ADVFN Morning London Market Report: Friday 11 June 2021

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London open: Stocks rise as investors mull GDP data

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London stocks rose in early trade on Friday, taking their cue from a positive finish on Wall Street as investors digested the latest UK GDP data.

At 0850 BST, the FTSE 100 was up 0.5% at 7,126.19.

Neil Wilson, chief market analyst at Markets.com, said: “A mildly positive start to the Friday session for European markets after Wall Street set fresh records, with the S&P 500 jumping to a new all-time high even as data showed US inflation surged in May.

“US CPI rose to 5% last month, whilst the core reading rose to +3.8%, the highest in 30 years. Core month-on-month declined from 0.9% in April to 0.7% in May but still remains extremely high. Rates actually fell with the 10yr Treasury under 1.44%, sending the dollar to under 90 and gold firmer.

“Hot inflation readings right now are pretty much fully priced and understood, as is the reaction function of central banks: they see it as transitory, nothing to worry about. This was evinced by the European Central Bank yesterday, which stuck to the inflation-is-temporary script.”

Oh home shores, figures released earlier by the Office for National Statistics showed the economy grew in April at its fastest monthly rate since July 2020 as lockdown restrictions eased. GDP expanded by 2.3% following 2.1% growth in March and versus expectations for 2.5% growth.

On the year, GDP was up 27.6%. Nevertheless, the UK economy is still 3.7% smaller than it was in February 2020, before the pandemic and related restrictions kicked in.

Retail sales volumes grew 9.2% on the month in April after all non-essential stores reopened from 12 April in England and Wales and from 26 April in Scotland. Education output was the second main contributor to services growth, according to the ONS, up 11.2% as more pupils returned to onsite lessons in April.

ONS deputy national statistician for Economic Statistics Jonathan Athow said: “Strong growth in retail spending, increased car and caravan purchases, schools being open for the full month and the beginning of the reopening of hospitality all boosted the economy in April.”

In equity markets, asset management services provider Sanne surged as it said it was in talks with Cinven after the buyout firm made a new 875p-a-share offer for the firm. Sanne had previously rejected a £1.35bn proposal as too low. Cinven now has until July 9 to make a firm offer.

Precious metals miners Fresnillo and Polymetal shone as gold prices gained.

On the downside, Domino’s Pizza lost ground after it emerged that chief financial officer Neil Smith is leaving the group to become finance director of pub and hotels company Fuller, Smith & Turner.

Elsewhere, equipment rental firm Ashtead was knocked lower by a downgrade to ‘hold’ from ‘buy’ at Deutsche Bank.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Fresnillo Plc +2.94% +25.00 875.00
2 Bunzl Plc +2.61% +59.00 2,317.00
3 Smurfit Kappa Group Plc +2.13% +81.00 3,882.00
4 Glencore Plc +2.08% +6.65 326.55
5 Antofagasta Plc +1.87% +28.00 1,525.00
6 Halma Plc +1.72% +46.00 2,726.00
7 Evraz Plc +1.60% +10.00 633.20
8 Experian Plc +1.60% +43.00 2,724.00
9 Associated British Foods Plc +1.59% +37.00 2,366.00
10 Rentokil Initial Plc +1.58% +7.60 488.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ashtead Group Plc -1.42% -72.00 4,996.00
2 Informa Plc -1.29% -7.20 550.60
3 Standard Chartered Plc -1.19% -5.90 491.60
4 Bt Group Plc -0.92% -1.80 193.35
5 Schroders Plc -0.57% -20.00 3,514.00
6 Hsbc Holdings Plc -0.41% -1.80 434.35
7 Smith & Nephew Plc -0.32% -5.00 1,537.50
8 Lloyds Banking Group Plc -0.28% -0.13 48.14
9 Hiscox Ltd -0.25% -2.00 785.60
10 Barclays Plc -0.21% -0.38 178.68

 

Europe open: Shares higher on ECB asset purchase stance

European shares were up slightly at the open on Friday as investors took heart from the European Central Bank’s decision to increase the pace of asset purchases.

The pan-European Stoxx 600 index was up 0.2% in early trade after a rise in Asian shares overnight.

“Investors shrugged off a higher than expected (US) inflation print having taken a good look underneath the bonnet,” said Interactive Investor analyst Richard Hunter.

“The 5% figure was higher than the 4.7% which had been widely expected, but major drivers of the increase were airline fares and the sale of used cars, the latter of which was partly prompted by the semiconductor shortage currently affecting the industry.”

He added that a further easing of lockdown restrictions could lead to more pressure on prices, but this was likely to subside in the second half of the year and investors were “beginning to warm to the Federal Reserve’s narrative of the current elevated levels being transitory”.

Investors also took heart from the European Central Bank, which said that its emergency asset purchases would continue at a “significantly higher” pace over the third quarter than in the first months of 2021, just as expected.

Britain’s FTSE 100 index was up after official data showed the UK economy grew in April at its fastest monthly pace since July 2020 as lockdown restrictions eased.

The economy expanded by 2.3% following 2.1% growth in March and versus expectations for 2.5% growth.

On the year, GDP was up 27.6%. Nevertheless, the UK economy is still 3.7% smaller than it was in February 2020, before the pandemic and related restrictions kicked in.

In equity news shares in French reinsurer Scor jumped 5.6% as major shareholder Covea agreed to an orderly exit from the company after a settlement over a frustrated takeover attempt.

 

US close: Stocks manage positive finish as inflation marches higher

Wall Street stocks closed above the waterline on Thursday, as market participants rifled through a consumer price index that revealed a bigger-than-expected increase in price pressures and a fresh batch of jobless claims data.

At the close, the Dow Jones Industrial Average managed gains of 0.06% to 34,466.24, while the S&P 500 added 0.47% to 4,239.18, and the Nasdaq Composite was 0.78% firmer at 14,020.33.

The Dow closed 19.1 points higher on Thursday, reversing losses recorded in the previous session, as the S&P 500 touched new record highs.

Thursday’s primary focus was the monthly consumer price index, which revealed inflation in the US bounded ahead in May with big gains evident across nearly all categories of products and services.

According to the Department of Labor, headline consumer prices jumped at a month-on-month pace of 0.6%, pushing the annual rate of increase from 4.2% for April to 5.0%.

Economists had forecast CPI to rise by 0.4% on the month and 4.6% on the year.

In addition to the CPI reading, the number of Americans lining up for state unemployment benefits declined for a sixth consecutive week, with initial claims decreasing by 9,000 to 376,000 in the week ended 5 June, according to the Labor Department.

Significantly, continuing claims for ongoing state unemployment dropped 258,000 in the week ended 29 May to 3.5m – the largest decline since mid-March.

In the corporate space, UPS stock was up 1.06% by the closing bell, following an upgrade from analysts at JPMorgan.

Shares in reopening plays were mixed by the close, with Boeing ascending 0.11%, while Delta Air Lines reversed earlier gains to end the session 0.52% lower.

So-called ‘meme stock’ GameStop plunged 27.16%, after tapping former Amazon executive Matt Furlong for CEO and revealing that sales had surged 25% last quarter.

 

Friday newspaper round-up: Camelot, Selfridges, Morrisons

The French president last night ramped up the pressure on Boris Johnson over the Northern Ireland protocol by insisting “nothing is negotiable” as the G7 summit of world leaders risked being overshadowed by the bitter standoff over Brexit. In a defiant intervention as he prepared to travel to the UK, Emmanuel Macron warned Boris Johnson that France is not open to renegotiating any aspect of the protocol – and even appeared to raise questions about whether the UK could be trusted. – Guardian

Camelot is facing its biggest ever struggle to retain control of the National Lottery, its boss has said, as bidders jockey to seize control of what has become the world’s largest online draw. The operator of the National Lottery announced record-breaking revenues and money raised for good causes after Britons switched to buying their tickets over the internet during the pandemic. – Telegraph

The billionaire Canadian owners of Selfridges are considering a sale of the upmarket department store chain. The Weston family have drafted in advisers at Credit Suisse to advise on a possible sale after an unsolicited takeover approach, React News first reported. It is understood that offers in excess of £4bn are likely to be sought for Selfridges, with its property portfolio accounting for about half that sum. – Telegraph

A German digital sports retailer has snapped up Wiggle, the British online bike brand, and agreed to ride on to the American stock market as part of a $3.2 billion blank-cheque deal. Signa Sports United is buying WiggleCRC, which also owns the Northern Irish seller Chain Reaction Cycles, in a bid to create one of the largest e-commerce platforms for cycling and outdoor activities as it goes public in New York. – The Times

Wm Morrison has suffered one of the biggest shareholder revolts over pay in British corporate history. A total of 70.1 per cent of votes were cast against the supermarket’s remuneration report at its annual meeting yesterday as investors rebelled over the company stripping out the cost of the Covid-19 crisis from bonus calculations. – The Times

 

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