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ADVFN Morning London Market Report: Thursday 26 January 2023

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London open: FTSE edges up as investors eye US GDP

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London stocks edged higher in early trade on Thursday following a late rally on Wall Street, as investors eyed the latest US GDP data.

At 0835 GMT, the FTSE 100 was up 0.2% at 7,761.31.

Fourth-quarter US GDP data is due at 1330 GMT.

CMC Markets analyst Michael Hewson said: “As we look towards today’s first iteration of Q4 GDP is seems quite likely that we’ll see a slowdown from the strong performance in Q3.

“Expectations are for a modest slide to 2.5%, although with signs in recent months that consumer spending is slowing you might think that there could be considerable downside risks to that estimate.”

In UK equity markets, 3i Group rallied as it hailed a positive third quarter and said it was on track to deliver “another year of good growth”.

Prudential was in the black as the insurer and investment manager said it had received approval from Macau to open a branch of its Hong Kong business there.

Equipment rental firm Ashtead rose after well-received results from US peer United Rentals.

Tate & Lyle gained after it backed its full-year guidance as it said third-quarter trading was consistent with the first half.

Intermediate Capital and IG Group also pushed higher after well-received results.

On the downside, Diageo lost ground despite saying it had made a good start to the current year, after interim sales fizzed.

Wizz Air fell even as the Hungary-based budget airline said it narrowed losses in the third quarter on the back of fare increases and higher booking volumes. EasyJet was also in the red. Airlines had a strong day on Wednesday after easyJet said it expected to beat full-year profit expectations.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 3i Group Plc +4.38% +64.00 1,524.00
2 Ashtead Group Plc +3.60% +182.00 5,234.00
3 Prudential Plc +3.11% +41.50 1,375.50
4 Direct Line Insurance Group Plc +2.70% +4.65 177.15
5 Ocado Group Plc +2.67% +18.60 715.60
6 Scottish Mortgage Investment Trust Plc +2.29% +17.00 759.80
7 Hiscox Ltd +1.92% +21.50 1,144.00
8 Hargreaves Lansdown Plc +1.90% +16.20 870.00
9 Rolls-royce Holdings Plc +1.81% +2.02 113.74
10 Schroders Plc +1.61% +7.70 486.10

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Diageo Plc -4.67% -171.50 3,503.50
2 United Utilities Group Plc -0.93% -10.00 1,068.00
3 Aviva Plc -0.64% -2.90 452.80
4 Glencore Plc -0.63% -3.50 555.00
5 Severn Trent Plc -0.56% -16.00 2,817.00
6 Tui Ag -0.56% -1.05 187.15
7 St. James’s Place Plc -0.54% -6.50 1,193.00
8 National Grid Plc -0.53% -5.50 1,031.00
9 International Consolidated Airlines Group S.a. -0.53% -0.90 168.82
10 Sage Group Plc -0.37% -2.80 756.40

 

US close: Wall Street ends flat as investors bide time ahead of key data

Wall Street’s main indices ended a volatile session roughly flat as investors digested weaker than expected outlooks from GEMicrosoft and Texas Instruments, a large earnings miss out of Boeing, and another antitrust case brought against Google.

Buoying sentiment perhaps, a week before the Federal Reserve’s next rate meeting, and key inflation data due out over the next two sessions, rate-setters in Canada signalled on Wednesday that they might pause on policy the next time they met.

And reports on Wednesday were that the latest Covid-19 boosters were effective against symptomatic disease brought on by the latest strains of the virus, while in China officials reported that the peak in infections had now passed.

The Dow Jones Industrials ended up by 0.03% at 33,743.84, the S&P 500 eased lower by 0.02% to 4,016.22 and the Nasdaq Composite was off by 0.18% to 11,313.36.

Shortly after the opening the bell the latter had traded almost 2% lower.

The US dollar index slipped 0.3%, West Texas Intermediate crude oil futures added 0.25% and 10-year Treasury yields were unchanged.

“The last few weeks may turn out to perfectly encapsulate how the year will be as a whole, fluctuating significantly and suddenly between optimism and pessimism as the data and headlines dictate,” said Craig Erlam, senior market analyst for UK & EMEA at OANDA.

“We appear to have entered the latter phase now after starting the year in a very buoyant mood, with earnings painting a more realistic picture of the outlook for this year than investors appeared to be convincing themselves was the case. Layoffs, missed headline numbers and downbeat forecasts are quickly becoming the norm.”

Microsoft had been the single biggest culprit behind the declines on Wall Street at the start of trading, retreating by around 4% at one point during the session, but finished just 0.59% lower.

The technology giant delivered weaker than expected sales for the latest quarter, together with lower than expected earnings per share guidance for the quarter just started.

Alphabet on the other hand fell 2.54% after the Department of Justice filed a second antitrust suit against the outfit.

GE’s cash flow target for 2023 meanwhile underwhelmed but the shares reversed early losses to edge up 0.11%.

Texas Instruments’s shares dipped by 1.1% on guidance for the first quarter that came in short of the Street’s estimates for both its top and bottom lines, but they too ended the day well of their earlier lows.

Boeing reiterated its forecasts for 2023 free cash flows but missed analysts’ estimates for its earnings per share in the fourth quarter due to extraordinary charges.

Even so, its shares also erased an earlier drop and rose by 0.33%.

After the close of markets in New York, Tesla’s latest quarterly results were rewarded with a gain of 2.73%.

As an aside, Bloomberg‘s John Authers cited a piece of research from stock investing legend Jeremy Grantham according to which the US stock market might be set to exhibit some largely unexpected resilience over the next few months.

Since Franklin Delano Roosevelt’s first election, Grantham had shown that in the seven months starting the month before mid-term elections and ending at the end of the following April – that is to say now – “have been far, far better than the returns in all the other months of the cycle”.

During those stretches the S&P 500 had clocked in with an annualised real total return of over 25% against just under 5% during all other times.

 

Thursday newspaper round-up: Britishvolt, car production, Home Reit

The battery startup Britishvolt owed as much as £120m to creditors when it collapsed last week in a major blow to hopes of sustaining the British car industry, it can be revealed. Creditors are expected to recover a very small proportion of the debts, according to a source with knowledge of the matter, although there are understood to be several bids for the company and its assets. EY, a professional services firm, is handling the administration. – Guardian

More than £1m was paid to energy customers with Octopus Energy on Tuesday as part of a power saving scheme. The energy supplier said more than 400,000 customers took part by reducing their electricity use between 4.30pm and 6pm. National Grid’s Demand Flexibility Scheme kicked in for the first time on Monday amid cold temperatures, meaning more energy was being used while less energy was being generated by wind power. – Guardian

Ministers are preparing to invest at least £1bn in Britain’s computer chip industry in a challenge China’s dominance of the sector. The Government’s long-awaited semiconductor strategy is expected to include proposals to subsidise early-stage electronic chip businesses and linked research activity, sources said. – Telegraph

Car production in Britain has plunged a further 10 per cent to new lows not seen since the 1950s, when Sir Anthony Eden was prime minister. UK car factories produced only 775,000 vehicles in 2022, down from the 859,000 that rolled off assembly lines in 2021, itself the worst year since 1956, a year before the British automotive industry was transformed by the start of mass production of the Mini. – The Times

Home Reit, the struggling “landlord for the homeless”, has admitted that a “significant number” of its tenants, including its largest, have fallen behind on their rent. The company had sought to emphasise the reliable nature of its income and its “robust tenants”, claiming in November that it had no rent arrears for the period up to the end of August. – The Times

 

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