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ADVFN Morning London Market Report: Wednesday 26 January 2022

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London open: FTSE rallies as investors eye Fed announcement

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London stocks rallied in early trade on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

At 0825 GMT, the FTSE 100 was up 1.2% at 7,462.83.

Victoria Scholar, head of investment at Interactive Investor, said: “Amid the backdrop of volatile equity markets, it would be tempting for the Fed to kowtow to the sell-off and soften its stance at the conclusion of its two-day monetary policy meeting today. However, the US economy is grappling with four-decade high inflation, a problem that the Fed must remain laser focused on. At today’s meeting, the Fed is likely to signal plans to begin raising rates in March and to end its quantitative easing stimulus programme this quarter.

“This year’s sell-off in US indices has largely priced in the tightening path ahead with the potential for stocks to stabilise from here. Fed Chair Powell, who has been described as ‘Goldilocks in a suit’, will be treading a fine line, neither too hawkish nor too dovish, displaying credibility in the fight against inflation without spooking the current precarious market mood.”

In equity markets, travel-related shares were the standout performers, with BA and Iberia owner IAG the top riser on the FTSE 100, closely followed by InterContinental Hotels and engine maker Rolls-Royce. On the FTSE 250, cruise operator Carnival and travel firm Tui racked up healthy gains.

Pets at Home advanced as it upgraded its full-year profit expectations following “continued growth momentum” in the third quarter. It now expects FY22 group underlying pre-tax profit to be at least £140m, compared to previous company guidance of between £128m and £135m and analyst expectations of £135m.

Online trading platform CMC Markets was also in the black after it backed its full-year guidance as it said its performance in the third quarter was in line with expectations.

On the downside, gambling software maker Playtech fell after it again urged shareholders to accept a £2.7bn takeover offer from Australia’s Aristocrat Leisure following reports that it is planning a breakup and sale of the group if the bid is blocked by a bloc of Asia-based investors. Sky News reported that Playtech’s directors and its investment banking advisers are discussing dismantling the group, citing unnamed sources.

Precious metals miner Fresnillo tumbled as it cut its production guidance, citing operational challenges and new labour laws.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. +5.46% +8.08 156.04
2 Carnival Plc +5.10% +67.80 1,396.60
3 Tui Ag +4.80% +11.80 257.80
4 Intercontinental Hotels Group Plc +4.56% +215.00 4,930.00
5 Whitbread Plc +4.04% +120.00 3,089.00
6 Antofagasta Plc +3.73% +51.50 1,430.50
7 Easyjet Plc +3.68% +22.20 626.00
8 Prudential Plc +3.53% +43.00 1,261.50
9 Glencore Plc +3.42% +13.30 402.25
10 Flutter Entertainment Plc +3.38% +355.00 10,850.00

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Fresnillo Plc -12.30% -99.00 706.00
2 Unilever Plc -0.66% -26.00 3,910.00
3 Rentokil Initial Plc -0.35% -1.80 512.00
4 Bunzl Plc -0.15% -4.00 2,717.00
5 Coca-cola Hbc Ag -0.04% -1.00 2,449.00
6 Just Eat Plc -0.00% -0.00 861.00
7 Nmc Health Plc -0.00% -0.00 938.40
8 London Stock Exchange Group Plc +0.00% +0.00 8,620.00
9 Rsa Insurance Group Ld +0.00% +0.00 684.20
10 Reckitt Benckiser Group Plc +0.00% +0.00 6,498.00

 

Europe open: Shares continue rally as investors eye Fed meeting

European shares continued to rally at the open on Wednesday, as investors waited on news from the US Federal Reserve’s two-day meeting later in the day.

The pan-European Stoxx 600 rose 1.26% in early deals with travel and leisure stocks leading gains. Investors are looking for guidance on the timing of already-announced rate rises.

In equity news, hygiene products group Essity dropped 4%, after posting a bigger-than-expected fall in quarterly profit and saying it planned to raise prices further in the face of record high costs.

In terms of individual share price movement, shares in Britain’s Allfunds Group climbed 7.59% after Citigroup upgraded the company’s stock to ‘buy’ from ‘neutral’.

Swiss drug contract manufacturer Lonza gained 2%, after reporting a 20% jump in 2021 core earnings, shored up by demand for the substances it supplies for new mRNA COVID-19 vaccines.

Travel and leisure stocks were also in demand, with Lufthansa, BA and Iberia owner IAG, cruise operator Carnival and holiday firm Tui all making gains.

Gambling software maker Playtech fell after it again urged shareholders to accept a £2.7bn takeover offer from Australia’s Aristocrat Leisure following reports that it is planning a breakup and sale of the group if the bid is blocked by a bloc of Asia-based investors.

Precious metals miner Fresnillo slumped tumbled as it cut its production guidance, citing operational challenges and new labour laws.

 

US close: Stocks end session in the red as earnings and IMF global growth downgrade take centre stage

Wall Street stocks closed lower on Tuesday as corporate earnings, geopolitical tensions and a downgrade in global growth forecasts were all in focus throughout the session.

At the close, the Dow Jones Industrial Average was down 0.19% at 34,297.73, while the S&P 500 was 1.22% weaker at 4,356.45 and the Nasdaq Composite saw out the session 2.28% softer at 13,539.29.

The Dow closed 66.77 points lower on Tuesday, taking a bite out of gains recorded in the previous session as the blue-chip index staged its largest intraday comeback since March 2020.

Stocks ended the session in the red on Tuesday as investors looked ahead to the Federal Reserve’s two-day policy meeting, scheduled to wrap up at 1900 GMT on Wednesday.

Geopolitical tensions between Russia and Ukraine were also in focus, with President Joe Biden speaking with European leaders amid fears of a Russian invasion, as was the impact of the Covid-19 Omicron variant on the economic recovery after the International Monetary Fund took an axe to its global growth forecasts, saying it now expects a figure of 4.4%, down from previous estimates for a reading of 4.9%.

The yield on the benchmark 10-year Treasury note was slightly higher at 1.782% at the end of trading on Tuesday.

In the corporate space, General Electric shares slumped after the company topped quarterly earnings expectations but missed on revenues.

Elsewhere, 3M reported better than expected earnings, American Express also topped expectations amid ‘record’ card spending, Lockheed Martin posted an earnings beat, and Raytheon Technologies also surpassed fourth-quarter earnings estimates,

Xerox‘s Q4 earnings and sales took a hit from the Covid-19 pandemic, and Johnson & Johnson posted mixed earnings but said it expects to see $3.5bn in Covid vaccine sales in 2022.

After the close, Microsoft beat on earnings and revenues with its second-quarter earnings and Texas Instruments also beat fourth-quarter expectations with its fourth-quarter earnings.

On the macro front, S&P/Case-Shiller‘s house price index increased 18.8% year-on-year in November, despite being the start of a traditionally slower season for the home market. The 10-city composite rose 16.8% year-on-year, down from 17.2% in October, while the 20- city composite grew 18.3%, down from 18.5% in the previous month.

Also in data news, US consumer confidence deteriorated in January as short-term expectations weakened, with the Conference Board‘s consumer confidence index declining to 113.8 from 115.2 in December, but was above expectations for a reading of 111.8.

The present situation index, based on consumers’ assessment of current business and labour market conditions, rose to 148.2 from 144.8, while the expectations index, based on the short-term outlook for income, business and labour market conditions, fell to 90.8 in January from 95.4 in December

 

Wednesday newspaper round-up: Airlines, probate, Elon Musk

At least 100,000 “ghost flights” could be flown across Europe this winter because of EU airport slot usage rules, according to analysis by Greenpeace. The deserted, unnecessary or unprofitable flights are intended to allow airlines to keep their takeoff and landing runway rights in major airports, but they could also generate up to 2.1 million tons of greenhouse gas emissions – or as much as 1.4 million average petrol or diesel cars emit in a year – Greenpeace says. – Guardian

Bereaved families in England and Wales face increased costs from Wednesday as probate fees rise by up to 76%. Applications for probate, which grants permission to deal with the estate of someone who has died, will now cost a flat rate of £273. Previously the fee was £155 if a solicitor applied on behalf of a family and £215 for those who applied direct. – Guardian

The owner of the Wolseley, a celebrity haunt in London’s West End, has been pushed into administration by an angry investor embroiled in a row with its co-founder. Minor International, the largest shareholder in the restaurant’s parent company Corbin & King, said it had appointed FRP as an administrator amid growing concerns that the business needed “strong financial support to survive and succeed”. – Telegraph

Elon Musk is in line to reap in excess of $35 billion of stock awards in the coming months despite the slide in Tesla’s shares. The world’s second-richest man is set to secure five tranches of share options in the electric carmaker over the next year, according to analysts, as it ramps up production and meets a series of targets tied to his controversial compensation package. – The Times

The City regulator has announced a clampdown on financial firms that try to sidestep paying compensation to burnt customers by improperly using insolvency techniques, with the prospect of fines, bans and court action for culprits. The Financial Conduct Authority said that there had been an increase in the number of firms developing proposals such as schemes of arrangement or other restructuring plans to shield themselves from liabilities to consumers, particularly redress orders. – The Times

 

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