ADVFN Morning London Market Report: Tuesday 9 June 2020

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London open: Stocks fall as BAT, Bellway updates disappoint


London stocks fell in early trade on Tuesday despite a solid session on Wall Street, weighed down by disappointing updates from the likes of British American Tobacco and Bellway.

At 0900 BST, the FTSE 100 was down 0.5% at 6,443.11.

In equity marketsLegal & General was the worst performer on the FTSE 100 after a downgrade to ‘neutral’ at Bank of America Merrill Lynch.

British American Tobacco was weaker after it lowered full-year guidance as it felt the impact of the coronavirus crisis on international travel sales and new products. The cigarette maker said it expected constant currency adjusted revenue growth of 1% – 3% from previous guidance of around the lower end of 3% – 5%.

Richard Hunter, head of Markets at Interactive Investor, said: “The road ahead may be strewn with obstacles, but BATS’ historic resilience will likely give the company a fighting chance in maintaining its premier position.

“Providing guidance and confirming dividend aspirations are becoming increasingly rare in the current environment, but in a refreshing change BATS has delivered both.

“The guidance reflects an impact from the pandemic, with the postponement of some product launches and the virtually complete removal of travel retail, or duty free, income resulting in a slight downgrade to revenues. The additional pressure has also meant that the revenue ambition of £5 billion has now slipped to 2025 from the previous 2023/2024 and the lockdown has resulted in tobacco bans in some emerging markets, most notably in South Africa where the company is currently embroiled in a legal challenge.”

Bellway was in the red as the housebuilder said sales completions fell between 1 August 2019 and 31 May 2020.

On the upside, Aveva was sitting pretty at the top of the FTSE 100 after leaving its final dividend unchanged as the industrial software company announced a 22% increase in annual profit and up to £60m of cost cuts.

Oxford Instruments was also in the black as it deferred a decision on its dividend after the Covid-19 crisis hit orders in the first two months of the current year.


Top 10 FTSE 100 Risers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Rolls-royce Holdings Plc +11.94% +42.50 398.40
2 Carnival Plc +9.92% +142.00 1,573.50
3 Marks And Spencer Group Plc +6.81% +7.60 119.15
4 Bt Group Plc +5.34% +6.40 126.35
5 Barratt Developments Plc +5.27% +29.00 579.20
6 Tui Ag +4.18% +21.20 528.60
7 Centrica Plc +4.11% +1.76 44.55
8 Lloyds Banking Group Plc +3.76% +1.34 36.88
9 Taylor Wimpey Plc +3.13% +5.05 166.45
10 Itv Plc +3.02% +2.66 90.86


Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Ocado Group Plc -6.57% -139.50 1,983.50
2 Melrose Industries Plc -5.71% -8.50 140.45
3 Crh Plc -3.82% -112.00 2,817.00
4 Experian Plc -3.27% -93.00 2,753.00
5 Smith & Nephew Plc -2.94% -51.00 1,685.00
6 Astrazeneca Plc -2.69% -227.00 8,200.00
7 Compass Group Plc -2.66% -35.50 1,300.50
8 Hiscox Ltd -2.57% -21.60 818.20
9 Antofagasta Plc -2.42% -22.40 904.60
10 Ferguson Plc -2.24% -148.00 6,462.00


US close: Stocks continue rally, S&P 500 returns to positive territory

Wall Street stocks closed higher on Monday as stocks continued to build upon last week’s sharp gains and the S&P 500 returned to positive territory for the year.

At the close, the Dow Jones Industrial Average was up 1.70% at 27,572.44 and the S&P 500 was 1.20% firmer at 3,232.39, while the S&P 500 saw out the session 1.13% higher at 9,924.74.

The Dow closed 461.46 points higher on Monday following a sharp rally on Friday, which also saw the Nasdaq Composite hit a record intraday high for the first time since 19 February, as investors continued to remain optimistic about the reopening of the economy despite ongoing protests across the nation.

As far as the new week was concerned, market participants will be holding out for comments from Federal Reserve chairman Jerome Powell regarding the futures of US interest rates on Wednesday. However, the Fed is expected to reiterate its commitment to unlined asset purchases as part of its efforts to keep markets functioning.

Investors were also focussed on efforts to reopen the US economy in the wake of Covid-19, with reopening plans in various stages across all 50 states.

However, while traders were backing stocks linked to the reopening of the economy, the likes of California, Utah, Arizona, North Carolina, Florida, Arkansas and Texas have all reported an increase in the number of coronavirus infections since having lifted restrictions, according to the Wall Street Journal.

Elsewhere in the corporate space, PG&E shares slid in early trading after the Californian firm announced a $3.25bn equity investment at a discounted price, while Gilead stock rallied and AstraZeneca slumped following reports that preliminary talks of a merger between the two had been abandoned.

No major data points were released on Monday.


Tuesday newspaper round-up: Retailers, debt, Centrica, TUI

Britain’s retailers suffered a second successive slump in monthly sales during May as the coronavirus shutdown took its toll on the high street. Price cutting by furniture and homewares shops, which were among the worst hit, failed to entice customers to open their wallets, leaving last month’s sales figures down by 5.9% compared with the same month last year. – Guardian

British households are expected to rack up debts worth a combined £6bn because of the coronavirus crisis, as millions of people fall behind on credit card payments, council tax and utility bills. Sounding the alarm as the economic fallout from the health emergency mounts, the StepChange debt advice charity said 4.6m households risked building up dangerous levels of debt because of the pandemic. – Guardian

Britain’s jobs market is suffering levels of inactivity never seen before, the Bank of England’s chief economist has warned, as a record number of firms plan to lay off workers. Andy Haldane, a member of the Bank’s Monetary Policy Committee, said Covid is widening the “pretty hefty” gap between rich and poor as lower-paid workers bear the brunt of the economic crisis. His warning came as a new survey revealed a sixth of businesses are preparing to cut jobs in the coming months. – Telegraph

The cracked reactors affecting Britain’s nuclear fleet pose an extra headache for Centrica, which wants to sell its 20 per cent interest in the plants to focus on its British Gas consumer operations. It began the sale in 2018 with the aim of getting rid of them by the end of this year, but admitted this February that it may now not be possible, citing the outages as an issue. Martin Young, of Investec, the banking and wealth management group, said that he would be “incredibly surprised” to see Centrica dispose of the stake within the next six months. – The Times

Tui Group has signed a deal with to sell its tours, attractions and activities to customers of the online travel site. The Anglo-German tourism group said that eventually’s customers would have direct access to a product portfolio of more than 70,000 excursions and experiences. – The Times


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