ADVFN Morning London Market Report: Monday 8 June 2020

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London open: Stocks a little lower as AstraZeneca slumps


London stocks were a little lower in early trade on Monday, having rallied strongly at the end of last week on the back of a better-than-expected US non-farm payrolls report.

At 0900 BST, the FTSE 100 was down 0.3% at 6,467.95.

CMC Markets analyst Michael Hewson said: “After the euphoria of last week, and an astonishing US jobs report for May, European markets have opened lower this morning, as markets temper some of their enthusiasm after three strong weeks of gains.

“In the space of four weeks we’ve seen history made as the US economy posted a record number of job losses in one month, only to be followed by a record number of jobs gains in the following month. Despite all of the enthusiasm over last month’s jobs report it doesn’t change the fact that US unemployment is still well above post financial crisis levels, and is likely to remain so for quite some time, with a margin for error in the unemployment numbers of around 3% due to uncertainty over how furloughed staff were counted by BLS officials.”

In equity marketsAstraZeneca was weaker after a report over the weekend the company has approached US-based Gilead Sciences about a potential merger to create a $240bn drug maker. Britain’s biggest company by market value contacted Gilead informally in May to size up the US company’s interest in a deal, Bloomberg reported. AstraZeneca did not set out any terms and the companies are not in formal talks, it said.

Contracts-for-difference platform Plus500 was sharply lower even as it said full-year revenue and profitability was expected to be in line with consensus expectations as volatile markets in recent weeks represented a gain for its customers.

JD Sports was also under the cosh after a downgrade to ‘underperform’ from ‘sector perform’ at RBC Capital Markets. RBC said the longer-term margin recovery prospects may be compromised by a shift in customer shopping patterns and to online.

On the upside, pub shares rallied, with Marston’sMitchells & Butlers and JD Wetherspoon all higher amid reports the government could allow beer gardens to reopen from 22 June – earlier than expected.

British Airways parent IAG and budget airline easyJet were both in the black even as new UK quarantine rules came into effect.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Carnival Plc +19.84% +237.00 1,431.50
2 Melrose Industries Plc +15.11% +19.55 148.95
3 International Consolidated Airlines Group S.a. +13.64% +39.30 327.50
4 Rolls-royce Holdings Plc +9.85% +31.90 355.90
5 Legal & General Group Plc +9.32% +21.40 250.90
6 Prudential Plc +8.84% +103.50 1,274.50
7 Whitbread Plc +8.79% +222.00 2,747.00
8 Centrica Plc +8.52% +3.36 42.79
9 Royal Bank Of Scotland Group Plc +8.41% +10.65 137.35
10 Micro Focus International Plc +8.37% +39.80 515.20


Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Fresnillo Plc -5.21% -39.40 717.40
2 National Grid Plc -2.67% -25.20 918.60
3 Auto Trader Group Plc -2.65% -15.00 551.00
4 Hikma Pharmaceuticals Plc -2.59% -62.00 2,330.00
5 London Stock Exchange Group Plc -2.39% -198.00 8,072.00
6 Experian Plc -2.33% -68.00 2,846.00
7 Reckitt Benckiser Group Plc -2.33% -164.00 6,874.00
8 United Utilities Group Plc -2.14% -20.00 916.00
9 Tesco Plc -1.47% -3.40 227.70
10 Rentokil Initial Plc -1.35% -6.60 483.40


Monday newspaper round-up: Brexit, BT, AstraZeneca

Downing Street fears that Michel Barnier has lost his grip on the fishing negotiations, throwing doubt over Boris Johnson’s hopes of a summer of swift and definitive progress towards a trade and security deal with the EU. The bloc’s chief negotiator had been expected to present a compromise proposal on access to British waters during the talks last week but was blocked at the last minute by member states with large fishing communities. – Guardian

One of Britain’s top bankers has urged the Treasury to rapidly take responsibility for tens of billions of pounds of toxic business loans as lenders seek to free themselves of coronavirus debt. Lloyds chairman Norman Blackwell, a former policy chief to Margaret Thatcher and John Major, called on the government to set up a vehicle that will take on debts from some companies unable to repay their state-backed coronavirus loans. – Telegraph

Royal Bank of Scotland delayed a £20m deal to import personal protective equipment by freezing the account of a pub where David Cameron and Xi Jinping, China’s president, once shared a pint. The Plough at Cadsden was forced to shut during the pandemic but its Chinese owners were using their contacts to import PPE during the crisis. The pub launched a legal action in the High Court after RBS froze its bank account in April without explanation. – Telegraph

The external auditor of BT has issued an “adverse opinion” on the company’s internal financial reporting controls in a fresh blow to its accounting credibility. KPMG wrote in a letter that BT “did not maintain effective internal control over financial reporting as of March 31, 2020 [the end of its financial year] because of . . . material weaknesses related to general IT controls and risk assessments”. – The Times

Astrazeneca has abandoned a tentative interest in combining with an American rival behind remdesivir, the coronavirus treatment. The London-listed, Cambridge-based pharmaceuticals company made a preliminary approach to Gilead Sciences last month, according to Bloomberg. – The Times


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