ADVFN Morning London Market Report: Thursday 15 July 2021

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London open: Stocks edge lower as investors mull jobs data

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London stocks edged lower in early trade on Thursday as investors digested the latest UK jobs data.

At 0835 BST, the FTSE 100 was down 0.2% at 7,076.52, while sterling was 0.3% lower against the dollar at 1.3820.

Figures released earlier by the Office for National Statistics showed that the number of employees on UK payrolls rose by 356,000 in June as the labour market continued to recover from the worst of the pandemic.

The increase took the total of payroll employees to 28.9 million but the figure remains 206,000 less than before the crisis with many jobs preserved by government support.

The unemployment rate edged down 0.2 percentage point to 4.8% and the redundancy rate fell to pre-pandemic levels. From April to June there were 862,000 vacancies – 77,500 more than the pre-crisis level in the first three months of 2020.

Darren Morgan, the ONS’s director of economic statistics, said: “The labour market is continuing to recover, with the number of employees on payroll up again strongly in June. However it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.

“The number of job vacancies continued to rise very strongly. The biggest sector driving this was hospitality, followed by wholesaling and retailing.”

In equity marketsShellBP and Tullow Oil gushed lower as oil prices fell.

British Airways and Iberia parent IAG, engine marker Roll-Royce, budget airline easyJet and travel company Tui were also in the red amid ongoing worries about the impact of Covid-19.

Just Eat Takeaway.com was weaker even after it said losses had peaked and it expected to move back into profit after orders increased by more than half in the first six months of 2021.

On the upside, cybersecurity firm Avast surged to the top of the FTSE 100 after confirming it was in advanced talks over a merger with NortonLifeLock. If the deal goes through, it will be a cash-and-share offer, Avast said, but added there was no certainty a deal will be agreed.

Credit-checking firm Experian rallied after lifting its full-year expectations as it reported a 31% jump in first-quarter revenues, with all regions and segments delivering growth.

B&Q owner Kingfisher gained after it said late on Wednesday that first-half adjusted pre-tax profit was set to be ahead of its previous expectations following better-than-anticipated second-quarter trading.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Experian Plc +5.27% +157.00 3,134.00
2 Prudential Plc +2.72% +36.50 1,380.50
3 Kingfisher Plc +1.90% +6.90 369.20
4 Diageo Plc +1.62% +56.50 3,543.50
5 Burberry Group Plc +1.36% +28.00 2,088.00
6 Coca-cola Hbc Ag +1.03% +27.00 2,640.00
7 Spirax-sarco Engineering Plc +0.91% +130.00 14,385.00
8 Ocado Group Plc +0.78% +14.50 1,862.50
9 Rio Tinto Plc +0.74% +45.00 6,133.00
10 British American Tobacco Plc +0.71% +20.00 2,820.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Easyjet Plc -3.48% -29.20 810.40
2 Tui Ag -3.36% -10.80 310.50
3 Bp Plc -2.81% -8.55 296.20
4 Royal Dutch Shell Plc -2.18% -31.40 1,411.80
5 Royal Dutch Shell Plc -2.00% -28.20 1,380.80
6 International Consolidated Airlines Group S.a. -1.86% -3.18 167.74
7 Carnival Plc -1.57% -23.00 1,443.40
8 Centrica Plc -1.46% -0.76 51.26
9 Taylor Wimpey Plc -1.32% -2.15 160.35
10 Persimmon Plc -1.23% -37.00 2,981.00

 

Europe open: Markets fall again as wind companies fall flat

European stocks fell again as markets opened on Thursday with wind energy companies on the slide after Siemens Energy posted a downbeat margin outlook.

The pan-European Stoxx 600 index was down 0.55% with all major regional bourses lower.

Investors were also digesting comments from US Federal Reserve Chairman Jerome Powell’s who sought to quell investors’ fears about a rollback of central bank stimulus, even as inflation rose. Powell said the economy is “a ways off” from where it needs to be for a change in policy.

Siemens Energy dropped 10% after it scrapped its margin target as wind power division Siemens Gamesa was hit by higher-than-expected raw material and product ramp-up costs.

Shares in Siemens Gamesa fell 15%, while shares in wind turbine maker Vestas were down 6%.

Oil majors Royal Dutch Shell and BP fell almost 3%, as crude prices fell on expectations of more supplies after a compromise between top OPEC producers on Wednesday.

Shares in cybersecurity firm Avast topped the Stoxx with a gain of 12.6% as the company confirmed it was in advanced merger talks with US peer NortonLifeLock.

Credit-checking firm Experian rose after lifting full-year guidance as it reported a jump in first-quarter revenues, with all regions and segments delivering growth.

Just Eat Takeaway.com was weaker even after it said losses had peaked and it expected to move back into profit after orders increased by more than half in the first six months of 2021.

 

US close: Stocks mixed after slew of bank earnings

Wall Street’s main indices closed in a mixed state on Wednesday, as second-quarter earnings from some of the biggest banks in the country rolled in.

At the close, the Dow Jones Industrial Average was up 0.13% at 34,933.23 and the S&P 500 added 0.12% to 4,374.30, while the Nasdaq Composite slipped 0.22% to 14,644.95.

The Dow closed 44.44 points higher on Friday, reversing some of the losses recorded in the previous session as hotter-than-expected inflation numbers weighed on sentiment.

With inflationary fears taking somewhat of a backseat on Wednesday, the session’s main focus was again on earnings, with several big names reporting prior to the open.

On the macro front, the number of Americans applying for home mortgages increased in the week ended 9 July, according to the Mortgage Bankers Association, with its seasonally adjusted market index rising 16.0% week-on-week.

The growth was a result of a 20.4% increase in applications to refinance existing loans and an 8.3% rise in applications to purchase a home.

Elsewhere, the producer price index spiked, rising 7.3% in the 12 months through June, the biggest year-on-year rise since November 2010.

Analysts had been expecting a rise closer to 6.8%.

In equities, Bank of America was down 2.51% after it posted second quarter revenues of $21.6bn, just shy of estimates for a print of $21.8bn, while earnings per share of 77 cents 77 per share were 108% higher year-on-year.

BlackRock lost 3.06% after reporting a second-quarter profit of $1.38bn on net income of $8.92 per share, topping Wall Street expectations.

Citigroup slipped 0.29% after its quarterly profits soared more than five-fold year-on-year, with earnings of $6.19bn, or $2.85 per share, helped by an improving US economy leading to fewer bad loans than expected being on its books.

Wells Fargo went the other way to its peers, rising 3.98% after reporting forecast-beating second-quarter earnings, with total revenue in the three months to 30 June of $20.27bn against $18.29bn a year previously, and $18.53bn in the first quarter, as the US lender slashed the amount it had put aside to cover bad debts.

Legacy carrier Delta Air Lines, meanwhile, descended 1.57% even after posting its first quarterly profit since the Covid-19 pandemic decimated the industry over a year ago, with second-quarter earnings of $652.0m.

However, without $1.5bn worth of federal pandemic relief and assorted one-time events, the airline would have delivered an adjusted loss of $678.0m, or $1.07 per share.

 

Thursday newspaper round-up: Salt tax, music streaming, SFO

Ministers are being urged to levy a £3bn sugar and salt tax as part of a “once-in-a-lifetime opportunity” to break Britain’s addiction to junk food, cut meat consumption by nearly a third and help tackle climate change. The government-commissioned National Food Strategy, drawn up by the restaurateur Henry Dimbleby, says the UK population’s “malfunctioning” appetites and poor diets – fuelled by consumer and manufacturer’s reliance on processed food – place an unsustainable burden on the NHS and contribute to 64,000 deaths each year. – Guardian

Consumers have been conned out of more than £2.3bn in the space of a year after a “devastating surge” in scams as fraudsters exploited the pandemic. The consumer body Which? found that in the year to April 2021, 413,553 instances of fraud were reported in England, Wales and Northern Ireland – an increase of 33% on the previous 12 months. Online shopping scams topped the table as criminals took advantage of the fact that locked-down consumers were buying more items via the internet. – Guardian

Bosses have been told to set up mental health hotlines for anxious staff in official guidance from Whitehall as the country gears up for a return to the office on Monday. Workers may be suffering from mental health issues and will need “extra consideration” from their employers after over a year spent working remotely or on the furlough scheme, the Department for Business said in eagerly-anticipated documents released on Wednesday. – Telegraph

The economics of music streaming should be “completely reset”, a group of MPs has concluded in a report that could threaten the business models of streaming giants Spotify and Apple Music. The Competition and Markets Authority (CMA) should step in to investigate a lack of competition in the music industry in an attempt to raise the amount of royalties paid to musicians and songwriters, said MPs on Culture select committee. – Telegraph

The key whistleblower in a case that resulted in a former Airbus subsidiary being fined £28.1 million for corruption was “hung out to dry” by the Serious Fraud Office, it has been claimed. Ian Foxley’s evidence led to a guilty plea this year from GPT Special Project Management over bribes related to a UK government contract to provide services to Saudi Arabia’s military. However, he accused the SFO of downplaying his role in the conviction and undermining his compensation claim. – The Times

 

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