ADVFN Morning London Market Report: Tuesday 20 July 2021

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London open: Stocks recover after Monday’s losses


London stocks rose in early trade on Tuesday, recovering some ground following heavy losses in the previous session on the back of Covid concerns.

At 0855 BST, the FTSE 100 was up 1.1% at 6,919.08.

Richard Hunter, head of markets at Interactive Investor, said: “The opening of trade in the UK reflects something of a relief rally, with the possibility that investors are seeking buying opportunities given what may have been a slight overshoot of negative sentiment. Even so, it will be some weeks for the effects of the full easing of restrictions in the UK to become apparent.

“As such, this may be a time to tread carefully until such time as the variant can be stopped in its tracks, thus allowing the full return to some kind of normality – and economic recovery – to resume.”

In equity markets, stocks that were hit hardest on Monday were among the best performers. Engine maker Rolls-RoyceInterContinental Hotels, broadcaster ITV, Premier Inn owner WhitbreadCineworldTui and easyJet were all higher.

InterContinental Hotels was also boosted by an upgrade to ‘buy’ at Stifel, while easyJet was in focus after the budget airline said it had reduced cash burn amid continuing Covid restrictions as it reported a £318m third-quarter loss.

The loss for the three months to June 30 compared with a loss of £346.8m last year. EasyJet said cash burn came in at £55m a week while revenue rose to £212.9m from £7.2m in 2020.

Elsewhere, Transact owner IntegraFin gained after it said third-quarter funds under direction passed £50bn for the first time amid positive equity markets, rising 7.2% over the previous quarter.

Anglo American rallied after it reported a 20% rise in second-quarter production, driven by strong output in diamonds and platinum, despite operations running at 95% of normal capacity because of Covid-19 disruptions.

BHP was also up after saying it was in “great shape” as the miner achieved record production at iron ore, coal, and copper and gold assets during the last financial year.

Morrisons was in the spotlight as it emerged that US private equity firm Apollo Global Management was in talks with Fortress Investment Group to join its bid for the supermarket chain. Apollo said it would not make an offer for Morrisons on its own.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Itv Plc +2.78% +3.15 116.40
2 Tui Ag +2.59% +8.00 316.70
3 Antofagasta Plc +2.57% +34.50 1,376.00
4 Legal & General Group Plc +2.31% +5.80 256.40
5 Rio Tinto Plc +2.31% +133.00 5,888.00
6 Evraz Plc +2.21% +12.80 591.40
7 Informa Plc +2.19% +10.40 485.70
8 Crh Plc +2.07% +71.00 3,507.00
9 Bp Plc +2.07% +5.75 284.20
10 Micro Focus International Plc +2.05% +7.80 387.90


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Intertek Group Plc -0.44% -24.00 5,456.00
2 International Consolidated Airlines Group S.a. -0.29% -0.46 158.54
3 Admiral Group Plc -0.27% -9.00 3,278.00
4 Morrison (wm) Supermarkets Plc -0.11% -0.30 261.70
5 Nmc Health Plc -0.00% -0.00 938.40
6 Just Eat Plc -0.00% -0.00 861.00
7 Royal Bank Of Scotland Group Plc +0.00% +0.00 120.90
8 London Stock Exchange Group Plc +0.00% +0.00 8,620.00
9 Reckitt Benckiser Group Plc +0.00% +0.00 6,498.00
10 Rsa Insurance Group Ld +0.00% +0.00 684.20


Europe open: Stocks rebound after Monday selloff

European shares rebounded on Tuesday after a sharp selloff in the previous session as investors responded to positive corporate earnings.

The pan-European Stoxx 600 index rose 1% in early trade after fears over the rapid spread of the Covid Delta variant saw stocks fall 2.3% on Monday. All major regional markets were higher.

“A weak showing in markets globally may provide some buying opportunities on the dip, but for the moment and despite a strong start to the earnings season, sentiment rather than performance is the overriding factor,” said interactive investor head of markets Richard Hunter.

New Covid cases are surging in Europe and the US as the variant spreads, largely among the young and unvaccinated, or the partially vaccinated.

In equity news, miners led the gains after BHP and Anglo American provided upbeat production numbers.

Swiss bank UBS rose 6.4% after it posted a 63% jump in second-quarter net profit, helped by a booming wealth management business.

Among decliners, Sweden’s Volvo fell 4.27% as it warned of further production disruptions and stoppages this year due to chip shortages.

Swedish industrial manufacturer Alfa Laval added 7% after beating profit estimates, while at the bottom of the index, compatriot home appliance company Electrolux fell more than 8% after issuing a supply chain warning.


US close: Dow suffers worst day in three months as Delta concerns grow

Equities closed deep into negative territory on Wall Street on Monday, with investors focusing on rising Covid-19 case numbers globally and the effect that might have on government bids to reopen economies.

At the close, the Dow Jones Industrial Average was down 2.09% at 33,962.04, while the S&P 500 lost 1.59% to 4,258.49 and the Nasdaq Composite was off 1.06% at 14,274.98.0

It was the worst day for the Dow in more than three months.

“Concerns about how robust recovery really is has sent the oil price under $70 a barrel, in marked contrast to the $100 that was being discussed as a real possibility for this summer,” said AJ Bell financial analyst Danni Hewson.

“The OPEC+ spat resolution will have played a part but Delta is destructive and US markets aren’t immune either.

“Investors appear to be flocking to the safe haven of government bonds with yields plummeting to levels last seen back in February, and Wall Street has followed the trajectory of European markets.”

Having come through the worst of the first waves of the Covid-19 pandemic in a much better shape than their Western counterparts, a number of countries in the Asia-Pacific region, including Indonesia, Thailand, South Korea, Vietnam and Singapore, were now battling fresh outbreaks and imposing restrictions.

Cases in the United States and UK, as well as on much of the continent, were continuing to climb as well.

Earlier, Jeffrey Halley at Oanda noted an article in the Wall Street Journal, penned by US Treasury Secretary Janet Yellen, which criticised the US-China trade deal as “failing to lift the malaise” in markets.

Also dampening the mood were plunging oil prices, with West Texas Intermediate last down 7.72% at $66.27 per barrel, and Brent crude losing 6.62% to $68.72.

Those moves came after OPEC and its oil-producing allies agreed to increase their combined output by 400,000 barrels per day from August.

Bond markets were in focus as well, with the yield on the benchmark 10-year US Treasury note last down 10 basis points at 1.194%.

On the economic front, the National Association of Homebuilders Housing Market Index dipped to an 11-month low of 80.0 in July, from a reading of 81.0 in June and below consensus expectations for 81.0.

In equities, cinema operator AMC Entertainment closed down 0.97%, having plunged more than 10% earlier in the session, before briefly breaking into the green late in the day.

On the upside, so-called ‘meme stock’ GameStop was up 2.67% on the back of a fresh rampage from the video game retailer’s loyal investor fans on social media platform Reddit.

While volumes on GameStop were lower than average, MarketWatch cited data from HypeEquity as showing that its “social media volume” was up more than 100%, as social media users mentioned ‘buying’ or ‘holding’ twice as much as they did ‘selling’ on the day.


Tuesday newspaper round-up: Fintech sector, Greensill, Johnson Matthey, Stonegate

Britain’s digital finance industry, more commonly known as the fintech sector, has hit a multibillion-pound peak of investor interest. Banking app Revolut confirmed last week that it had raised another $800m from big investors including the Softbank Vision Fund, pushing the bank’s valuation to $33bn (£24bn). It came just weeks after Wise, the forex transfer business, listed on the London Stock Exchange at nearly £9bn. – Guardian

David Cameron’s intensive text message lobbying of ministers and high-ranking civil servants on behalf of Greensill Capital showed a “significant lack of judgment”, an official parliamentary inquiry has found. The Treasury select committee said it was inappropriate of the ex-prime minister to send 62 messages to former colleagues pleading for them to help the bank, in which Cameron held a “very significant personal economic interest”. – Guardian

Motorists face soaring repair costs from a Brussels crackdown on unbranded car parts, one of the world’s biggest distributors has said. Andy Hamilton of Euro Car Parts warned that drivers risk being forced to spend an extra £100 a year if the Government does not step in to overrule new the European Union legislation. – Telegraph

A FTSE 100 chemicals giant is seeking to win taxpayer backing for a factory to build components for hydrogen-powered cars, in another potential boost for Britain’s car industry. The Business Secretary, Kwasi Kwarteng, met with Johnson Matthey in May about financial support for a plant to make vehicle parts including membrane electrode assemblies (MEAs). – Telegraph

The healthcare technology company founded by Lord Drayson is exploring a potential dual-listing in the United States amid pressure from an activist investor. Sensyne Health – whose shares on Aim, the London Stock Exchange’s junior market, remain below their float price – said that it was considering listing on the Nasdaq index and that such a move would “complement” its primary London listing. Sensyne, which is based in Oxford, also said that it remained committed to having its headquarters in Britain. – The Times

Britain’s biggest pub company has launched an £845 million legal suit against a trio of insurers, claiming they paid only a fraction of their liability for coronavirus-related losses. Stonegate, which is backed by TDR Capital, the private equity firm, said that MS Amlin, Liberty Mutual Insurance Europe and Zurich Insurance insisted that the liability was only £17.5 million, of which £14.5 million had been paid. – The Times


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