ADVFN Morning London Market Report: Tuesday 13 July 2021

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London open: Banks pace the advance as BoE lifts dividend restrictions


London stocks rose in early trade on Tuesday, outperforming their European peers as banks led the charge after the Bank of England removed dividend restrictions on the sector.

At 0850 BST, the FTSE 100 was up 0.3% at 7,144.30 after the Bank said it was removing restrictions on dividend payouts introduced in the wake of the Covid-19 pandemic as the sector remains “well-capitalised” and “resilient”.

HSBCNatWestLloyds and Barclays all rallied.

Shore Capital analyst Gary Greenwood said: “We believe this will open the door for the UK banks to announce further shareholder distributions alongside their interim results which are due to be published during the last week of July and first week of August.

“We expect this news to be welcomed by the market and should act as a positive catalyst to share price performance for a sector that has weakened off in recent weeks.”

Elsewhere, British Land was higher after it said rent collection was improving and activity at its retail parks was close to pre-pandemic levels as lockdown restrictions were eased.

Redde Northgate gained after the commercial vehicle hire business said it had bought Charged Electric Vehicles (ChargedEV), a charging equipment supply and installation specialist, for an undisclosed sum.

Shell gushed higher after an upgrade to ‘overweight’ at Barclays, while Dr. Martens was boosted by an upgrade to ‘buy’ at Goldman Sachs.

Howden Joinery advanced as it said trading was strong in the first half and ahead of its expectations, with revenue ahead of the same period in 2020 and 2019.

On the downside, Centamin lost its shine after Liberum reiterated its ‘sell’ rating on the gold producer.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Hsbc Holdings Plc +1.57% +6.50 419.35
2 Melrose Industries Plc +1.56% +2.45 159.45
3 Anglo American Plc +1.47% +43.50 2,998.50
4 Fresnillo Plc +1.39% +11.00 801.40
5 Rio Tinto Plc +1.33% +81.00 6,181.00
6 Itv Plc +1.29% +1.60 125.35
7 Rolls-royce Holdings Plc +1.24% +1.19 96.93
8 Persimmon Plc +1.24% +37.00 3,014.00
9 Johnson Matthey Plc +1.24% +39.00 3,186.00
10 Lloyds Banking Group Plc +1.10% +0.52 47.69


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc -0.83% -16.00 1,923.00
2 Astrazeneca Plc -0.80% -70.00 8,692.00
3 Micro Focus International Plc -0.76% -3.30 428.20
4 Hikma Pharmaceuticals Plc -0.76% -20.00 2,596.00
5 Whitbread Plc -0.63% -19.00 3,019.00
6 Compass Group Plc -0.61% -9.00 1,477.00
7 United Utilities Group Plc -0.48% -5.00 1,037.50
8 National Grid Plc -0.38% -3.60 941.50
9 Glaxosmithkline Plc -0.36% -5.20 1,433.60
10 Easyjet Plc -0.33% -3.00 896.60


Europe open: London bucks trend as shares open lower

European stocks were marginally lower at the open on Tuesday, with London’s FTSE the only bright spot after the Bank of England lifted curbs on dividend payouts.

The pan-European Stoxx 600 index slipped 0.16% after hitting a record high on Monday. Britain’s FTSE 100 was up 0.27%, while other main regional indexes fell. US and Asian markets were higher overnight.

UK banks BarclaysHSBCNatWest and Lloyds all rose after the BoE ditched a ban on shareholder payouts imposed at the height of the coronavirus pandemic last year.

Investors were also focusing on June CPI numbers from Germany, France and the US. In the UK retail sales enjoyed their best quarter ever according to the British Retail Consortium, with a big jump in spending in June on clothing and footwear, as well as sales of televisions ahead of the Euro 2020 football championship. Spending on hotels and accommodation also rose as a result of the easing of restrictions in May.

“With bond markets seemingly less concerned about inflationary pressures, after last week’s sharp fall in yields, and commodity prices starting to show signs of slowing, today’s latest CPI numbers from the US may well mark the high-water mark as far as the reflation trade is concerned,” said CMC Markets analyst Michael Hewson.

“This of course assumes that bond markets are drawing the correct conclusions around recent events, and that we weren’t merely seeing a clear out of stale positions.”

Shares in German drug delivery device maker Gerresheimer fell to the bottom of the Stoxx after reporting lower second quarter net profit.

Finnish telecom equipment maker Nokia jumped 6.3% after it said it planned to raise its full-year outlook as business picked up pace in the second quarter.

Shares of German genetic testing company Qiagen fell after it lowered its outlook on weaker demand for Covid-19 tests.


US close: Stocks end session higher ahead of Q2 earnings

Wall Street stocks closed higher on Monday, extending gains seen in the previous session to push major indices to fresh record highs.

At the close, the Dow Jones Industrial Average was up 0.36% at 34,996.18, while the S&P 500 was 0.35% firmer at 4,384.63 and the Nasdaq Composite saw out the session 0.21% stronger at 14,733.24.

The Dow closed 126.02 points higher on Monday, with reopening plays Carnival Corp and General Electric in the red, while big tech stocks like TeslaNvidia and Facebook closed in the green.

Virgin Galactic was down around 17% after founder Richard Branson made history by making his way into space aboard the company’s VSS Unity spacecraft, while Walt Disney stock gained after Black Widow brought in $80.0m at the US domestic box office at its debut, the most of any Covid-19 era film.

Investors also had an eye locked on the yield on the benchmark 10-year Treasury note, currently sitting at around 1.36%.

While no major corporate earnings were released on Monday, the second-quarter earnings season will kick off tomorrow, with analysts expecting strong earnings reports from JPMorgan Chase and Bank of America throughout the week.

On the macro front, the New York Federal Reserve Bank‘s June survey of consumer expectations showed that median inflation expectations over the next 12 months jumped to 4.8% – a 0.8 percentage point increase to the highest in series history.


Tuesday newspaper round-up: Fuel poverty, Amazon, Apple, freeports

Almost 400,000 UK households could be pushed into fuel poverty this winter as energy bills climb by almost 10% as a result of rising gas market prices. At least 3 million homes in the UK are already thought to be unable to afford their energy bills, and the number in fuel poverty could grow by 392,000 within the coming months. – Guardian

The Unite union has lodged an official competition complaint against Amazon, alleging the online retailer profited from pandemic-related “price gouging” on products such as hand sanitiser and face masks. In a 41-page letter, seen by the Guardian, lawyers for Unite accuse Amazon of “exploitative abuse of its dominance” and call on the UK Competition and Markets Authority (CMA) to launch an investigation. – Guardian

Apple has made a record £720m payment from its UK operations to its Irish holding company and inched up its UK tax payments amid an international shake-up of tax rules. The iPhone maker paid dividends worth just over £600m for its three UK-headquartered businesses in the year to September 2020 and paid a further £120m in December, according to its accounts. – Telegraph

Leading American multinationals plan to increase their investment in Britain over the coming years despite concern over the fallout from leaving the European Union. A survey of large US companies already employing about 275,000 staff in the UK found a clear majority were confident in the country as a place to do business. Several dozen firms signalled they intend to at least modestly boost their expenditure over the next two to three years. – The Times

Most firms still do not have a full understanding of how freeports will operate and be governed, a survey suggests (Louisa Clarence-Smith writes). A report which includes responses from the British Ports Association, Brittany Ferries and Lloyds Bank found that 64 per cent of about 500 businesses questioned were unclear about how the eight freeports in England announced by Rishi Sunak in March would work. – The Times


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