ADVFN Morning London Market Report: Monday 19 July 2021

Share On Facebook
share on Linkedin
Print

London open: Stocks fall amid Covid, inflation concerns

© ADVFN

London stocks fell sharply in early trade on Monday as worries about the spread of the Delta variant outweighed any cheer over ‘Freedom Day’, while inflation concerns also continued to weigh on sentiment .

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Worries are mounting about what the lifting of social distancing rules will mean for economic recovery, if the virus spreads more rapidly. Already many industries from hospitality to manufacturing are struggling to cope with high levels of absence as staff are pinged by the test and trace app, leading to the closure of some venues and a drop in output.

“The confusion surrounding quarantine and testing rules for international travel is also leading to fresh uncertainty about the prospects for the aviation and tourism industries, which have been struggling through the worst crisis in their history. The lack of warning about the need for travellers from France to isolate for ten days from today, has thrown holiday plans into fresh mass chaos, with hopes of a boost to summer bookings evaporating.

“Amidst concerns that infection rates could derail the recovery are worries about inflation heating up and the knock on effect of rising interest rates.”

In equity markets, travel and leisure shares were the worst performers, with British Airways owner IAG, catering group CompassInterContinental Hotels, Premier Inn owner Whitbread, engine maker Rolls-RoyceCineworld, cruise operator Carnival, budget airlines easyJet and Wizz Air, and Upper Crust owner SSP all weaker.

Online supermarket Ocado was under the cosh as it faced a week of disruption after a fire at its Erith warehouse.

Neil Wilson, chief market analyst at Markets.com, said: “There is the immediate operational impact at Erith with orders being cancelled following the blaze, which was caused by a three-robot crash. There is reputational risk from cancelling swathes of orders – small I’d say – but nonetheless to be considered.

“But the main thing investors are concerned about is the safety of the technology – will this be repeated? It is only two years since the Andover facility burned down. Will this impact on future deals with international partners?”

Amid the sea of red, Ultra Electronics fell despite saying that strong demand from defence markets had helped the company deliver better-than-expected first-half profits.

AstraZeneca lost ground even as it said that its drug to treat extensive-stage small cell lung cancer had been approved in China.

Synthomer retreated even as the chemicals company lifted its full-year earnings guidance as it said trading across the business remained strong.

 

Top 10 FTSE 100 Risers

Sponsored by
ii
Buy Sell
72% of retail CFD accounts lose money.
# Name Change Pct Change Cur Price
1 3i Group Plc +0.60% +7.00 1,166.50
2 Hikma Pharmaceuticals Plc +0.08% +2.00 2,632.00
3 London Stock Exchange Group Plc +0.00% +0.00 8,620.00
4 Standard Life Aberdeen Plc +0.00% +0.00 274.10
5 Rsa Insurance Group Ld +0.00% +0.00 684.20
6 Royal Bank Of Scotland Group Plc +0.00% +0.00 120.90
7 Reckitt Benckiser Group Plc +0.00% +0.00 6,498.00

 

Top 10 FTSE 100 Fallers

Sponsored by
ii
Buy Sell
72% of retail CFD accounts lose money.
# Name Change Pct Change Cur Price
1 Carnival Plc -7.37% -104.20 1,310.00
2 Easyjet Plc -5.65% -46.60 777.60
3 International Consolidated Airlines Group S.a. -4.97% -8.34 159.44
4 Rolls-royce Holdings Plc -4.57% -4.25 88.81
5 British Land Company Plc -4.11% -20.50 478.00
6 Micro Focus International Plc -4.00% -16.10 386.10
7 Land Securities Group Plc -3.81% -25.60 646.40
8 Intercontinental Hotels Group Plc -3.81% -179.00 4,524.00
9 Whitbread Plc -3.39% -99.00 2,825.00
10 Johnson Matthey Plc -3.30% -103.00 3,018.00

 

Europe open: Travel stocks hit on Delta variant worries

European shares opened lower on Monday, led by travel and energy stocks as investors fretted about the rising number of Delta variant Covid cases globally.

The pan-European STOXX 600 index fell 1.5%, Germany’s DAX dropped 1.4% and France’s CAC 40 declined 1.62%. Britain’s FTSE 100 was down 1.4% as England’s total reopening was overshadowed by a spike in cases.

“Inflation was the big story last week and remains the big question mark hanging over markets. Consumer expectations have shot higher – the University of Michigan released its report on Friday showing consumers think prices will rise 4.8% over the next year,” said Neil Wilson at Markets.com.

Travel and leisure stocks were in the red after the UK government on Friday it was scrapping a planned relaxation of Covid-19 quarantine rules for travellers from France.

Cruise line company Carnival fell to the bottom of the Stoxx, down almost 8%, while airlines easyJetWizz Air and British Airways-owner IAG all fell more than 5%.

“The confusion surrounding quarantine and testing rules for international travel is also leading to fresh uncertainty about the prospects for the aviation and tourism industries, which have been struggling through the worst crisis in their history,” said Hargreaves Lansdown analyst Susannah Streeter.

“The lack of warning about the need for travellers from France to isolate for 10 days from today, has thrown holiday plans into fresh mass chaos, with hopes of a boost to summer bookings evaporating. Amidst concerns that infection rates could derail the recovery are worries about inflation heating up and the knock on effect of rising interest rates.”

Related stocks were also lower, with InterContinental Hotels, Premier Inn owner WhitbreadAccor Hotels, engine maker Rolls-RoyceCineworld, and Upper Crust owner SSP all weaker.

Oil majors were lower as crude prices fell after OPEC+ agreed to boost output.

 

US close: Stocks mixed as more earnings roll in

Wall Street stocks were in a mixed state at the close on Thursday, as market participants thumbed over more bank earnings and the key jobless claims report from the Labor Department.

At the close, the Dow Jones Industrial Average was up 0.15%, while the S&P 500 lost 0.33% to 4,360.03 and the Nasdaq Composite was off 0.7% at 14,543.13.

The Dow closed 53.79 points higher on Thursday, adding to the gains recorded in the previous session as investors digested earnings from several of the nation’s biggest banks.

On the macro front, first-time unemployment claims dropped to a new Covid-19 pandemic-era low of 360,000 in the week ended 19 June, a marked decrease when compared to the previous week’s upwardly revised total of 386,000.

According to the Labor Department, initial unemployment claims came in at their best number since 14 March, 2020 last week, while continuing claims also fell sharply, declining by 126,000 to 3.24m – another new low for the US jobs market.

Sharp declines in claims in Texas and Georgia accounted for almost all the decline, indicating that the early end to benefits may have encouraged people to re-enter the workforce.

The number of Americans collecting benefits under all government programmes also fell sharply, dropping 449,642 to 14.2m – well above anything seen pre-coronavirus but far below the 33.2m citizens in the dole queue twelve months prior.

Also in economic headlines, the price of goods purchased overseas rose roughly as expected last month despite a large increase in energy costs.

According to the Department of Labor, in seasonally adjusted terms the US import price index jumped at a month-on-month pace of 1.0%, just shy of consensus expectations for 1.2%.

While that was less than anticipated by economists, the ‘miss’ was offset by an upwards revision of three-tenths of a percentage point to the print for May to 1.4%.

Elsewhere, industrial output in the US grew more slowly than anticipated in June as a shortage of semiconductors kneecapped auto manufacturing.

The Department of Commerce said that total industrial production rose by 0.4% month-on-month, against forecasts for 0.6%, and revised down its estimates for February, April and May.

Still on data, the Philadelphia Fed’s July manufacturing index revealed that factory activity in the US mid-Atlantic region slowed sharply for a third straight month in July to hit its lowest growth since December, with the bank’s business activity index falling to 21.9 from 30.7 in June – well below economists’ expectations for a reading of 28.0.

Corporate earnings were again in focus at the open on Thursday, with Morgan Stanley rising 0.18% after its second-quarter revenues and profits exceeded expectations on the Street, driven by strength in both equities trading and investment banking.

Morgan Stanley reported revenues of $14.8bn, ahead of estimates of $13.98bn, while earnings per share smashed expectations of $1.65 each at $1.85.

Net income was $3.5bn, up from $3.2bn a year ago.

US Bancorp added 3.21% after it posted second-quarter revenues of $5.78bn and earnings per share of $1.28, beating estimates for prints of $5.62bn and $1.14, respectively.

Bank of New York Mellon, meanwhile, fell 1.22% after reporting that quarterly earnings per share had grown 12% year-on-year to $1.13 despite total revenues slipping 1% to $4.0bn in the three months ended 30 June as the group’s investments in digitisation and open-architecture modular solutions continued to pay off.

Moving on from lenders, UnitedHealth, seen as somewhat of an industry bellwether, closed up 1.28% even after it posted a 35.7% fall in quarterly profits as a recovery in the elective medical care market normalised costs for the country’s largest health insurer.

 

Monday newspaper round-up: House prices, pingdemic, Ocado

Months of “frenzied buyer activity” have driven the average asking price for a home in Britain to a new high, according to the property website Rightmove. The property portal said it expected figures from HMRC due later this week to show that June was the busiest month on record for sales, with buyers rushing to complete before stamp duty rules change in parts of the United Kingdom. – Guardian

The UK’s top business lobby group and Marks & Spencer have joined a growing chorus urging the government to tackle a nationwide “pingdemic” by immediately amending the self-isolation policy for people notified by the NHS test-and-trace app. The Confederation of British Industry (CBI) said “speed was of the essence” as crippling staff shortages threatened to close supermarkets and bring car production lines to a halt. – Guardian

Rishi Sunak faces an extra £10bn bill over the next two years as inflation surges, driving up interest bills on Government debts that are linked to the cost of living. About a quarter of the Government’s debt, amounting to £460bn, is tied to the retail price index (RPI) measure of inflation, so the Treasury must pay out more money to savers and investors when prices rise. – Telegraph

Ocado customers face a week of disruption to orders following a fire at the online grocer’s biggest warehouse. The blaze broke out late on Friday after three robots used to handle orders collided at the Erith facility in southeast London, the FTSE 100 company said. – Telegraph

Most of the world’s biggest oil-exporting nations have agreed a deal to boost supply in a move expected to help cool the runaway rise in the cost of crude, which has sent prices at the pump soaring and helped fuel inflation. They agreed to boost oil production by 400,000 barrels a day as demand increases, as part of a deal to reverse an earlier cut of 5.8 million barrels per day by September next year. – The Times

One of the biggest shareholders in FirstGroup has urged the Financial Conduct Authority to investigate the transport company’s alleged failure to disclose information about incidents of child abuse on its US school buses. The US hedge fund Coast Capital, which owns a 15 per cent stake in FirstGroup, accused the company of withholding information, which meant that investors could not properly assess the sale of the school buses business. – The Times

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20210917 12:16:12