ADVFN Morning London Market Report: Thursday 26 November 2020

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London open: Stocks nudge lower as investors await news on Covid tiers

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London stocks nudged lower in early trade on Thursday as investors awaited details of the new three-tier system that will come into effect next week once England’s lockdown ends.

At 0840 GMT, the FTSE was down 0.2% at 6,376.33, with a relatively quiet session expected as US markets will be closed for Thanksgiving.

Later in the day, Health Secretary Matt Hancock is due to set out plans in the Commons for the new tier system in England, with most of the nation expected to be placed in the two toughest tiers of Covid-19 restrictions from next Wednesday. London is expected to be put into tier two.

Spreadex analyst Connor Campbell said: “Based on the European open, it looks like the markets are taking a pause from anything too serious, unable to really move without US guidance.

“Without any other distractions, it’s hard to muster much positive sentiment in the face of the largest daily number of Covid-19 deaths worldwide since the pandemic began.

“Hardly the most interesting session, and one likely to remain so in the absence of the Thanksgiving-celebrating American markets. A Brexit deal breakthrough could be the thing to shake investors out of their nap; ditto the region-by-region Tier designations in the UK, which could have a major impact on hospitality and leisure stocks.”

Market participants were also digesting news that German Chancellor Angela Merkel has decided to extend the country’s ‘lockdown lite’ until 20 December.

CMC Markets analyst Michael Hewson said: “The decision by the German government to go down this road suggests that the coming winter is likely to be a long hard slog for businesses all over Europe, as populations tire of having their freedoms restricted, and concerns grow about the prospect of much longer term economic damage.”

In equity markets, ex-dividend stocks were a drag, with Imperial BrandsPersimmonLand SecuritiesCMC Markets and Bellway all in the frame.

Bodycote was under the cosh after announcing another restructuring and saying it expects the civil aerospace market to remain near the current low levels for at least the next 18 months.

On the upside, sales, marketing and support services group DCC was sitting pretty at the top of the FTSE 100 after an upgrade to ‘overweight’ at Morgan Stanley.

Soft drinks maker Britvic was also in the black after it reported a small rise in full-year pre-tax profit as lower costs helped to offset a revenue decline, as its out-of-home segment was dented by the Covid-19 crisis.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Dcc Plc +3.33% +188.00 5,842.00
2 Flutter Entertainment Plc +3.31% +440.00 13,740.00
3 Reckitt Benckiser Group Plc +2.51% +162.00 6,606.00
4 Fresnillo Plc +2.16% +23.50 1,111.00
5 Ocado Group Plc +1.67% +36.00 2,196.00
6 Scottish Mortgage Investment Trust Plc +1.31% +14.00 1,081.00
7 Rightmove Plc +1.20% +7.20 606.60
8 Easyjet Plc +1.18% +9.80 839.40
9 Unilever Plc +0.99% +45.00 4,605.00
10 Hikma Pharmaceuticals Plc +0.96% +25.00 2,627.00

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Imperial Brands Plc -4.53% -67.50 1,423.50
2 Persimmon Plc -4.09% -116.00 2,718.00
3 Lloyds Banking Group Plc -3.09% -1.18 36.95
4 Land Securities Group Plc -2.90% -20.10 673.80
5 British Land Company Plc -2.31% -11.20 474.60
6 International Consolidated Airlines Group S.a. -2.28% -3.90 166.85
7 Legal & General Group Plc -2.21% -5.80 256.10
8 Crh Plc -2.18% -69.00 3,098.00
9 Barclays Plc -2.12% -3.04 140.36
10 Barratt Developments Plc -2.01% -12.80 623.40

 

US close: Stocks finish mixed after data tsunami

Wall Street stocks finished in a mixed state on Wednesday, amid an avalanche of data and following the Dow Jones’ record-breaking close in the previous session.

At the close, the Dow Jones Industrial Average was down 0.58% at 29,872.47 and the S&P 500 lost 0.16% to 3,629.65, while the Nasdaq Composite rose 0.48% to 12,094.40.

The Dow Jones closed 173.77 points lower on Wednesday, cutting into gains recorded in the prior session after the Trump administration finally signalled its willingness to begin the transition process.

Wednesday’s main focus was a slew of US data, with mortgage applications up to the plate first.

According to the Mortgage Bankers Association of America, mortgage applications increased by 3.90% in the week ended 20 November after having fallen in both of the last two weeks.

Homebuyer mortgage applications rose 3.5%, while applications to refinance a home shot up 4.5%.

Elsewhere, first-time unemployment claims in the US registered a moderate and unexpected rise last week.

According to the Department of Labor, in seasonally adjusted terms, initial jobless claims for the week ended 21 November increased by 30,000 to 778,000, while secondary unemployment claims for the seven days finished 14 November fell by 299,000 to 6.07m.

On another note, the Census Bureau said 999,000 new homes were sold across the US in October, a 0.3% decline on September’s upwardly revised rate.

The median price of properties sold throughout the month was $330,600.

Gross domestic product grew at an unrevised 33.1% annualised rate, according to the Commerce Department’s second estimate of third-quarter output, confirming the economy’s historic pace of expansion throughout the period.

Moving to durable goods figures, new orders for US-made capital goods increased 1.3% in October, more than expected on the Street.

However, momentum appeared to be slowing in line with expectations for decelerated economic growth in the fourth quarter.

Still on data, personal income decreased by $130.1bn in October, according to the Bureau of Economic Analysis, while disposable personal income contracted $134.8bn and personal consumption expenditures increased $70.9bn.

The core PCE price index was unchanged.

Lastly, the University of Michigan‘s consumer sentiment index fell from 81.8 to 77.0 in November, slightly ahead of a preliminary reading of 76.9.

Rising coronavirus cases were also in focus, with the total number of confirmed Covid-19 cases in the US having now topped 12.4m, according to Johns Hopkins University.

In corporate news, Deere & Company closed down 1.95%, even after it smashed fourth-quarter earnings estimates by 90 cents per share and offered full-year net income guidance of $3.6bn to $4.0bn.

 

Thursday newspaper round-up: Eurostar, pub chains, Bell Pottinger

The government will launch a “levelling-up fund” for England worth £4bn to support towns and communities with regeneration projects, Rishi Sunak has said. The chancellor used his spending review statement to announce details of the new funding package as part of Boris Johnson’s election promise to boost the economic prosperity of areas outside London and the south-east of England. Alongside the £4bn for England, there will be funding worth £800m for Scotland, Wales and Northern Ireland. – Guardian

Eurostar has appealed to the UK government for urgent financial support, warning it is “fighting for survival” with just one train a day now running from London to Paris. Passenger numbers on the cross-Channel train service have been down 95% since March but are currently believed to be less than 1% of pre-Covid levels under travel restrictions that will last into at least December. – Guardian

Taxpayers will fork out £5.8m a day next year to keep rail services running following concerns that demand for train travel will take years to return to pre-pandemic levels. Rishi Sunak announced an estimated £2.1bn of subsidies for rail operators in 2021-22 in the Government’s Comprehensive Spending Review. It has already spent up to £9bn on the railways this year. – Telegraph

The bosses of Britain’s biggest pub chains have demanded that Boris Johnson step in with urgent financial support for the sector or risk the total collapse of hundreds of breweries and thousands of pubs. Chief executives of firms including Greene King, Marson’s, Fuller’s and the UK divisions of Carlsberg and Budweiser have written to the prime minister warning that the sector faces a “looming disaster” unless the Government provides an immediate rescue package. – Telegraph

Partners of Bell Pottinger have yet to repay £1.8 million in “excess drawings” that they took from the PR business before its collapse, according to liquidators. An additional significant sum is being pursued against an unnamed partner via litigation, which alleges breach of contract and “significant and related excess drawings,” Matthew Tait and Malcolm Cohen, the joint liquidators from BDO, said in a progress report. – The Times

 

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