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London open: Stocks rally on US cues; Vodafone gains on update
London stocks rose in early trade on Wednesday, taking their cue from a positive session on Wall Street.
At 0840 GMT, the FTSE 100 was up 0.5% at 7,571.93 as investors eyed policy announcements from the European Central Bank and the Bank of England on Thursday.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets continue their February ascent, attempting to build on recent bullish momentum after January’s rout.
“The Stoxx 600 is attempting to regain ground with most stocks trading in the green with technology and travel & leisure are at the top of the basket. The FTSE 100 is driving higher outperforming other bourses as the UK index inches closer to 7,600 as the next major resistance hurdle to watch.”
Market participants were digesting a survey which showed that the rate of price rises in UK shops almost doubled in January, adding to pressure on the cost of living with more increases to come.
Shop-price annual inflation accelerated to a near-decade high of 1.5% from 0.8% a month earlier, the British Retail Consortium‘s survey showed. The rate of increase was higher than the six-month average rise of 0.1% and was the highest since December 2012.
The increase was driven by a 0.9% rise in non-food inflation, rebounding from a 0.2% decline in December. Furniture and flooring prices rose particularly fast because of strong demand and higher shipping costs.
Food-price inflation strengthened to 2.7% from 2.4% a month earlier. Fresh food inflation was little changed at 2.9% but the rate of price increases for ambient food rose to 2.4% from 1.7%. Prices were affected by poor harvests, labour shortages and rising global food prices.
The BRC said prices were likely to keep rising strongly. The trend will put further pressure on household budgets with domestic energy prices surging and an increase in national insurance contributions on the way.
BRC chief executive Helen Dickinson said: “The rise in shop prices is playing into wider UK inflation, which is pushing cost of living to the forefront of the political agenda. Many households will find it difficult to absorb the additional costs, as well as others on the horizon. As commodity prices, energy prices and transportation costs continue to rise, it is inevitable that retail prices will continue to follow.”
In equity markets, online supermarket Ocado surged to the top of the FTSE 100 after a double upgrade to ‘outperform’ by Credit Suisse, while Auto Trader rose after an upgrade to ‘buy’ from ‘hold’ at Jefferies.
Telecoms giant Vodafone gained after it reported higher third-quarter services revenue, driven by growth in Europe and Africa as it reiterated annual guidance.
Molten Ventures, formerly Draper Esprit, was also on the rise after a well-received investment update.
On the downside, Playtech edged lower after the gambling software group said it was unlikely shareholders would approve a takeover offer by Australia’s Aristocrat Leisure based on proxy counts, and that it was looking at “attractive alternatives” if the deal collapsed.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +7.41% | +106.00 | 1,537.00 |
| 2 |  |
Auto Trader Group Plc | +3.64% | +24.60 | 700.20 |
| 3 |  |
Vodafone Group Plc | +2.52% | +3.22 | 131.18 |
| 4 |  |
Spirax-sarco Engineering Plc | +2.18% | +290.00 | 13,580.00 |
| 5 |  |
Flutter Entertainment Plc | +2.08% | +235.00 | 11,550.00 |
| 6 |  |
Ferguson Plc | +2.07% | +240.00 | 11,860.00 |
| 7 |  |
Ashtead Group Plc | +2.04% | +108.00 | 5,408.00 |
| 8 |  |
Persimmon Plc | +1.93% | +46.00 | 2,434.00 |
| 9 |  |
Rightmove Plc | +1.79% | +11.80 | 672.60 |
| 10 |  |
Croda International Plc | +1.57% | +126.00 | 8,134.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bae Systems Plc | -1.96% | -11.40 | 569.00 |
| 2 |  |
Rolls-royce Holdings Plc | -1.40% | -1.64 | 115.58 |
| 3 |  |
Antofagasta Plc | -0.95% | -13.00 | 1,348.50 |
| 4 |  |
Bp Plc | -0.89% | -3.50 | 389.80 |
| 5 |  |
Compass Group Plc | -0.76% | -12.50 | 1,642.50 |
| 6 |  |
Carnival Plc | -0.72% | -10.20 | 1,402.40 |
| 7 |  |
Astrazeneca Plc | -0.39% | -33.00 | 8,476.00 |
| 8 |  |
British American Tobacco Plc | -0.36% | -11.50 | 3,162.00 |
| 9 |  |
Unilever Plc | -0.21% | -8.00 | 3,741.00 |
| 10 |  |
Just Eat Plc | -0.00% | -0.00 | 861.00 |
Europe open: Shares up ahead of central bank meetings
European shares opened higher again on Wednesday on strong corporate news and ahead of key European and UK central bank meetings on Thursday.
The pan-European Stoxx 600 index was up 0.6% in early deals with all major regional bourses trading higher.
“European markets continue their February ascent, attempting to build on recent bullish momentum after January’s rout,” said Victoria Scholar, head of investment at Interactive Investor.
“The Stoxx 600 is attempting to regain ground with most stocks trading in the green with technology and travel & leisure are at the top of the basket.”
In equity news, online supermarket Ocado gained 6% after a double upgrade to ‘outperform’ by Credit Suisse.
Swedish industrial technology group Hexagon gained 3.5% after beating market expectations with record quarterly earnings.
Shares in German chip supplier Siltronic were higher after the company reported a 17% rise in quarterly earnings and said it expected semiconductor demand to increase.
Novo Nordisk shares were up despite the Danish drug maker missing expectations for fourth-quarter operating profit.
Teamviewer stock slumped 14% after the company reported lower core earnings in the fourth quarter, while Swedbank also fell after lower-than-expected fourth-quarter operating profits.
Telecoms giant Vodafone gained after it reported higher third-quarter services revenue, driven by growth in Europe and Africa as it reiterated annual guidance.
Playtech edged lower after the gambling software group said it was unlikely shareholders would approve a takeover offer by Australia’s Aristocrat Leisure based on proxy counts, and that it was looking at “attractive alternatives” if the deal collapsed.
US close: Stocks end first day of February trading in the green
Wall Street stocks closed higher on the first day of February trading as market participants digested a number of data points and corporate updates.
At the close, the Dow Jones Industrial Average was up 0.78% at 35,405.24, while the S&P 500 was 0.69% firmer at 4,546.54 and the Nasdaq Composite saw out the session 0.75% stronger at 14,346.00.
The Dow closed 273.38 points higher on Monday after wrapping a rollercoaster month on a positive note in the previous session.
Tuesday’s primary focus was earnings from some of the nation’s largest firms, both during the session and after the close, as well as a few key data points published throughout the morning.
On the macro front, IHS Markit‘s final January manufacturing PMI came in at 55.5, ahead of preliminary estimates for a reading of 55.0 but down from December’s print of 57.7 as firms expanded their workforce numbers at the slowest pace in the last 18 months.
Elsewhere, the Institute for Supply Management‘s January manufacturing PMI registered a reading of 57.6%, a decrease of 1.2 percentage points from the seasonally adjusted December reading of 58.8% but still indicating expansion in the overall economy for the 20th month in a row.
Still on data, construction spending hit $1.639bn in December, up 9% year-on-year and 0.2% above the revised November estimate of $1.636bn, according to the Census Bureau.
Finally, the number of job openings in the US increased a little at the end of 2021, even as hiring and voluntary separations dipped. According to the Department of Labor, job openings grew at a month-on-month pace of about 1.4% to reach 10.77m. Hiring on the other hand decreased by 5.0% in comparison to January to approximately 6.26m and voluntary separations or so-called ‘quits’ declined by 3.6% to about 5.9m.
In the corporate space, Stanley, Black & Decker posted full-year organic revenue growth and adjusted diluted earnings per share expansion of 30% on Tuesday, leading the firm to issue 2022 guidance ahead of estimates, while Exxon’s fourth-quarter profits topped estimates amid soaring oil and gas prices.
Tesla shares were in the red after the electric carmaker revealed it was recalling roughly 53,000 vehicles with its self-driving software in the US, while UPS shares advanced more than 14% after the shipping company beat earnings estimates and hiked its quarterly dividend by 49%.
AT&T revealed it will shed its stake in WarnerMedia following a planned merger of the division with Discovery.
After the close, Alphabet posted a huge fourth-quarter beat and announced a 20-for-1 stock split, Electronic Arts third-quarter revenues missed estimates, AMD unveiled an earnings better and issued some strong guidance and Starbucks posted mixed results as increased costs and Covid-19 pay weighed on profits.
The yield on the benchmark 10-year Treasury increased slightly to 1.794%.
Wednesday newspaper round-up: Fraud, cake war, London tube, Playtech
The government has been warned by an influential group of MPs to urgently tackle a “fraud epidemic” across Britain, amid concerns about the increasing financial toll on consumers and taxpayers from economic crime. The Commons Treasury committee said ministers needed to bring in fresh laws and beef up resources for fighting fraud after a dramatic surge in scams during the coronavirus pandemic. – Guardian
Colin the Caterpillar has shaken hands with rival Cuthbert in a resolution of the supermarket cake wars. Marks & Spencer has reached a deal with Aldi after taking legal action to protect its bestselling bug-shaped Colin cake. M&S had called in the lawyers over concerns that the German discount grocer’s rival chocolate sponge roll, Cuthbert, was making copycat appearances at birthday parties and picnics. – Guardian
Sadiq Khan is threatening to shut the Tube for days on end and close bridges and tunnels across the capital as a black hole in London’s transport budget balloons to £1.5bn. Introducing a road tax, increasing council tax and extending a congestion charging zone will not be enough to balance the books at Transport for London (TfL), board papers published on Tuesday reveal. – Telegraph
Google has brushed off fears that the waning impact of pandemic lockdowns will put an end to the tech boom as it smashed Wall Street profit estimates. Alphabet, Google’s parent company, revealed that sales in the fourth quarter of last year reached $75.3bn (£56.2bn), a 32pc increase on a year earlier. Profits rose by 36pc to $20.6bn. Shares rose by up to 7pc in after hours trading. – Telegraph
A £2.7 billion takeover of Playtech by an Australian suitor looks set to fail because of opposition from investors. Aristocrat Leisure requires 75 per cent acceptance under the scheme of arrangement, which concludes today, but Playtech and Aristocrat were last night ready to throw in the towel amid indications that they had fallen short due to opposition from a collection of Asia-based investors who own about 28 per cent of the shares. – The Times
