ADVFN Morning London Market Report: Thursday 10 June 2021

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London open: Stocks nudge up ahead of ECB, US inflation data


London stocks were just in the black in early trade on Thursday as investors erred on the side of caution ahead of the latest US inflation data and a policy announcement from the European Central Bank.

At 0845 BST, the FTSE 100 was up 0.1% at 7,087.52.

Neil Wilson, chief market analyst at, said: “If there is a worry about inflation – today’s US CPI print will tell us a lot – then the bond market is not showing it. US 10-year yields fell under 1.49% to the lowest level in three months. This not just a Fed thing – the yield on longer dated paper such as the 30yr is also well off its 2021 highs.

“Today’s inflation reading still poses a risk to the market. The annual rate is forecast to climb to 4.7% in May, from 4.2% in April, whilst the core reading it seen at 3.4%, with the month-on-month at +0.4%. With the Federal Reserve anchoring its policy goals to employment, another hot reading won’t too much to worry about. Nevertheless, the print will still lead to some volatility at 13:30 (BST) in index futures, numerous FX crosses and gold.

“An above forecast inflation reading would reignite market taper fears, albeit this is likely to be short-lived and one to fade as the Fed still has control of this, at least to the extent that the market believes it does.”

Investors will also be eyeing the latest policy announcement from the ECB at 1245 BST. “It will be hard to avoid taper talk so how the ECB responds to questions around tapering will be of central importance to the market’s expectations and the euro,” Wilson said.

In equity marketsAuto Trader rallied after it said a dramatic shift to buying cars online during pandemic lockdowns helped it to limit full-year losses and reinstate its dividend. The company reported a 37% fall in pre-tax profit to £157.4m as revenue fell 29% to £262.8m. A dividend of 5p a share was declared.

BT was also a high riser after multibillionaire telecoms dealmaker Patrick Drahi bought a 12.1% stake in the group to capitalise on its involvement in the rollout of faster broadband in the UK. Drahi has bought 1.2 billion BT shares through Altice UK, which he wholly owns.

Outsourcer Mitie gained after it posted a slump in full-year profit but said 2022 profit was set to be “materially ahead” of its prior expectations.

CMC Markets rose as the online trading platform reported a 127% surge in full-year profits, with customers numbers up as it benefited from heightened volatility due to the pandemic.

On the downside, Sainsbury’s and Johnson Matthey were both weaker as they traded without entitlement to the dividend.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Auto Trader Group Plc +5.78% +33.40 611.20
2 Bt Group Plc +2.46% +4.50 187.65
3 Astrazeneca Plc +1.39% +113.00 8,243.00
4 Rightmove Plc +1.16% +7.20 629.80
5 Pearson Plc +1.10% +9.40 861.60
6 Glaxosmithkline Plc +1.09% +15.00 1,395.40
7 Standard Life Aberdeen Plc +1.01% +2.80 279.80
8 Sse Plc +0.91% +14.00 1,560.00
9 Standard Chartered Plc +0.90% +4.50 501.80
10 Smith & Nephew Plc +0.90% +13.50 1,519.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Easyjet Plc -2.23% -22.00 964.20
2 Sainsbury (j) Plc -1.76% -4.60 257.50
3 Carnival Plc -1.68% -31.40 1,834.00
4 Melrose Industries Plc -1.43% -2.35 161.90
5 International Consolidated Airlines Group S.a. -1.22% -2.50 202.00
6 Halma Plc -1.19% -32.00 2,648.00
7 Johnson Matthey Plc -1.14% -36.00 3,109.00
8 Hiscox Ltd -1.13% -9.00 787.00
9 Tui Ag -1.00% -4.30 425.70
10 Next Plc -0.98% -80.00 8,094.00


Europe open: Shares make muted start ahead of ECB meet, US CPI

European shares were flat at the opening on Thursday as investors awaited the outcome of the European Central Bank’s policy meeting and US inflation numbers later in the day.

The pan-European Stoxx 600 index barely moved the needle in muted trade while the UK’s FTSE 100 was up 0.17%.

“This week’s price action in equity markets appears to have been more or less dictated by how big a rise we might see in today’s US CPI report for May, as well as how the European Central Bank sees the current outlook for the economy in Europe over the next few months,” said CMC Markets analyst Michael Hewson.

“Up until recently the ECB was faced with the prospect of having to talk down the recent rise in long term bond yields across the bloc, however the declines seen in the past few days would appear to have bought the bank some time in that regard.”

“The economic outlook for the European economy has also started to look as if it might be starting to falter a touch, despite the economic reopening being announced in various parts of the bloc.”

“There have been signs of a pickup in economic activity in the latest PMI numbers, helped by the spill over effects of US stimulus as well as progress on the vaccination front, however there are risks given that infection rates in Europe are higher, and the vaccination program is still behind that of the US as well as the UK.”

In equity news, shares in UK vehicle marketplace Auto Trader topped the Stoxx, up 7.58% as the company said it was set to cash in on a “dramatic” shift to online car buying during the pandemic – despite a 37% fall in pre-tax profit to £157.4m for the 12 months to March 31.

BT shares rose after US firm Altice Group said it had taken a 12.1% stake in the UK’s largest broadband and mobile operator.


US close: Stocks finish weaker ahead of CPI print

Wall Street reversed earlier gains to finish weaker on Wednesday, as major indices continued to search for direction ahead of the release of May’s consumer price index tomorrow.

At the close, the Dow Jones Industrial Average was down 0.44% at 34,447.14, while the S&P 500 lost 0.18% to 4,219.55 and the Nasdaq Composite was off 0.1% at 13,911.75.

The Dow Jones closed 152.68 points lower on Wednesday, adding to the losses recorded in the previous session even as major indices continued to hover near record levels.

While things were mostly quiet ahead of Thursday’s CPI print, reopening play Carnival slipped into negative territory to finish down 2.03%.

So-called ‘meme stocks’ were also in focus, with Reddit users now turning their attention to Clover Health Investments, which slid 23.61% following an 85% rally in the previous session.

Also on traders’ agendas was news that the US government had committed to spending $1.2bn on nearly two million courses of Merck‘s experimental Covid treatment, according to the American drug firm.

Molnupiravir, which has not yet received regulatory approval, is currently in phase 3 clinical trials for the treatment of non-hospitalised Covid-19 patients who have at least one risk factor associated with poor disease outcomes.

The payment, for 1.7 million courses of treatment, remained conditional on Molnupiravir receiving emergency use authorisation from the Food and Drug Administration.

Merck shares finished 2.27% firmer by the end of trading.

On the macro front, applications for mortgages slipped in the US during the week ended 4 June as refinancing dropped to the lowest level seen since February 2020.

According to the Mortgage Bankers Association, its seasonally adjusted market index fell 3.1% week-on-week and 27% year-on-year.

Elsewhere, US wholesale inventories increased 0.8% month-on-month in April to $698.0bn, according to the Census Bureau, in line with preliminary estimates and following a 1.2% uptick in March.

On a yearly basis, wholesale inventories advanced 5.2% in April.


Thursday newspaper round-up: Airports, G7 tax plan, electric cars

The UK aviation sector has warned that airports are likely to lose at least £2.6bn this summer as the “chaotic” Covid traffic light system halts international travel. Airports said the coming months could deal a heavier financial blow than 2020, while airlines called for grants to offset the impact of travel restrictions and protect jobs. – Guardian

Britain will seek to exclude the City of London’s financial services companies from a global tax overhaul targeting the world’s most profitable businesses agreed between G7 finance ministers last weekend. The chancellor, Rishi Sunak, is concerned that under a version of the plan put forward by the US president – which involves redistributing the profits of the world’s 100 largest businesses – digital businesses such as Google, Amazon and Facebook will be joined by banks that he says already pay a fair share of tax. – Guardian

Ministers are considering a radical plan to axe tariffs on hybrid and electric cars as part of efforts to speed up Boris Johnson’s switch to a carbon-neutral economy. Officials are understood to be eyeing the plan as part of efforts to send a message that the country will champion free trade after Brexit and is committed to limiting climate change. – Telegraph

Britain will win a massive economic boost and thousands of businesses and workers will get their “mojo” back if lockdown freedom day goes ahead as planned on June 21, Andy Haldane, the Bank of England’s chief economist, has said. Mr Haldane said that an end to the last of the Covid restrictions would be “fantastic” for growth as the country recovers from its deepest recession in centuries. – Telegraph

A private British company with ambitious plans to make electric flying taxis is close to agreeing to be taken over by a Wall Street blank cheque company in a deal valuing it at almost $2 billion. Bristol-based Vertical Aerospace is in advanced talks with Broadstone Acquisition Corp, according to Sky News, citing City sources, with a deal due to be announced as early as Thursday. – The Times


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