ADVFN Morning London Market Report: Friday 15 October 2021

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London open: FTSE rises on earnings optimism, travel shares rally

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London stocks rose in early trade on Friday following an upbeat session on Wall Street, as earnings optimism helped to offset concerns about inflation.

At 0900 BST, the FTSE 100 was up 0.2% at 7,221.02, having earlier hit its highest level since the start of the pandemic.

Russ Mould, investment director at AJ Bell, said: “For now, strong results from banks, a decline in new jobless claims and lower than expected producer price inflation all from the US have served to put investors in a more positive mood.

“Next week looks more testing for markets as China is scheduled to produce data on economic growth which may disappoint.”

In equity markets, Iberia and British Airways parent IAG and Premier Inn owner Whitbread rallied after the government said fully vaccinated passengers and children arriving in England from non-red list countries can take a lateral flow test from 24 October, instead of the more expensive PCR tests.

“That could lead to a rush of last-minute bookings for half-term travel, thereby benefiting airline earnings. The sector needs all the help it can get as it is one of the last industries still waiting to play catch-up with earnings following the pandemic,” Mould said.

Mediclinic gained as the private healthcare provider reported a rise in first-half revenue, driven by a jump in patient activity across its three divisions.

Jupiter Fund Management was also on the front foot as it posted an increase in assets under management for the three months to 30 September.

BP was boosted by an upgrade to ‘buy’ at Berenberg, while Antofagasta was up after an upgrade to ‘sector perform’ at RBC Capital Markets.

Harbour Energy racked up healthy gains after an upgrade to ‘buy’ at Berenberg, while Qinetiq was in the black after heavy losses on Thursday and as Investec upped the shares to ‘buy’.

On the downside, Rio Tinto lost ground as the mining giant cut annual iron ore shipment forecasts, citing labour shortages in Western Australia.

Educational publisher Pearson also fell as it reported a rise in revenues as growth in assessment and qualifications offset lower US higher education enrolments due to Covid-19 infections.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +3.06% +11.50 387.90
2 Evraz Plc +2.35% +14.00 609.00
3 Easyjet Plc +2.25% +14.20 644.80
4 International Consolidated Airlines Group S.a. +2.16% +3.82 180.98
5 Whitbread Plc +1.96% +65.00 3,378.00
6 Glencore Plc +1.47% +5.65 390.45
7 Hsbc Holdings Plc +1.47% +6.25 432.25
8 Bp Plc +1.34% +4.80 362.50
9 Barclays Plc +1.29% +2.50 196.90
10 Royal Dutch Shell Plc +1.26% +22.20 1,783.20

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Pearson Plc -4.69% -34.20 694.80
2 Rio Tinto Plc -1.55% -79.00 5,032.00
3 Hikma Pharmaceuticals Plc -1.26% -30.00 2,345.00
4 Johnson Matthey Plc -1.05% -29.00 2,723.00
5 Unilever Plc -0.86% -33.50 3,846.50
6 United Utilities Group Plc -0.86% -8.60 990.40
7 Smith (ds) Plc -0.77% -3.00 384.50
8 Severn Trent Plc -0.75% -20.00 2,655.00
9 Smith & Nephew Plc -0.71% -9.00 1,265.00
10 Dcc Plc -0.66% -40.00 6,036.00

 

Europe open: Shares edge ahead as US bank earnings give impetus

European shares edged ahead at the open on Friday as strong US corporate earnings overnight helped to drive sentiment.

The pan-European Stoxx 600 index rose 0.2% in early deals with banks, transport and travel stocks making gains.

Wall Street rallied overnight, pushing the S&P 500 to its best day since March, driven by stronger-than-expected earnings Bank of AmericaMorgan Stanley and Citigroup. This provided a lift for Deutsche BankBank of Ireland and Virgin Money.

Oil majors were up on the back of higher oil prices, with Brent oil trading a touch above $84 from $83.75 on Thursday. BP and Shell rose as a result.

In other equity news, shares in fashion retailer Hugo Boss gained after the company raised its outlook for the current year after third-quarter earnings rebounded on the back of strong demand in Europe and the Americas.

Rio Tinto fell 1 after the Australian miner cut its 2021 iron ore shipments forecast, citing a tight labour market in Western Australia.

Pearson fell despite backing full-year forecasts. A rise in sales was dampened by lower US course enrolments due to Covid-19.

Swiss banking software firm Temenos plunged 13.8% after results, while French cloud computing services company OVHcloud rose 1.8% in its Paris stock market debut.

British e-commerce company THG climbed 5.5% to lead the Stoxx 600, continuing its rebound from a 35% on Tuesday.

 

US close: Stocks leap higher on raft of corporate earnings

Wall Street stocks closed well above the waterline on Thursday, as investors digested more quarterly earnings and the Labor Department’s weekly jobless claims report.

At the close, the Dow Jones Industrial Average was up 1.56% at 34,912.56, as the S&P 500 added 1.71% to 4,438.26 and the Nasdaq Composite was 1.73% firmer at 14,823.43.

The Dow closed 534.75 points higher on Thursday, after seeing out the previous session flat.

Thursday’s primary focus was the Labor Department’s weekly jobless claims report, which revealed the number of Americans filing for unemployment claims undershot forecasts again last week, retreating to their lowest level since near the start of the Covid-19 pandemic.

According to the US Department of Labor, in seasonally adjusted terms, the number of people who filed for initial unemployment claims dropped by 36,000 over the week ended 9 October to reach 293,000 – better than expectations for a print of 315,000

On the macro front, wholesale inflation in the US rose a bit less quickly than anticipated last month, despite big jumps for energy and food prices.

According to the Department of Labor, final demand prices rose at a month-on-month pace of 0.5% in September, just lower than consensus estimates for a print of 0.6%, as energy prices were 2.8% higher on the month and food inflation came in at 2.0%.

In equities, Walgreens Boots Alliance was up 8.61% after it topped quarterly earnings estimates amid stronger-than-expected demand for Covid-19 vaccines, while Domino’s Pizza shares eked out gains of 0.25% after it beat estimates.

Citigroup was ahead 0.77% after it reported a surge in third-quarter investment banking revenues, as it benefitted from a boom in merger and acquisition activity.

Morgan Stanley added 2.48% after it too beat expectations as it posted record revenues for the investment banking business.

US banking giant Bank of America jumped 4.47% after it reported quarterly earnings that beat expectations thanks to better-than-expected loan losses and record advisory and asset management fees.

Wells Fargo went the other way to its peers, falling 1.61% despite posting better-than-expected income and profits for its recently ended quarter thanks to sharp declines in costs and provisions.

Elsewhere in the company space, Carnival shares were in the green by 0.34%, and MGM Resorts gained 0.6%, as stocks tied to an economic recovery gained in early trade.

UPS advanced 4% following an upgrade from analysts at Stifel due to upcoming holiday demand.

 

Friday newspaper round-up: Butchers, contactless limit, energy providers

The government has stepped in to counter a spiralling crisis on pig farms by allowing butchers to enter the UK on temporary visas, in the latest reversal of post-Brexit immigration policy. Butchers in abattoirs and meat processing plants dealing with pigs will be allowed to come to work in Britain for six months, the environment secretary, George Eustice, announced on Thursday evening. He said 800 butchers were needed to meet staffing shortages and get the situation under control. – Guardian

People in the UK using contactless cards will be able spend up to £100 a time from Friday after the limit on payments was more than doubled. At the start of the pandemic the cap was increased to £45 to reduce the need for customers to handle cards and cash because of concerns about the virus being transmitted via surfaces. – Guardian

Energy providers have been accused of increasing households’ monthly direct debit payments in a breach of industry rules as they battle to survive surging power costs. Citizens Advice is calling for action by Ofgem, the energy watchdog, after being contacted by a string of consumers hit with an unexpectedly high payment increase over the past few weeks. One household’s bills almost doubled to £117 a month, it said. – Telegraph

Britain’s biggest haulage lobbying group has been frozen out of meetings with ministers following claims it is biased against Brexit and deliberately sparked last month’s fuel crisis. As businesses battle a national shortage of lorry drivers, relations between the Road Haulage Association (RHA) and the Government have entered a “deep freeze”, sources said. – Telegraph

GlaxoSmithKline is embroiled in a row with an activist investor after it called for the replacement of the drugs group’s chairman and chief executive. Sir Jonathan Symonds, GSK’s chairman, replied to Bluebell’s partners on Wednesday, two days after Bluebell sent its critical letter, saying that it was “disappointed” with the investor’s account of a shareholder meeting hosted by the Investor Forum on Thursday last week to discuss the separation of GSK’s consumer healthcare division. – The Times

 

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