntofagastaAnglo AmericanRio and Glencore all higher.

Consumer goods giant Unilever rose after it reported 8.1% growth in first-half underlying sales as it lifted prices to tackle higher costs, and raised it sales growth guidance for the year.

Catering group Compass rallied as it said underlying revenues had more than doubled in the three months ended 30 June, with all three of its trading regions operating above 2019 levels.

Budget airline easyJet flew higher after saying it currently expects fourth-quarter capacity to be around 90% of pre-Covid pandemic levels with load factors above 90% as it narrowed third-quarter losses. The company reported a group headline loss before tax for the three months to June 30 of £114m, down from the £318m last year.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Easyjet Plc +3.61% +13.50 387.30
2 Admiral Group Plc +2.51% +43.50 1,780.00
3 Unilever Plc +2.36% +92.50 4,009.00
4 Anglo American Plc +2.29% +62.50 2,791.50
5 Antofagasta Plc +2.23% +24.00 1,099.00
6 Compass Group Plc +2.17% +40.00 1,885.00
7 Centrica Plc +2.15% +1.90 90.34
8 Shell Plc +2.13% +44.00 2,113.00
9 Bp Plc +2.06% +7.95 394.65
10 Bhp Group Limited +1.84% +40.00 2,219.00


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Kingfisher Plc -7.35% -19.70 248.40
2 Marks And Spencer Group Plc -4.26% -6.20 139.20
3 Sainsbury (j) Plc -2.26% -5.00 216.20
4 Bunzl Plc -2.12% -64.00 2,955.00
5 Tesco Plc -1.77% -4.70 260.10
6 Next Plc -1.77% -118.00 6,548.00
7 Persimmon Plc -1.65% -31.00 1,845.00
8 Barratt Developments Plc -1.49% -7.50 495.30
9 Rightmove Plc -1.48% -9.20 613.80
10 Micro Focus International Plc -1.46% -4.20 283.10


US close: Stocks mixed as investors look to Fed, earnings

Wall Street trading closed mixed but little changed on Monday, as July began to draw to a close with another five days of corporate earnings, as well as a Federal Reserve decision later in the week.

At the close, the Dow Jones Industrial Average was up 0.28% at 31,990.04, as the S&P 500 added 0.13% to 3,966.84 while the Nasdaq Composite slipped 0.43% to 11,782.67.

The Dow closed 90.75 points higher on Monday, taking a bite out of losses recorded in the previous session.

“Recent risk-on moves appear to be on thin ice as markets gear up for another bout of earnings and a crucial Fed rate decision,” said IG senior market analyst Joshua Mahony.

“As we have seen with the ECB and BoC, central banks are happy to push rates faster than most expect, with governors seeking to act swiftly before recessionary pressures kick in.

“Thus, while markets currently attribute a mere 10% chance of a 100-basis point move, recession expectations do raise the possibility that Powell opts to front-run future hikes to the benefit of the dollar.”

The week’s primary focus looked set to remain on earnings, with second-quarter updates due from the likes of AmazonApple, and Microsoft throughout the course of the week, while AlphabetTimberland, and Whirlpool were due to report after the closing bell on Monday.

Traders were also holding out for an update from the Federal Reserve on Wednesday following its two-day policy meeting, with economists widely expecting the central bank to announce a three-quarter point interest rate hike.

GDP data would also follow a day later.

In terms of Monday’s economic headlines, the Chicago Federal Reserve’s national activity index printed at -0.19 in June, flat month-on-month after May’s print was downwardly revised and remaining at low levels not seen since February 2021.

Meanwhile, the three-month moving average, which aims to provide a more consistent picture of national economic growth, decreased to -0.04 from +0.09 for the first negative reading in two years.

In equities, self-destructing social message specialist Snap slipped 0.1% on the back of its disappointing earnings last week alongside a warning over the likelihood of falls in digital advertising spending given the worsening economic outlook.

Among its internet peers, Amazon was down 1.05% and Facebook owner Meta Platforms was off 1.55%.

Energy plays featured on the upside, meanwhile, with Chevron gaining 2.98% as oil prices rose, while Marathon Oil jumped 6.57% and Occidental Petroleum added 5.49%.


Tuesday newspaper round-up: Energy bills, Amazon, Sunak

Millions of people will be plunged into “unmanageable” debt this winter unless the government comes up with more support for those struggling to pay their energy bills, MPs have warned. – Guardian

Amazon is to increase the price of its monthly Prime subscription service by 12.5% – or £1 – to £8.99 from September in the latest sign that delivery costs are rising. The company said the cost of an annual Prime package, which includes unlimited deliveries for online shopping, access to its video and music streaming services and its Amazon Fresh grocery deliveries, would rise by more – 20%, or £16 – to £95, although this remains a discount on the monthly option. – Guardian

The China-backed owner of Britain’s biggest microchip factory has been accused of “misleading” MPs looking into the deal, amid claims they cut customers off from using the plant. In a letter sent to MPs on the Business Select Committee, seen by the Telegraph, a former director at Welsh chip plant Newport Wafer Fab hit back at claims made by Nexperia to an inquiry into the UK’s semiconductor industry. – Telegraph

Rishi Sunak was the “driving force” behind plans to revive a regular UK-China trade summit while Chancellor, Whitehall insiders have revealed, as he was accused of playing “pure politics” over his tougher stance towards Beijing. Mr Sunak is said to have pushed China “very hard” to resume the economic and financial dialogues after the summits were suspended amid simmering tensions over Hong Kong, Huawei and human rights abuses in Xinjiang. – Telegraph

Household disposable income fell by a record £44 a week in June, marking its eighth consecutive month of decline as the cost of living crisis intensifies. The average household was £175.80 worse off in June this year than they were in the same month in 2021, according to Asda’s monthly income tracker, produced by the Centre for Economics and Business Research. – The Times


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