ADVFN Morning London Market Report: Friday 4 December 2020

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London open: Stocks rise as investors eye payrolls report

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London stocks rose in early trade on Friday as investors eyed the release of the latest US non-farm payrolls report.

At 0830 GMT, the FTSE 100 was up 0.7% at 6,533.33, while the FTSE 250 was 0.4% higher at 20,202.45.

Spreadex analyst Connor Campbell said: “On the final non-farm Friday of 2020, the European markets were broadly positive, with the FTSE continuing to lead the way.

“Up more than half a percent, the FTSE climbed past 6,500, a level last hit almost exactly 9-months ago – i.e. during the rapid descent following the first covid-19 outbreak in the UK. Compared to this the pound was far more placid, up 0.1% against the dollar but down 0.1% against the euro.

“Sterling spiked on Thursday following comments from the Irish foreign minister claiming a Brexit deal could be reached ‘within days’. Now the latest roadblock has appeared – or, rather, seablock, as arguments over fishing are once again threatening to sink negotiations.”

On the macroeconomic front, the payrolls report, unemployment rate and average earnings are all due at 1330 GMT. Ahead of that, Markit’s UK construction PMI for November is at 0930 GMT.

CMC Markets analyst David Madden said the payrolls are expected to show that 469,000 jobs were created last month, down from the 638,000 registered in October.

“The unemployment rate is tipped to be 6.8%, down from the 6.9% in previous update, and the yearly average earnings metric is expected to slip from 4.5% to 4.3%. A fall in wages could be viewed as positive for the economy as it could be an indication that more lower-income workers have returned to the workforce,” he said.

In equity marketsSSE gained after saying it had sold a 10% stake in the first two phases of Dogger Bank Wind Farm to Eni for £202.5m as it lifted guidance for the 2020/21 fiscal year.

Croda rallied after a double upgrade to ‘outperform’ at Credit Suisse, while conference and exhibitions organiser Hyve rose after an upgrade to ‘buy’ at Peel Hunt and as Citi reiterated its ‘buy’ recommendation on the stock.

Gold miner Centamin was boosted by an upgrade to ‘buy’ at Berenberg.

On the downside, Berkeley Group shares fell after the housebuilder stuck to its targets for shareholder returns but reported a 16.6% fall in first-half profit caused by the Covid-19 crisis. Peers followed suit, with Taylor WimpeyBarratt and Persimmon all trading lower.

Lloyds was also in the red after a downgrade to ‘underperform’ at Bank of America Merrill Lynch.

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Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +7.94% +32.00 434.80
2 Sse Plc +2.87% +39.00 1,400.00
3 Croda International Plc +2.79% +166.00 6,106.00
4 Royal Dutch Shell Plc +2.29% +30.00 1,339.40
5 Bp Plc +2.27% +6.05 272.55
6 Royal Dutch Shell Plc +2.20% +29.80 1,386.20
7 Associated British Foods Plc +2.04% +47.00 2,350.00
8 Carnival Plc +2.00% +29.50 1,505.00
9 Smith & Nephew Plc +1.94% +29.00 1,520.50
10 Hikma Pharmaceuticals Plc +1.65% +42.00 2,586.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Berkeley Group Holdings (the) Plc -2.74% -133.00 4,720.00
2 Rolls-royce Holdings Plc -1.78% -2.40 132.50
3 Lloyds Banking Group Plc -1.31% -0.51 38.69
4 Severn Trent Plc -1.15% -27.00 2,330.00
5 Taylor Wimpey Plc -1.11% -1.85 165.10
6 Kingfisher Plc -0.99% -2.80 279.70
7 Melrose Industries Plc -0.95% -1.60 166.00
8 Barratt Developments Plc -0.76% -5.00 654.20
9 Antofagasta Plc -0.65% -9.00 1,366.00
10 Barclays Plc -0.63% -0.94 147.62

 

US close: Markets finish mixed after employment data surprise

Wall Street stocks closed in a mixed state on Thursday, as some stronger-than-expected data offset news that the US had registered a new single-day record for Covid-19 deaths.

At the close, the Dow Jones Industrial Average was up 0.29% at 29,969.52 and the Nasdaq Composite was ahead 0.23% at 12,377.18, while the S&P 500 slipped 0.06% to 3,666.72.

The Dow closed 85.73 points higher, extending gains recorded in the previous session as market participants continued to monitor developments regarding a possible stimulus bill.

Stimulus headlines were still in focus after the opening bell on Thursday after House Speaker Nancy Pelosi and Senate minority leader Chuck Schumer issued a statement together asking both Republicans and Democrats to work together on another round of Covid-19 relief funding.

However, Senate majority leader Mitch McConnell rejected the $908.0bn proposal and has repeatedly stated the next round of stimulus should be significantly smaller at roughly $500.0bn.

News that the UK had approved Pfizer and BioNTech‘s vaccine was also still in focus, with US regulators set to make determinations on the vaccine and a similar candidate from Moderna later in the month, possibly allowing distribution to begin before the start of 2021.

The US currently has more than 100,000 patients hospitalised with Covid-19, according to the Covid Tracking Project, while daily deaths from the coronavirus topped 2,880 on Wednesday, according to Johns Hopkins University.

On the macro front, US jobless claims for the previous week surprised sharply to the downside, according to the Department of Labor, with initial unemployment claims for the week ending on 28 November dropping by 75,000 to 712,000, considerably better than the print of 760,000 that some economists had pencilled in.

“Crucially, we have also seen a sharp decline in continuing jobless claims, with the figure of 5.5 million highlighting that there are roughly 78% less claimants compared with the May peak of 25 million,” said IG senior market analyst Joshua Mahony.

“The steady decline in US unemployment comes in stark contrast to the rampant path of the coronavirus, with daily cases or 200,000 and hospitalisation of 100,000 yesterday.”

Mahony said the focus was now shifting towards the US jobs report on Friday.

“While markets expect further downside for tomorrow’s non-farm payrolls figure, yesterday’s ADP reading does highlight how markets are willing to ignore weaker data in anticipation of a vaccine-fuelled recovery through 2021.”

Still on jobs, US-based employers announced 64,797 job cuts in November, according to Challenger, Gray and Christmas, down from 80,666 in October but still 45.4% higher year-on-year.

Elsewhere, activity in America’s services sector slowed slightly in November as businesses try to cope with the recent surge in Covid-19 infections, the results of a closely-followed survey revealed.

The Institute for Supply Management‘s services sector purchasing managers’ index fell from October’s level of 56.6 points to 55.9. Economists were expecting a reading of 56.0.

Lastly, IHS Markit‘s composite PMI output index posted 58.6 in November, up from 56.3 in October to mark the sharpest rate of growth since March 2015, as manufacturing and service sector firms both recorded faster expansions in output.

In corporate news, industrial conglomerate 3M was down 0.01% after it revealed it would cut as many as 2,900 jobs globally, while fast fashion retailer Express plunged 25.71% after it missed earnings estimates and announced layoffs.

 

Friday newspaper round-up: Aston Martin, Waitrose, Thames Water

A wide-ranging review of gambling laws to be launched next week will consider banning sports sponsorship and limiting online casino stakes among a “reformer’s shopping list” of proposals to overhaul gambling laws, the Guardian can reveal. The long-awaited review, which could roll back vast swathes of the 2005 Gambling Act 2005, will begin as soon as Monday with an initial call for evidence. – Guardian

The boss of Aston Martin has called for an internal investigation after the British carmaker was accused of using a “sockpuppet PR firm” to legitimise a report which used data criticised as misleading to discredit electric vehicles. The new chief executive, Tobias Moers, said Aston Martin’s involvement in the widely discredited report began before he joined the company last August, and that he was not aware of its contents before it was published. – Guardian

Waitrose has refused to join the raft of supermarkets pledging to repay business rates relief claimed during the pandemic, blaming struggling sales at sister company John Lewis. A flurry of supermarkets have committed to hand back billions of pounds in rates relief designed to support firms throughout the coronavirus crisis after Tesco surprised rivals by saying it would return £585m in Covid tax breaks to the Treasury. – Telegraph

Thames Water has again been named the worst water company in the country by the industry’s regulator. The London and Thames Valley supplier and waste handler has been reprimanded by Ofwat alongside the other poorest performers, Southern Water and Affinity Water, which is an agglomeration of water supply companies in the Home Counties. Hafren Dyfrdwy, the former Dee Valley supplier on the Welsh-English border and owned by Severn Trent, joins them at the bottom of Ofwat’s league. – The Times

Hundreds of Rolls-Royce factory workers face an uncertain Christmas as the aircraft engine maker revealed the latest details of its deep cost-cutting, in a statement that helped to send its shares up by more than 15 per cent and made it the top riser in the FTSE 100. The Derby-based company is suffering from the collapse in air travel – it usually receives billions of pounds a year tied to engine-flying hours – and the halving in production at Airbus and Boeing, its main customers. – The Times

 

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