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ADVFN Morning London Market Report: Monday 25 April 2022

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London open: Stocks down on China lockdowns, central bank concerns


London stocks were in the red on Monday morning, tracking losses on Wall Street at the end of the previous week, as ongoing Covid-19 lockdowns in China continued to dent sentiment.

At 0851 BST, the FTSE 100 was down 1.87% at 7,380.88, and the FTSE 250 was 1.63% weaker at 20,540.55.

“The pace of reporting is frenetic in the UK this week, where scrutiny on the numbers and outlook will be as intense,” said Interactive Investor head of markets Richard Hunter.

“Each of the UK banks will post first quarter updates, following a tepid showing from the US banks on the whole.

“Focus may also come to bear on shareholder returns and the announcement of any further dividend or share buyback developments, given the embarrassment of riches which the UK banks currently carry in terms of excess capital.”

Elsewhere, and following some weak retail sales numbers last week, Hunter said the likes of Primark owner Associated British Foods would be watched for evidence of changing consumer behaviour.

“After some disappointment surrounding the general merchandise and Argos divisions at the last update, Sainsbury will also be scanned for improvements as it reports full-year results,” he added.

“Any progress within company updates will also need to be robust to underpin a market which has so far weathered the global economic storm this year.

“However, with the skittish sentiment of the US markets passing through to the UK via Asia in early trade, the FTSE 100 has seen its defensive work this year evaporate in an instant, with the premier index now standing largely flat in the year to date.”

Also dampening sentiment were reports that the European Union was preparing smart sanctions against imports of Russian oil, although in remarks to Die Welt the bloc’s foreign policy said there was not yet enough support for a complete embargo nor for punitive tariffs.

Elsewhere on the geopolitical front, UN chief Antonio Guterres, was scheduled to visit Ankara on Monday and Moscow on Tuesday in a bid to try and re-energise peace talks as Russia’s unprovoked invasion of Ukraine entered its ninth week.

Some observers were hoping that an agreement on evacuating the city of Mariupol or for a ceasefire during Orthodox Easter might generate the needed momentum for talks to succeed.

On the economic front, the Confederation of British Industry was set to release its Industrial Trends survey for April at 1100 BST.

Germany’s IFO institute was also due to publish the results of its closely-followed business confidence survey for the eurozone’s largest economy during the morning.

In equities, Anglo American was tumbling after the Chilean environmental regulator recommended denying an extension to its Los Bronces copper project.

Chile’s Environmental Assessment Service (SEA) issued the recommendation last week, with a final decision on $3.3bn investment expected soon.

“The SEA’s recommendation is despite the strong support for the project offered to date by 23 of the 25 technical services bodies and government ministries that form part of the assessment process,” Anglo American said in a statement.

Elsewhere, real estate investor British Land was in the red after selling a 75% stake in the bulk of its Paddington Central assets to GIC for £694.0m, to establish a new joint venture between the pair.

British Land said establishment of the joint venture, which was unconditional and will be within three months, would see it deliver against one of its key priorities of proactively recycling capital out of mature assets where it had created “considerable value”.

Urban Logistics was also weaker after reporting the deployment of a further £45m of capital at a blended net initial yield of 6.7% since 28 March.

The FTSE 250 real estate investment trust said its total deployment since its December fundraise now stood at £184m, at a blended net initial yield of 5.4%.

It had agreed five new lettings, three rent reviews and two lease regears in the period, covering 630,000 square feet of space, while rent reviews and regears were settled at a blended 13% increase over passing rent, the board said.

LondonMetric Property was below the waterline after buying six London urban logistics warehouses in separate transactions for £26.7m, reflecting an anticipated blended initial yield of 4.3% and a reversionary yield of more than 4.5%.

The assets are expected to generate a total rent of £1.2m a year, while in a separate deal, the company sold a multi-let industrial estate for £8.5m.

On the upside, Polymetal International was in the green after it reported a rise in first-quarter revenue, driven by higher prices and despite a fall in production.

Revenue for the three months to March 31 increased 4% year on year to $616m, while production of gold equivalent was down 6% to 372,000 troy ounces.

Polymetal said it still expected to produce 1.7 million ounces in 2022.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Unilever Plc +0.78% +27.50 3,568.50
2 Pearson Plc +0.13% +1.00 783.80
3 Smith (ds) Plc +0.09% +0.30 327.00
4 Easyjet Plc +0.07% +0.40 568.80
5 Morrison (wm) Supermarkets Plc +0.00% +0.00 286.40
6 Evraz Plc +0.00% +0.00 82.68
7 Standard Life Aberdeen Plc +0.00% +0.00 274.10
8 Rsa Insurance Group Ld +0.00% +0.00 684.20
9 Royal Bank Of Scotland Group Plc +0.00% +0.00 120.90
10 Reckitt Benckiser Group Plc +0.00% +0.00 6,498.00


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Anglo American Plc -6.34% -219.50 3,241.00
2 Glencore Plc -5.85% -27.85 448.35
3 Bhp Group Limited -5.76% -155.50 2,545.00
4 Bp Plc -5.21% -20.50 372.65
5 Rio Tinto Plc -4.80% -272.00 5,392.00
6 Burberry Group Plc -4.44% -72.50 1,562.00
7 Shell Plc -4.43% -97.00 2,091.00
8 Prudential Plc -4.35% -45.40 998.60
9 Ferguson Plc -4.03% -425.00 10,115.00
10 Ocado Group Plc -3.93% -41.00 1,001.00


Europe open: Shares slump as investors fret over rate hikes, China Covid spread

European stocks slumped at the open on Monday as investors fretted about a slowdown in China and faster US interest rate hikes overshadowed pro-European French President Emmanuel Macron’s election win.

The pan-European Stoxx 600 index was down 1.53%, having fallen 1.9% at one point. France’s CAC 40 dropped 1.13% and Germany’s DAX was down 0.77%.

“Friday’s sell off marked the end of a disappointing week for markets in Europe, as well as the US after Fed chair Jay Powell signalled that the Federal Reserve could well go much harder, and a lot quicker when the central bank pulls the trigger on the first of what might be several 50bps rate hikes, starting next month,” said CMC Markets UK chief market analyst Michael Hewson.

In France and across the Continent there was relief at Macron’s victory, signalling a commitment to a united Europe as the French electorate’s rejection of hard-right policies.

Asian stocks slumped overnight as panic buying took hold in Beijing on fears of a hard Covid lockdown.

In equity news, shares in Russian gold miner Polymetal rose as the company reported a rise in first quarter revenues on higher metals prices.

Shares of Dutch health technology company Philips fell 10% as the firm reported a steep drop in first-quarter core profit.

Miners were weaker on the back of lower metals prices, with BHPGlencoreAnglo AmericanRio Tinto and Antofagasta all lower.


Monday newspaper round-up: French elections, British Airways, Partygate, Twitter, non-doms

Emmanuel Macron won a resounding victory against Marine Le Pen in the presidential run-off, becoming the first French modern head of state to secure re-election while holding executive power. Macron, 44, won with 58.5 percent of the vote against Le Pen’s 41.5 per cent after an aggressive second-round campaign in which he cast the leader of the National Rally as a far-right threat to democracy and European security. – The Times

British Airways is setting up its maiden overseas base for short-haul flights to combat staff shortages that have sparked the worst wave of cancellations in a decade. The UK flag carrier is to open a cabin crew base in Madrid as bosses scramble to avoid the recent travel chaos lasting throughout the summer. – Telegraph

Britain’s hopes of a favourable post-Brexit trade deal with the US risk being undermined by the government’s lack of engagement on workers’ rights, trade unions have warned. As a second round of US-UK talks begins this week, union leaders from both countries said Washington would push for a “worker-centred approach to trade” to help unlock a deal. – Guardian

A Whitehall report into lockdown-breaking parties in Downing Street is so damning that senior officials believe it could leave Boris Johnson with no choice but to resign as prime minister, The Times has been told. The report by Sue Gray, a senior civil servant, is understood to be highly critical of Johnson both for attending some of the events and the culture in No 10 under his leadership. – The Times

Driving an electric car for a year costs almost £600 less than its petrol equivalent after fuel prices surged more than electricity costs, research by the comparison website Compare the Market has found. Electric vehicles were already cheaper to run, according to figures shared with the Guardian, but the gap has widened significantly amid turmoil in global energy markets caused by the war in Ukraine. – Guardian

Boris Johnson will launch a push for families to take up £2,000 a year in childcare support as he attempts to refocus attention on how the Government can help with the cost-of-living crisis. The Prime Minister is keen to move on from a bruising week that was dominated by the “partygate” scandal, with a number of Tory MPs publicly criticising his leadership. – Telegraph

The chairman of the Commons business select committee has urged Kwasi Kwarteng not to let Downing Street delay legislation needed to bring forward audit and corporate governance reforms. Darren Jones, a Labour MP, has written to the business secretary raising concerns about reports that the legislation has been dropped from next month’s Queen’s Speech. – The Times

The Labour party has vowed to abolish the “non-dom” tax loophole used by the chancellor Rishi Sunak’s wife to save paying up to £20m in UK tax. Rachel Reeves, the shadow chancellor, said it “simply isn’t right that those at the top can benefit from outdated non-dom tax perks” while ordinary people struggle with tax rises and the cost of living crisis. – Guardian

Two in three pharmacists are now dealing with medication shortages on a daily basis, research shows, amid growing concern about worsening access to hormone replacement therapy. Pharmacists said they were regularly facing patients “boiling over” with rage amid desperation over shortages of treatments for dozens of conditions. – Telegraph

The board of Twitter is coming under pressure to engage with Elon Musk over his mooted $43 billion takeover bid after the Tesla founder lined up financing for a deal. Musk met key Twitter shareholders late last week and some have since indicated they expect the board to leave the door open for talks, even if his “best and final offer” of $54.20 a share may not be enough to seal a deal. The shares closed at $48.93 on Friday. – The Times

International travel should be protected in future pandemics, MPs have urged, describing the Covid restrictions imposed by the UK government as confusing, arbitrary and disproportionate. The Commons transport select committee said the government should learn lessons from the coronavirus pandemic to create a predictable and transparent system for future public health crises, to support travellers and the aviation industry. – Guardian


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