ADVFN Morning London Market Report: Tuesday 15 September 2020

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London open: Stocks nudge up after UK jobs data; miners rally

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London stocks nudged higher in early trade on Tuesday as investors digested the latest UK jobs data ,with miners on the front foot after encouraging Chinese data.

At 0840 BST, the FTSE 100 was up 0.2% at 6,038.23.

Figures released earlier by the Office for National Statistics showed the number of redundancies rose in July by the most since 2009 as the Covid-19 pandemic took its toll. The data showed 156,000 people were made redundant in the May to July quarter, up 58,000 from the same period a year ago and 48,000 higher than between February and April.

The ONS said these were the largest annual and quarterly increases since 2009.

“While redundancies are at their highest level since September to November 2012, the level remains well below that seen during the 2008 downturn,” it said.

Meanwhile, the unemployment rate increased to 4.1% in July from 3.9% the month before. The data showed that the number of employees on payrolls declined by 695,000 in August compared to March and by 36,000 compared to July.

ONS director of economic statistics Darren Morgan said: “Some effects of the pandemic on the labour market were beginning to unwind in July as parts of the economy reopened. Fewer workers were away on furlough and average hours rose. The number of job vacancies continued to recover into August, too.

“Nonetheless, with the number of employees on the payroll down again in August and both unemployment and redundancies sharply up in July, it is clear that coronavirus is still having a big impact on the world of work.”

In equity markets, miners were doing well, with GlencoreAnglo American and BHP all higher after Chinese industrial production and retail sales figures for August surprised to the upside.

Online grocer and technology firm Ocado rallied after it recorded a sharp rise in third-quarter revenue, driven by continued higher average spends as it forecast annual core earnings of £40m. The company, which has started its new partnership with Marks & Spencer, said revenue in the 13 weeks to August 30 grew 52% to £587.3m with average weekly orders up 9.6% to 345,000.

Next was in the black after it acquired a majority stake in the UK and Irish arm of L Brands’ Victoria’s Secret unit for an undisclosed sum as part of a joint-venture agreement.

Chemring racked up strong gains after saying the expected outturn for the year ending 31 October 2020 was towards the upper end of current analyst expectations.

Polypipe rose as it reported a decline in first-half profit and revenue due to the pandemic but struck a more upbeat note on recent trading.

FirstGroup pushed higher after saying it now expects to deliver a small adjusted operating profit for the seasonally-weaker first half of the financial year, ahead of its expectations earlier this summer.

William Hill shares surged after the bookmaker said a multi-year deal between its US partner Caesars Entertainment and broadcaster ESPN will feature its sports betting apps and sports book odds.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc +5.90% +139.00 2,494.00
2 Marks And Spencer Group Plc +4.54% +4.75 109.45
3 Flutter Entertainment Plc +3.69% +435.00 12,235.00
4 Bae Systems Plc +1.73% +9.00 529.20
5 Rio Tinto Plc +1.64% +82.00 5,082.00
6 Crh Plc +1.43% +42.00 2,978.00
7 Bhp Group Plc +1.37% +24.00 1,777.40
8 Next Plc +1.27% +76.00 6,070.00
9 Bunzl Plc +1.21% +29.00 2,421.00
10 Scottish Mortgage Investment Trust Plc +1.06% +10.00 953.00

 

Top 10 FTSE 100 Fallers

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76.4% of retail CFD accounts lose money.

 

# Name Change Pct Change Cur Price
1 Kingfisher Plc -4.15% -11.80 272.60
2 Bt Group Plc -1.93% -2.15 109.00
3 Centrica Plc -1.83% -0.80 42.92
4 Smith (ds) Plc -1.80% -5.00 273.00
5 Compass Group Plc -1.71% -22.50 1,291.00
6 Rolls-royce Holdings Plc -1.71% -3.60 206.70
7 Tui Ag -1.57% -5.50 344.80
8 Standard Chartered Plc -1.57% -6.00 376.20
9 Lloyds Banking Group Plc -1.48% -0.39 25.98
10 Micro Focus International Plc -1.31% -3.70 278.00

 

US close: Vaccine optimism and corporate dealmaking boost sentiment

Wall Street stocks closed higher on Monday as a raft of corporate deals and optimism around a Covid-19 vaccine led a broad market rally.

At the close, the Dow Jones Industrial Average was up 1.18% at 27,993.33, while the S&P 500 was 1.27% stronger at 3,383.53 and the Nasdaq Composite saw out the session 1.87% firmer at 11,056.65.

The Dow Jones closed 327.69 points higher, extending gains recorded by the index in the final session of last week’s volatile trading.

Sentiment got a slight boost from news that chipmaker Nvidia had agreed to buy competitor Arm Holdings from Japan’s Softbank for $40.0bn – which it will finance through a combination of cash and common stock.

Also in deal news, TikTok parent ByteDance rejected Microsoft‘s bid to buy it US operations, opting instead to make Oracle its US partner, providing it with a significant stake in the business, while Gilead agreed to acquire Immunomedics as part of an effort to expand its cancer treatments.

On the earnings front, Miami-based homebuilder Lennar reported earnings of $666.4m after the close, up 30% year-on-year, as revenues remained broadly flat at $5.9bn.

News that AstraZeneca‘s UK vaccine trial had resumed following a halt to the study due to safety concerns provided stocks with a lift. However, the firm’s US trials were still on pause as a result of the side effects presented in its British equivalent.

Pfizer chief executive Albert Bourla said over the weekend that the pharmaceutical giant’s vaccine could very well be distributed across the US before the end of 2020.

As far as the coronavirus pandemic itself was concerned, the number of cases in 11 US states were growing by 5% or more, according to John Hopkins University.

In terms of ongoing stimulus negotiations on Capitol Hill, senate majority leader Mitch McConnell said late last week that the chances of both sides reaching an agreement didn’t “look that good right now”.

 

Tuesday newspaper round-up: Arm Holdings, New Look, pension funds

The government is under pressure to intervene in the $40bn (£31bn) takeover of the UK’s biggest tech company, Arm Holdings, after Labour, trade unions and the company’s co-founder voiced concerns about the deal. The US software firm Nvidia said on Monday it had agreed to buy Cambridge-based Arm, a global leader in designing chips for smartphones, computers and tablets, from Japan’s SoftBank. – Guardian

Renters are swapping inner London transport hubs for homes further afield as the need to commute has become less important than a desire for space, data on searches on property website Rightmove suggests. Analysis of 60m searches in August showed steep falls in the number of searches for rental homes in commuter hubs such as Earl’s Court in west London, and New Cross in the south, while areas in outer London and beyond registered big increases.- Guardian

Airlines and airports delivered a double dose of bad news as Emirates prepared to swing the axe on its UK workforce and London City airport announced plans to cull up to a third of its staff. Emirates warned its almost 600 of its employees based in Britain of the need to “consider reducing the size of the UK workforce”. Quarantines, border controls and other travel restrictions has left passenger demand for air travel “extremely subdued”, according to an internal email seen by The Telegraph. – Telegraph

A vote today on a vital restructuring for New Look is on a knife-edge as a host of the retailer’s biggest landlords plan to object to the proposals. British Land, owner of the Meadowhall shopping centre in Sheffield, and Newriver Reit are among the property owners intending to oppose the proposed company voluntary arrangement. Hammerson, the owner of Birmingham’s Bullring, and Land Securities are also intending to vote against the restructuring, Sky News reported. Together the landlords own about 55 of New Look’s 490 UK store sites. – The Times

Britain’s traditional pension funds would need fantastically improbable returns from shares to erode their huge deficits over the next ten years, according to a warning yesterday from one of the pension industry’s leading consultants. Share markets over the past three centuries have delivered an average of 3.1 percentage points a year in excess of cash returns, yet pension funds would on average need excess returns of 9 percentage points to clear their shortfalls, Willis Towers Watson said. – The Times

 

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