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ADVFN Morning London Market Report: Monday 30 January 2023

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London open: FTSE edges lower ahead of busy week

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London stocks edged lower in early trade on Monday as investors eyed a series of key central bank rate announcements this week.

At 0830 GMT, the FTSE 100 was down 0.3% at 7,738.68.

Victoria Scholar, head of investment at Interactive Investor, said: “European markets have started the week on a negative note.

“Markets are trading cautiously ahead of a busy week for central banks with interest rate decisions from the Federal Reserve, the European Central Bank and the Bank of England. All three are expected to raise interest rates as their mission to curtail above target inflation continues.”

In equity markets, Frasers Group was in the red following a report the company is planning to launch new financial services this year that will allow shoppers to buy its products on credit.

Legal & General fell it said that Sir Nigel Wilson was planning to retire after more than a decade as chief executive.

Gambling group 888 tumbled as it announced the departure of its chief executive, and said it was suspending some VIP accounts in the Middle East pending the outcome of an internal compliance investigation. Just weeks after announcing that chief financial officer Yariv Dafna had “mutually agreed” to step down from the business, 888 said CEO Itai Pazner is stepping down with immediate effect.

On the upside, Auto Trader was the top gainer on the FTSE 100 after an upgrade to ‘overweight’ at Barclays, while Moneysupermarket was also boosted by the same upgrade.

Consumer goods giant Unilever rose after announcing the appointment of Hein Schumacher as its new chief executive officer. Hein, who is currently CEO of the global dairy and nutrition business Royal FrieslandCampina, became a non-executive director of Unilever in October last year.

Elsewhere, Computacenter rallied after it said annual results would be slightly ahead of expectations following a record fourth quarter.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Sainsbury (j) Plc +1.62% +4.10 256.60
2 Unilever Plc +0.87% +35.00 4,056.00
3 Experian Plc +0.79% +23.00 2,918.00
4 Relx Plc +0.76% +18.00 2,396.00
5 Bae Systems Plc +0.54% +4.60 856.00
6 Diageo Plc +0.45% +15.50 3,437.50
7 Astrazeneca Plc +0.43% +46.00 10,668.00
8 Gsk Plc +0.40% +5.60 1,415.60
9 Kingfisher Plc +0.37% +1.00 273.00
10 Smith & Nephew Plc +0.31% +3.50 1,125.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Tui Ag -2.51% -4.50 175.00
2 Standard Chartered Plc -2.41% -17.20 695.40
3 Fresnillo Plc -2.35% -20.20 839.00
4 Legal & General Group Plc -2.26% -5.90 254.90
5 Prudential Plc -1.93% -26.50 1,345.00
6 Carnival Plc -1.76% -13.80 772.40
7 St. James’s Place Plc -1.54% -19.00 1,214.50
8 Rolls-royce Holdings Plc -1.52% -1.68 108.52
9 Scottish Mortgage Investment Trust Plc -1.36% -10.40 756.60
10 Phoenix Group Holdings Plc -1.28% -8.20 633.40

 

US close: Stocks end higher as GDP data keep hopes of soft landing alive

Wall Street’s main market indices put in solid gains on Thursday following the release of a raft of data that many economists said kept the hopes of a soft landing alive.

“As momentum fades, we expect the U.S. to slip into a mild recession later this year, although risks are tilted toward a ‘soft landing’ given the resilience of the labor market,” said Mickey Levy, economist at Berenberg Capital Markets.

Yet the details of the various economic reports arguably revealed slightly weaker than expected levels of activity, with the possible exception of the jobless claims figures.

Against that backdrop, the Dow Jones Industrials climbed 0.61% to 33,949.41, the S&P 500 was up by 1.10% to 4,060.43 and the Nasdaq Composite was ahead by 1.76% to 11,512.41.

Worth noting, boosting the latter was an 11% pop in shares of electric vehicle maker Tesla.

US gross domestic product expanded at an annualised rate of 2.9% over the last three months of 2022.

That was better than the 2.8% gain anticipated by economists.

But inventory building made a 1.5 percentage point contribution to GDP growth with foreign trade adding a further 0.6 points and neither were sustainable, said Ian Shepherdson at Pantheon Macroeconomics.

“We think final demand growth will be minimal in the next couple quarters, with headline GDP falling. Whether this eventually is declared a recession will depend on what happens to employment and incomes, but they are both likely to soften markedly, at least,” he explained.

“And note that the near-stalling in final demand does not reflect the full impact of the Fed’s tightening, so these data reinforce our view that further rate hikes are unnecessary.”

The initial jobless claims figures meanwhile did surprise again to the downside, but because analysts overlooked the seasonal patterns and layoff announcements “point unambiguously to much higher claims in Q2,” Shepherdson added.

Durable goods orders literally soared in December, but only due to rocketing orders for civilian aircraft which were notoriously volatile.

New home sales edged past forecasts during the same month, but that was offset by downwards revisions to the numbers for the preceding three months.

Perhaps key among all the noise, Shepherdson noted that the price data contained in Thursday’s GDP report was consistent with an in-line reading for the key personal consumption expenditures price deflator data due out the next day.

 

Sunday newspaper round-up: Dividends, BP, Capricorn Energy

Companies’ dividend payments jumped by 8% to reach £94.3bn, led by big banks alongside a surge in payouts from oil outfits. share buybacks meanwhile reached 2% of the combined value of UK-listed companies. However, Link Group anticipates that payments will decline by 2.8% in 2023 to reach £91.7bn and believes that the economic backdrop is “decidedly gloomier” than one year ago with higher interest rates set to pressure margins further. – Financial Mail on Sunday

Multiple companies within the FTSE 100 are trading at valuations lower than those of their peers overseas, turning them into attractive bid targets says Michael Stiasny, head of UK equities at M&G Investments. In particular, Stiasny singled out BP. The oil major, in which M&G holds a stake, was trading at a 50% valuation discount versus peer Shell, against just 10% in 2018. – The Sunday Times

Capricorn Energy is under pressure to initiate a strategic review given the increasing likelihood that its takeover by Israel’s NewMed Energy will flounder. The oil outfit is due to vote in new board members on Wednesday after its boss and chairwoman recently stepped down. A vote on the proposed takeover had been postponed until 22 February. Activist investor Palliser Capital, one of the shareholders opposed to a sale to NewMed, was one of those calling for a strategic review. – The Sunday Times

National Grid has stood down the coal-fired power stations that had been told to warm up as a precaution due to possible strikes in France. France’s grid operator RTE had said it might require help. Drax was also employing its demand flexibility service, by which the company paid some households with smart meters for cutting their energy use. That helps to balance the grid and to avoid use of some of the dirtiest energy sources. – Guardian

 

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