ADVFN Morning London Market Report: Tuesday 19 October 2021

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London open: Stocks steady as investors eye US earnings

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London stocks were steady in early trade on Tuesday amid worries about rate hikes and as investors eyed key US earnings later in the session.

At 0900 BST, the FTSE 100 was flat at 7,206.67.

Neil Wilson, chief market analyst at Markets.com, said: “European stocks are flat in early trade as risk remains on watch for a range of factors, including earnings, inflation and expectations central banks will tighten the screw.

“Also worrying markets are central banks – the Bank of England has put the cat among the pigeons with its hawkish talk, nudging markets to price in some hikes in the next year that just weren’t expected a few weeks ago.”

Wilson also pointed there are “some big names reporting earnings today, including NetflixUnited Airlines, and Tesla“.

In UK equity markets, British Airways and Iberia parent IAG was the worst performer on the FTSE 100 after a downgrade to ‘hold’ from ‘buy’ at Berenberg.

Gambling firm 888 was on the back foot as it said it will take a $10m hit to profits after its Dutch business stopped operations from the start of October because of changes to gaming rules.

On the upside, Hikma was the biggest gainer on the top-flight index after an upgrade to ‘overweight’ at Morgan Stanley, while education publisher Pearson rose after an upgrade to ‘hold’ from ‘sell’ at Berenberg.

Bellway gained ground after the housebuilder increased its final dividend by almost two-thirds as it reported a 72% increase in annual profit and a solid order book.

Online price comparison platform Moneysupermarket.com rallied after saying it was buying consumer cashback website Quidco for up to £101m.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Pearson Plc +3.28% +20.20 635.40
2 Hikma Pharmaceuticals Plc +3.02% +71.00 2,419.00
3 Evraz Plc +2.51% +15.80 645.40
4 Fresnillo Plc +2.46% +21.20 884.20
5 Taylor Wimpey Plc +1.96% +3.05 158.45
6 Hargreaves Lansdown Plc +1.76% +26.50 1,535.00
7 Next Plc +1.44% +114.00 8,042.00
8 Rio Tinto Plc +1.36% +68.00 5,070.00
9 Spirax-sarco Engineering Plc +1.20% +180.00 15,195.00
10 Barratt Developments Plc +1.12% +7.60 685.40

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. -2.77% -4.86 170.86
2 Tui Ag -2.29% -5.90 252.10
3 Easyjet Plc -1.59% -10.00 617.00
4 Schroders Plc -1.12% -40.00 3,536.00
5 Associated British Foods Plc -0.94% -17.00 1,796.50
6 Rolls-royce Holdings Plc -0.84% -1.20 141.44
7 Micro Focus International Plc -0.80% -3.00 372.00
8 Flutter Entertainment Plc -0.80% -115.00 14,265.00
9 Carnival Plc -0.65% -10.00 1,525.20
10 Intercontinental Hotels Group Plc -0.63% -32.00 5,016.00

 

Europe open: Shares edge ahead as Bellway results please

European shares edged ahead at the open on Tuesday as investors stayed on the sidelines ahead of more major corporate US earnings later in the day.

The pan-European Stoxx 600 index was up 0.4% with regional markets mixed. Asian shares closed broadly higher overnight.

“The Bank of England has put the cat among the pigeons with its hawkish talk, nudging markets to price in some hikes in the next year that just weren’t expected a few weeks ago,” said Markets.com analyst Neil Wilson.

That’s seen the yield curve flatten with many arguing that central banks shouldn’t be hiking into a supply-side inflation crunch.”

In equity news, shares in UK housebuilder Bellway rose to the top of the Stoxx as the company increased its final dividend by almost two-thirds after reporting a 72% increase in annual profit and a solid order book.

Underlying pretax profit rose to £530.8m in the 12 months to the end of July from £309.3m a year earlier as revenue increased 40% to £3.12bn. The group increased its final dividend by 65% to 82.5p a share taking the annual payout to 117.5p – up 135%.

French food group Danone slipped 1.3% after recording rising costs and slower sales growth in the third quarter.

Swedish telecoms operator Tele2 fell despite posting quarterly core earnings in line with market expectations.

 

US close: Mixed performance on the Street following China GDP figures

Wall Street stocks turned in a mixed performance on Monday as bond yields headed north and Chinese GDP numbers disappointed.

At the close, the Dow Industrial Average was down 0.10% at 35,258.61, while the S&P 500 was 0.34% stronger at 4,486.46 and the Nasdaq Composite saw out the session 0.84% firmer at 15,021.81.

The Dow closed 36.15 points weaker on Monday, cutting into gains recorded at the tail end of last week on the back of a better than anticipated start to the third-quarter earnings season.

In focus on Monday, the yield on the benchmark 10-year Treasury note ticked up to above 1.58% at the start of the week, applying some pressure to shares, while also weighing on sentiment was a report from Beijing that gross domestic product had fallen short of estimates in the third quarter, coming in at 4.9% annual growth, less than the 5.3% clip expected by economists.

On the macro front, US industrial production dropped unexpectedly last month, according to the Department of Commerce, which revealed that, in seasonally adjusted terms, total output shrank at a month-on-month pace of 1.3%, compared to a 0.3% rise as forecast by economists. Manufacturing production dropped by 0.7% in comparison to the prior month, while mining output declined 2.3% and utilities fell 3.6%.

Elsewhere, homebuilder sentiment rebounded in October, according to the National Association of Home Builders/Wells Fargo housing market index, which rose four points to 80 as supply chain issues were offset by high buyer demand.

In the corporate space, Disney shares traded lower after analysts at Barclays downgraded the stock, pointing to an expected slowdown in subscriber growth.

While things were fairly quiet on the earnings front on Monday, big-time names like NetflixJohnson & JohnsonUnited Airlines and Procter & Gamble will report tomorrow, while TeslaVerizon and IBM will publish their latest quarterly results before the week is out.

 

Tuesday newspaper round-up: Cost of living, Meggitt, big tech

Ministers have unveiled plans for £5,000 grants to allow people to install home heat pumps and other low-carbon boiler replacements as part of a wider heat and buildings strategy that some campaigners warned lacked sufficient ambition and funding. Labour also condemned the plans as “more of Boris Johnson’s hot air”, without sufficient substance.- Guardian

British households will be £1,000 worse off next year from a cost of living squeeze created by rising energy prices and shortages of workers and supplies caused by Covid and Brexit, a leading thinktank has warned. The Resolution Foundation said higher levels of inflation would weigh down workers’ earnings next year, contributing to a hit to the average household income in Britain at a time when the government is cutting benefits and raising taxes. – Guardian

Kwasi Kwarteng has intervened in a planned £6.3bn US takeover of Meggitt amid concerns it could harm national security. The Government issued a public interest intervention notice into Parker Hannifin’s deal on Monday night in a move it said came after ministers received official advice. – Telegraph

Big Tech companies have been accused of failing to stop an “epidemic of scams” that has caused some victims to consider taking their own lives. Martin Lewis, the founder of consumer advice website MoneySavingExpert, told MPs the proliferation of scam adverts on social media had resulted in some people being defrauded of tens of thousands of pounds. – Telegraph

Boris Johnson has announced almost £10 billion of overseas investment in Britain before a global summit in an attempt to trump Emmanuel Macron’s efforts to lure businesses to France. The prime minister said that the 18 new trade and investment pledges would “power our economic recovery”, creating 30,000 jobs in sectors such as wind and hydrogen energy, and environmentally friendly homes. – The Times

 

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