ADVFN Morning London Market Report: Friday 5 June 2020

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London open: Stocks rise as investors eye payrolls report

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London stocks rose in early trade on Friday following losses in the previous session, as investors eyed the latest US non-farm payrolls report.

At 0830 BST, the FTSE 100 was up 0.8% at 6,389.72.

Spreadex analyst Connor Campbell said: “Europe got back on the horse on Friday, resuming a June rally that paused momentarily yesterday ahead of this afternoon’s likely shocking non-farm jobs report.

“Analysts are expecting the headline figure to show that a further 7.75 million jobs were lost last month, an estimate that is already lower than the initial 9 million-plus assessment thanks to Wednesday’s far better than forecast ADP reading.

“It bears repeating that it is insane that such a high figure could draw market-relief, but then, we are in unprecedented times, and investors have quickly adapted to this new normal.”

The payrolls report, unemployment rate and average earnings are due at 1330 BST.

On home shores, the latest survey from GfK showed consumer confidence fell in May to its worst level since January 2009 as the Covid-19 pandemic continued to weigh.

A “flash” report by GfK using data gathered between 20 and 26 May showed the long-running consumer confidence index fell by two points to -36, with four out of five of the measures that make up the index down. This was just three points below the historic low of -39 in July 2008.

Joe Staton, client strategy director at GfK, said: “Against a backdrop of falling house prices, soaring jobless claims, and with no sign of a rapid V-shaped bounce-back on the cards, consumers remain pessimistic about the state of their finances and the wider economic picture for the year to come.

“The only bright spark in the numbers is for the major purchase index with a six-point fillip, pointing to latent demand among shoppers across the UK despite most outlets remaining shuttered. As the lockdown eases, it will be interesting to see just how the consumer appetite for spending returns in a world of socially-distanced shopping and the seismic shift to online retailing – alongside worries of a fresh spike in Covid-19 cases as relaxations increase.”

In equity markets, airlines were the standout gainers, with budget offering easyJet and British Airways and Iberia parent IAG both sharply higher.

Cruise operator Carnival also rallied, along with Premier Inn owner Whitbread.

Elsewhere, Virgin Money rose after it and Aberdeen Asset Management agreed to provide up to £12.5m each of extra funding for their asset management joint venture.

Waste management company Biffa was in the red after its full-year results, while luxury fashion brand Burberry was a little weaker after a downgrade to ‘sell’ at Goldman Sachs.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Easyjet Plc +4.41% +34.60 819.00
2 Fresnillo Plc +3.11% +23.20 770.00
3 Ashtead Group Plc +2.70% +67.00 2,546.00
4 International Consolidated Airlines Group S.a. +2.22% +6.20 285.40
5 Associated British Foods Plc +1.97% +38.50 1,996.00
6 Berkeley Group Holdings (the) Plc +1.72% +74.00 4,368.00
7 Compass Group Plc +1.41% +18.00 1,297.50
8 Standard Chartered Plc +1.40% +6.00 433.30
9 Astrazeneca Plc +1.24% +107.00 8,703.00
10 Segro Plc +1.12% +9.80 882.60

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 British Land Company Plc -2.11% -9.50 441.40
2 Schroders Plc -2.11% -66.00 3,067.00
3 Standard Life Aberdeen Plc -1.99% -5.40 266.60
4 Johnson Matthey Plc -1.93% -44.00 2,235.00
5 Smith (ds) Plc -1.78% -6.30 348.40
6 Whitbread Plc -1.77% -47.00 2,604.00
7 Evraz Plc -1.72% -5.30 302.80
8 Informa Plc -1.70% -8.60 498.00
9 Barclays Plc -1.52% -1.90 123.42
10 Imperial Brands Plc -1.51% -23.00 1,495.50

 

US close: Stocks close mostly lower following jobless data

Wall Street stocks closed mostly lower on Thursday after the Labor Department published some more disappointing unemployment claims data.

At the close, the Dow Jones Industrial Average was up 0.05% at 26,281.82, while the S&P 500 was 0.34% softer at 3,112.35 and the Nasdaq Composite saw out the session 0.69% at 9,615.81.

The Dow closed just 11.93 points higher on Thursday, halting a rally the peaked yesterday on growing optimism regarding the reopening of several US states.

Thursday’s main focus was the Department of Labor‘s latest unemployment claims data, which revealed layoffs in the US continued at a furious but slightly slower pace last week.

Initial unemployment claims during the week ending on 30 May dropped by 249,000 to reach 1.877m (consensus: 1.75m). Last week 2.1m Americans lodged new claims. The four-week moving average meanwhile, which aims to smooth out the variations from one week to the next, fell by 324,750 to 2.284m.

Protests across the US as a result of the death of unarmed African-American man George Floyd at the hands of Minneapolis police officer Derek Chauvin, rising tensions between Washington and Beijing and the ongoing Covid-19 pandemic were all very much so still in focus as well.

Market participants also kept a keen eye on moves across the pond, with the European Central Bank‘s policy decision surprising markets with a larger-than-expected increase in its bond-buying programme against the pandemic.

That coincided with the announcement overnight of an also larger-than-expected second stimulus programme from Berlin worth €130bn, versus the €50-100bn figure that various reports had bandied about throughout the previous week.

Elsewhere on the macro front, data from Challenger, Gray & Christmas revealed that US employers cut 397,016 jobs in May, down 40.8% from April’s total of 671,129. While the number was a marked decrease on the prior month, it was still the second-highest total in the data series’ 27-year history.

Lastly, America’s shortfall on trade in goods and services with the rest of the world widened by less than expected in April.

According to the Department of Commerce, the total deficit for US trade in goods and services jumped from a downwardly revised deficit of $42.3bn for March to $49.4bn in April. Economists at Barclays Research had anticipated a deficit of -$52.5bn.

In the corporate space, coronavirus-stricken Royal Caribbean Cruises offered up to $2bn in senior notes and convertible bond that mature in 2023 in order to help the group repay debt, while shares in Wells Fargo were upgraded to ‘hold’ by analysts at Deutsche Bank.

A late-day sell-off in tech shares like FacebookAmazonAppleNetflix and Alphabet dragged two of the three major indices into the red.

 

Friday newspaper round-up: Rail passengers, VAT, BASF

Northern Ireland business groups are calling for a six month delay to Brexit checks in the Irish Sea saying that Boris Johnson’s late admission that he is legally obliged to implement them has left them no time to prepare for the December cliff edge. They have also hit out at Downing Street secrecy, saying they are refusing to discuss the plans with the very people that needed to implement them. – Guardian

Rail passengers can now be warned of busy trains and stations before they leave home as part of a UK industry system designed to help maintain physical distancing and safe travel during the coronavirus pandemic. The technology will combine data on journey trends and live updates from station staff, to both inform passengers searching for journeys on the National Rail website and app, and alert those who opt in for updates on specific journeys, using their anonymised data to help predict how busy each train will be. – Guardian

Britain has been urged to follow Germany’s lead after it unveiled plans to slash VAT as part of a massive stimulus package to escape the coronavirus recession. Angela Merkel has launched a €130bn (£117bn) rescue programme that includes a temporary cut in VAT from 19pc to 16pc, as well as €50bn for rail and broadband networks and electric car subsidies. – Telegraph

A slew of European titans have taken advantage of a debt lifeline offered by the Bank of England, including Dulux maker Akzo Nobel, chemicals company Bayer and Chanel. Household names from aviation, retail and industry were among the 53 companies to borrow £16.2bn under the Covid Corporate Financing Facility (CCFF), the Bank revealed in its first week of naming firms. – Telegraph

The German chemicals giant BASF has emerged as the largest recipient of the Bank of England’s Covid-19 emergency funding scheme despite only employing 834 people in Britain. The company, which is valued at €50 billion, has borrowed £1 billion from the Bank, equivalent to nearly £1.2 million for each of its UK workers.- The Times

 

 

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