ADVFN Morning London Market Report: Tuesday 28 July 2020

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London open: Stocks edge higher as housebuilders rally


London stocks edged higher in early trade on Tuesday, with housebuilders pacing the gains.

At 0900 BST, the FTSE 100 was up 0.4% at 6,127.47.

Spreadex analyst Connor Campbell said: “With gold retreating slightly from Monday’s record-breaking performance – the safe haven commodity neared, but didn’t quite reach, the mythic $2,000 per ounce mark – there wasn’t much drama to digest after the bell.

“The FTSE added 0.4%, allowing the UK index to put of distance between it and 6100. The FTSE 250 was slightly stronger, climbing 0.6% in part thanks to a 3% rebound from TUI.

“Looking ahead and, on what is Day 1 of the Federal Reserve’s July meeting – the fruits of which won’t be revealed until Wednesday evening – the Dow Jones is currently heading for a fairly flat start this afternoon. Like its European peers, the Dow is waiting for a renewed sense of direction.”

In equity markets, housebuilders rallied, with BarrattBerkeleyPersimmon and Taylor Wimpey all higher on the back of a report that UK ministers are drawing up plans to extend the Help to Buy scheme beyond its December deadline to prevent buyers losing out because of coronavirus delays. According to The Times, the government is set to prolong the scheme, which allows people in England to buy a new-build property with only a small deposit.

Education publisher Pearson was the standout gainer on the FTSE 100, having fallen sharply in the previous session on downbeat broker notes.

Miniature wargames manufacturer Games Workshop racked up strong gains as it posted a rise in annual pre-tax profit and revenue, hailing an “amazing” set of results.

Greencore advanced after the Irish convenience food group posted a drop in third-quarter sales as its food to go categories were hit by the Covid-19 pandemic, but said trends were improving and announced the sale of its molasses businesses.

TalkTalk was higher following a Sky News report that it rejected a takeover bid last year from asset manager Toscafund that would have valued it at close to double its current share price.

On the downside, precious metals miner Fresnillo fell even as it said higher commodity prices and lower costs had resulted in a “significant” rise in profitability during the first half.

Consumer goods giant Reckitt Benckiser also lost ground even as it reported a 10.8% jump in first-half net revenue as its hygiene business was boosted by solid demand for cleaning products due to the pandemic.

Bakery chain Greggs was also in the red after swinging to a loss in the first half as sales fell after its shops were forced to close for three months due to the pandemic.


Top 10 FTSE 100 Risers

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76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Pearson Plc +5.23% +26.80 539.00
2 Barratt Developments Plc +4.72% +24.40 541.20
3 Berkeley Group Holdings (the) Plc +4.56% +204.00 4,675.00
4 Persimmon Plc +3.94% +97.00 2,559.00
5 Taylor Wimpey Plc +3.27% +4.25 134.25
6 Tui Ag +3.06% +9.20 310.20
7 Smurfit Kappa Group Plc +2.57% +64.00 2,558.00
8 Legal & General Group Plc +2.55% +5.60 225.60
9 Bt Group Plc +2.45% +2.65 110.70
10 Centrica Plc +2.06% +0.99 49.10


Top 10 FTSE 100 Fallers

Sponsored by
76.4% of retail CFD accounts lose money.


# Name Change Pct Change Cur Price
1 Fresnillo Plc -5.56% -71.00 1,205.50
2 Easyjet Plc -2.55% -13.80 528.40
3 International Consolidated Airlines Group S.a. -2.22% -4.15 182.80
4 Rio Tinto Plc -1.38% -67.00 4,772.00
5 Evraz Plc -1.35% -4.20 305.80
6 Antofagasta Plc -1.27% -13.50 1,053.00
7 Tesco Plc -1.05% -2.30 217.70
8 Burberry Group Plc -1.02% -13.00 1,265.00
9 Spirax-sarco Engineering Plc -0.98% -105.00 10,590.00
10 Bhp Group Plc -0.81% -14.20 1,734.00


US close: Stocks snap losing streak amid continued stimulus talks

US stocks closed higher on Monday as market participants prepared for a week full of major corporate earnings amid continued stimulus talks in Washington.

At the close, the Dow Jones Industrial Average was up 0.43% at 26,584.77, while the S&P 500 was 0.74% firmer at 3,239.41 and the Nasdaq Composite saw out the session 1.67% stronger at 10,536.27.

The Dow closed 114.88 points higher on Monday, reversing most of the losses recorded at the end of last week amid ratcheting up in tensions between the US and China following the closure of a Chinese consulate in Houston and a US consulate in Chengdu.

Gold prices hit a new record high of $1,943.92 prior to the open, before slipping to $1,930.91 later on, as investors seemed to stock up on more traditional safe havens as those same US-Sino relations remained strained going into the new week. Silver also hit its highest level in almost seven years as

Not only were political relations frayed, but fears regarding the Covid-19 crisis were also doing the rounds, especially in hard-hit states like Florida, Texas and Arizona.

Also in focus, lawmakers on Capitol Hill were trying to forge ahead with another coronavirus stimulus package.

Treasury Secretary Steven Mnuchin said on Sunday that Republicans had finalised a bill for roughly $1trn in Covid-19 relief funds, while White House economic advisor Larry Kudlow said there was “a $1,200 check coming”.

Oanda‘s Edward Moya said: “US stocks are rebounding as investors shrug off virus worries and remain focused with the prospect of at least a $1 trillion fiscal stimulus deal this week, high hopes the Fed will show they will provide longer-run accommodation, and ahead of the busiest week for earnings seasons.

“The virus picture in the US is mixed as several daily updates are noisy and make it seem the virus is showing no signs of slowing. Florida the current epicenter, saw their largest number of deaths over the past day, while several counties in California struggle to contain the virus. US case numbers through Sunday posted the first seven-day decline since early June and provide some hope the second wave is cresting.”

On the macro front, orders for goods made to last more than three years continued to bounce back last month, despite another sharp drop in orders for civilian aircraft. According to the Department of Commerce, durable goods orders jumped at a month-on-month pace of 7.3% in June to reach $151.58bn (consensus: 7.0%).

Elsewhere, the Dallas Fed‘s manufacturing index for July revealed Texas factory activity has continued to expand following a record contraction in the spring. The production index inched up from 13.6 to 16.1, suggesting a slight pickup in the pace of output growth


Tuesday newspaper round-up: Unemployment benefits, stamp duty cut, restaurants, Boohoo

The number of people claiming unemployment benefits per job vacancy in Britain has increased fivefold since the onset of the coronavirus pandemic, according to an employment thinktank. The Institute for Employment Studies (IES) said approximately eight people are claiming benefits support for every job opening, up from 1.5 people per job before the crisis began in March. – Guardian

The government’s stamp duty cut to reboot Britain’s virus-stricken property market has benefited London most and had little impact elsewhere so far, according to Zoopla. In a reflection of the disproportionate benefit for wealthier buyers, the property website said that agreed house sales in the capital jumped by 27% in the first two weeks of the stamp duty holiday. – Guardian

Restaurants have warned they could be crippled by a Whitehall push for mandatory calorie labels on menus as the hospitality industry battles for survival. Pub and restaurant bosses said the plans could deal a fresh hammer blow to the beleaguered industry as it emerged that hospitality outlets lost close to £30bn in sales during the second quarter of 2020. – Telegraph

The City regulator has been criticised for a lack of enforcement action over misleading financial promotions despite a spate of scandals which cost ordinary investors hundreds of millions of pounds. The Financial Conduct Authority did not prosecute any authorised firm or individual over errant financial promotions between 2013 and 2019 and fined only three groups of authorised firms and individuals, according to a freedom of information request. – The Times

Investors who bought Boohoo shares because of its high ethical ratings missed a “clear red flag” that should have alerted them to problems in its supply chain, a leading City broker says. In a highly critical research note, Liberum said some of the fast-fashion group’s institutional investors should have queried limited disclosures on the sources of its cut-price clothing. – The Times


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