ADVFN Morning London Market Report: Wednesday 18 November 2020

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London open: Stocks edge lower amid Covid worries; inflation in focus

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London stocks edged lower in early trade on Wednesday as investors digested the latest UK inflation figures, with worries about rising coronavirus cases and tighter restrictions continuing to weigh on sentiment.

At 0845 GMT, the FTSE 100 was down 0.5% at 6,335.93.

On home shores, data released earlier by the Office for National Statistics showed inflation edged higher in October as the price of clothing rose.

Consumer price inflation rose to 0.7% in October from 0.5% in September. Economists had been expecting 0.6% growth. Meanwhile, core inflation increased to 1.5% from 1.3%, versus expectations for no change.

The largest upward contribution came from clothing and footwear, the ONS said. Clothing prices rose by 2.8% between September and October, mostly due to a rise in the price of womenswear, compared with a 0.9% increase between the same two months a year ago.

Meanwhile, food prices increased 0.1% compared with a 0.6% decline between the same two months a year ago, with the move higher driven mainly by vegetables and fruit.

Jonathan Athow, deputy national statistician for Economic Statistics, said: “The rate of inflation increased slightly as clothing prices grew, returning to their normal seasonal pattern after the disruption this year.

“The cost of food also nudged up, while second-hand cars and computer games also all saw price rises. These were partially offset by falls in the cost of energy and holidays.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said consumer price inflation looks set to hover close to 0.7% until April, when the energy component will no longer depress the headline rate and some restaurants, hotels and leisure providers will raise prices in response to the return of VAT to its usual 20% rate.

In equity markets, investment platform Hargreaves Lansdown was the worst performer on the FTSE 100 after an offering of 6.7m shares by co-founder Stephen Lansdown was priced at 1,535p each, which is a 5% discount to the closing share price on Tuesday. According to terms seen by Bloomberg, the stake was offered by PHL Limited, an entity controlled by Stephen Lansdown.

British Land lost ground as it posted a decline in underlying half-year profit as the value of its retail assets fell by nearly 15%. The company also warned that due to concerns about Brexit and Covid-19, office leasing volumes will be lower as customers defer long-term decisions.

Spirax-Sarco Engineering was weaker despite backing its full-year expectations and reporting an improvement in third-quarter trading.

On the upside, RSA Insurance rallied after agreeing to be bought for £7.2bn by a consortium comprising Intact Corp of Canada and Denmark’s Tryg A/S.

Energy supplier SSE was also up as it reported a fall in adjusted operating profit after taking a £115m hit from the coronavirus pandemic, but maintained its interim dividend payout.

Micro Focus gained after a well-received trading update, while Virgin Money was boosted by a double-upgrade to ‘overweight’ at Barclays.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +22.82% +62.00 333.70
2 Rsa Insurance Group Plc +3.86% +25.00 672.00
3 Kingfisher Plc +2.59% +7.50 296.80
4 Croda International Plc +1.71% +104.00 6,188.00
5 Tui Ag +1.52% +6.20 413.70
6 Hsbc Holdings Plc +1.31% +4.95 381.55
7 Fresnillo Plc +0.94% +10.50 1,122.00
8 Taylor Wimpey Plc +0.94% +1.50 160.50
9 Hikma Pharmaceuticals Plc +0.90% +23.00 2,570.00
10 Sainsbury (j) Plc +0.89% +1.90 214.80

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Spirax-sarco Engineering Plc -4.24% -505.00 11,410.00
2 Hargreaves Lansdown Plc -3.87% -62.50 1,553.00
3 Easyjet Plc -3.23% -24.60 738.00
4 British Land Company Plc -3.15% -16.10 494.90
5 Bae Systems Plc -1.98% -9.80 485.40
6 Carnival Plc -1.53% -18.50 1,191.00
7 Smiths Group Plc -1.39% -21.50 1,522.50
8 Schroders Plc -1.38% -42.00 2,991.00
9 Intertek Group Plc -1.34% -82.00 6,040.00
10 Evraz Plc -1.32% -5.00 374.90

 

Wednesday newspaper round-up: Brexit, UK music industry, Amazon

Failure to strike a post-Brexit trade deal would cut the UK’s economic growth rate by more than half next year, delaying a full recovery from the coronavirus pandemic, according to a report. The accountancy firm KPMG said the economy would suffer heavily should the UK fail to secure a trade deal with the EU before the end of the Brexit. – Guardian

The UK music industry is set to halve in size this year as issues including an effective shutdown of concerts, gigs and festivals strip £3bn from its contribution to the economy. UK Music, the umbrella organisation representing the commercial music industry from artists and record labels to the live music sector, has revealed that the industry grew by 11% last year to be worth £5.8bn to the UK economy. – Guardian

Amazon is urging shoppers to buy their presents early as even the most advanced online retailers battle against supply chain chaos in the run-up to Christmas. The e-commerce giant has hired an extra 250,000 workers this year to staff its global network of warehouses – along with 100,000 temporary Christmas employees. – Guardian

Business leaders have warned the government that livelihoods are at risk because they are in the dark about what Covid-19 restrictions will be in place when England’s lockdown ends on December 2. Bosses told MPs yesterday that they needed clarity over the rules they would have to adhere to in the crucial Christmas trading period so that they could make plans for their staff, sites and suppliers. – Telegraph

It is perhaps no surprise that the word Covid appears 215 times in Airbnb’s 349-page float prospectus. The document, published on Monday night, shows just how bad it became for the home-sharing service in the worst months of the pandemic. This January, guests made a net 33.3 million bookings on Airbnb for rooms and “experiences” such as city tours, cookery classes and stand-up comedy workshops. In March, they made a net 4.1 million cancellations. Like the rest of the travel industry, Airbnb was in crisis. – Telegraph

 

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