ADVFN Morning London Market Report: Monday 12 July 2021

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London open: Stocks fall amid Covid worries; Admiral bucks trend

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London stocks fell in early trade on Monday despite a solid session in Asia, as worries about Covid-19 weighed on sentiment.

CMC Markets analyst Michael Hewson said: “Last week’s events appear to paint a narrative of some concern that the reflation trade is either in trouble, or merely being delayed, due to concern over rising Delta variant cases in Asia, which has prompted a number of countries including Japan, South Korea and Australia to reimpose tighter restrictions.

“We’re also seeing higher case counts in the UK, US and Europe, which could also add to the uncertainty, although in the case of the UK the high levels of vaccination are keeping hospitalisations and deaths low for now. Whether that stays the case remains to be seen, but the lower vaccination rate in Europe could prove problematic in the days ahead, which mean help explain this morning’s weaker European open.”

At 0845 BST, the FTSE 100 was down 0.5% at 7,088.73, as investors looked ahead to the start of the US earnings season – with results due this week from the likes of CitiGoldman Sachs and JPMorgan – while the UK calendar will also pick up, with BurberryDunelm and Barratt Developments among those slated to report.

In equity markets, travel-related stocks were the worst performers, with engine maker Rolls-Royce, British Airways owner IAG, budget airlines easyJet and Wizz and travel company Tui all weaker.

Miners were also under pressure as metals prices fell, with Anglo AmericanAntofagasta and Glencore trading lower.

On the upside, Admiral rallied after the insurer said it expected a higher-than-anticipated first-half profit due to an “unusually positive” development in the cost of UK motor injury claims. The firm guided for pre-tax profit of £450m to £500m and a dividend of 110p to 125p a share.

Tate & Lyle also gained after agreeing to sell a controlling stake in its primary products business in North America and Latin America to private equity outfit KPS Capital Partners for $1.3bn. The deal, which effectively breaks up the food and drink ingredients maker, would also involve the sale of the company’s interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products Company joint ventures.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Admiral Group Plc +3.40% +106.00 3,227.00
2 Ocado Group Plc +1.55% +29.50 1,938.50
3 Auto Trader Group Plc +1.37% +8.80 649.40
4 Halma Plc +1.30% +36.00 2,811.00
5 Segro Plc +1.29% +15.00 1,179.50
6 Direct Line Insurance Group Plc +1.20% +3.50 295.90
7 Experian Plc +0.99% +29.00 2,967.00
8 Morrison (wm) Supermarkets Plc +0.94% +2.50 267.40
9 Rightmove Plc +0.93% +6.00 654.20
10 Hiscox Ltd +0.88% +7.60 873.20

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Antofagasta Plc -3.22% -46.50 1,396.00
2 Easyjet Plc -3.15% -29.40 904.00
3 International Consolidated Airlines Group S.a. -3.01% -5.56 179.28
4 Rolls-royce Holdings Plc -2.92% -2.95 98.05
5 Evraz Plc -2.89% -17.80 597.40
6 Tui Ag -2.77% -9.90 347.10
7 Whitbread Plc -2.55% -80.00 3,056.00
8 Anglo American Plc -2.52% -75.50 2,915.50
9 Melrose Industries Plc -2.51% -4.00 155.50
10 Barclays Plc -2.32% -4.02 169.34

 

Europe open: Shares lower on worries over rising Covid delta cases

European shares opened lower on Monday as investors continued to worry about the spread of Covid-19 cases and rising inflation.

The pan-European Stoxx 600 index was 0.12% lower with France’s CAC 40 down 0.42% and Britain’s FTSE 100 off 0.53%.

“Last week’s events appear to paint a narrative of some concern that the reflation trade is either in trouble, or merely being delayed, due to concern over rising Delta variant cases in Asia, which has prompted a number of countries including Japan, South Korea and Australia to reimpose tighter restrictions,” said CMC Markets analyst Michael Hewson.

“We’re also seeing higher case counts in the UK, US and Europe, which could also add to the uncertainty, although in the case of the UK the high levels of vaccination are keeping hospitalisations and deaths low for now. Whether that stays the case remains to be seen, but the lower vaccination rate in Europe could prove problematic in the days ahead, which mean help explain this morning’s weaker European open.”

In equity news shares in tabloid publisher Daily Mail and General Trust jumped after its largest shareholder, the Rothermere family, said it might take the UK newspaper group private in a £810m deal, if the sales of its insurance risk unit and Cazoo business go through.

Tate & Lyle shares rose after the company said it had agreed to sell a controlling stake in its primary products business in North America and Latin America to private equity outfit KPS Capital Partners for $1.3bn.

Shares in UK insurer Admiral gained 3.4% after the company raise its first-half profits forecast.

French IT consulting group Atos slumped 12% after it cut full-year earnings forecast.

Miners were also under pressure as metals prices fell, with Anglo AmericanAntofagasta and Glencore trading lower.

 

Monday newspaper round-up: UK business confidence, lorry drivers, house sales

UK business confidence has jumped as firms anticipate the lifting of lockdown restrictions later this month, despite concerns over the rise in Covid-19 infections. A survey by accountancy and business advisory firm BDO found that firms were their most optimistic since 2005 in June. Manufacturing optimism rose sharply, due to improved global economic outlook driven by the Covid-19 vaccine rollout this year. – Guardian

The overwhelming majority of British workers would not want to see the introduction of a four-day working week if it meant taking a cut to their pay. Eight out of 10 British employees would not favour accepting a reduction in working hours if it resulted in lower wages, according to research by cross-party thinktank, the Social Market Foundation (SMF), with only one in 10 employees willing to work less and earn less. – Guardian

Ministers have launched secret talks on a short-term visa scheme for foreign lorry drivers as they race to prevent a shortage of staff from overwhelming the haulage industry. Officials at the Department for Transport (DfT) are consulting industry chiefs on how to tackle the crisis, with an estimated shortfall of 100,000 truckers delaying deliveries of everything from clothing to food and fuelling a rise in prices. – Telegraph

House sales have collapsed by more than half this month after Rishi Sunak reined in a stamp duty holiday which was helping to fuel the red-hot property market, estate agent Knight Frank has said. The number of property exchanges in the first week of July was 60pc below the five-year average for this time of year, it said, after buyers scrambled to complete deals before the end of June. – Telegraph

Businesses are gearing up for a boom in hiring and investment as economic activity returns to normal, reports say. While companies spent much of last year cutting costs, they are now taking advantage of record low interest rates and tax incentives to unleash investment to help meet rising demand. Hiring and investment will hit their highest level in almost seven years over the coming months, according to a report by Deloitte. At the same time, expansion through acquisition has become a higher priority than at any time in the past 11 years. – The Times

 

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