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ADVFN Morning London Market Report: Tuesday 26 April 2022

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London open: Stocks rise on tech rally, Musk takeover of Twitter


London stocks were in the green on Tuesday morning, after Wall Street indices turned around a global sell-off overnight to close in positive territory.

At 0852 BST, the FTSE 100 was up 7,435.55, and the FTSE 250 was ahead 0.58% at 20,718.34.

“In the past few days and weeks, we have seen a serious sell-off for the global equity markets, and the reality is that the concerns which broke the back of the bull rally are still intact,” said AvaTrade chief market analyst Naeem Aslam.

“However, today, traders seem to be ignoring all those concerns.”

Aslam said the focus was on mega tech stocks and their earnings, and if any of them missed the estimates like Netflix, pessimism would likely take control of the price action.

“Nearly 160 S&P 500 companies will report their earnings this week, but the earnings results from Amazon, Meta, Microsoft, Alphabet, and Apple will set the tone for trading.”

Fears over the current Covid-19 situation in China continued to weigh on sentiment, but a rally in technology plays stateside helped to turn things around in New York.

Also in focus was the news that Twitter’s board would accept a $44bn offer from Elon Musk to take over the social network.

On the economic front, public borrowing was almost a fifth higher than forecast, according to data from the Office for National Statistics.

UK public sector net borrowing totalled £151.8bn for the 2021-2022 financial year – comfortably topping the £127.8bn pencilled in by the Office for Budget Responsibility just last month.

The total for the year was more than £165bn less than in the prior financial period, when the government spent huge sums to support the economy during the worst of the Covid-19 lockdowns.

It was, however, still the third-highest figure since records began in 1947.

Borrowing was below expectations in March, however, coming in at £18.1bn, compared to the £19.25bn expected in a Reuters poll.

In equities, National Express was soaring after reporting that first-quarter group revenues were back to 2019 levels, with the group actually trading ahead of the same time two years earlier during March.

The coach operator said it delivered its seventh consecutive quarterly improvement, with revenue up 30% year-on-year in constant currency, driven by a “particularly strong recovery” in its UK and ALSA coach businesses, demonstrating strong pent-up demand for travel.

Housebuilder Taylor Wimpey was also higher, after saying it was trading in line with full-year expectations and that it remained on track to deliver against guidance set out at the time of its 2021 annual results.

The housebuilder stated its net private sales rate for the year ended 17 April was “strong” at 0.96, down only slightly from 1.00 in the equivalent period a year earlier, with cancellation rates flat year-on-year at 14%.

On the downside, agribusiness-to-clothing group Associated British Foods was in the red after reporting soaring first-half profits, but warning of increasing prices at its Primark clothing business due to inflation.

AB Foods posted adjusted operating profit of £706m for the 24 weeks to March 5, up from £369m a year earlier. Group revenue for the six months rose 25% to £7.88bn.

HSBC was weaker after reporting a 28% fall in first-quarter profits due to higher-than-expected credit losses, the Ukraine war and a slowdown in China as it also warned on the outlook for share buybacks.

The bank posted pre-tax profits of $4.2bn for the three months to March, still better than expectations of $3.7bn, with revenue down 4% to $12.5bn.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Taylor Wimpey Plc +3.98% +5.10 133.15
2 Lloyds Banking Group Plc +3.46% +1.57 46.97
3 Glencore Plc +2.73% +12.25 461.60
4 Barclays Plc +2.64% +3.80 147.98
5 Anglo American Plc +2.28% +73.50 3,297.00
6 Barratt Developments Plc +2.20% +11.20 521.40
7 Easyjet Plc +2.04% +11.60 580.00
8 Coca-cola Hbc Ag +1.92% +31.50 1,670.00
9 Persimmon Plc +1.91% +42.00 2,236.00
10 Aviva Plc +1.82% +7.80 436.60


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Associated British Foods Plc -3.07% -50.00 1,580.00
2 Hsbc Holdings Plc -1.70% -8.55 493.05
3 Ocado Group Plc -1.40% -14.50 1,021.50
4 Marks And Spencer Group Plc -1.11% -1.70 151.30
5 Halma Plc -1.09% -27.00 2,450.00
6 Sainsbury (j) Plc -0.99% -2.40 241.00
7 Kingfisher Plc -0.94% -2.40 253.50
8 Next Plc -0.69% -42.00 6,086.00
9 Standard Chartered Plc -0.66% -3.30 494.00
10 Flutter Entertainment Plc -0.56% -46.00 8,114.00


Europe open: Shares rally on Twitter deal, but China worries persist

European shares rebounded at the open on Tuesday after a rally in US tech stocks driven by Elon Musk’s agreed $43bn takeover of social media platform Twitter.

The pan-European Stoxx 600 index was up 0.61% in early deals, with all major regional bourses higher. The tech-heavy US Nasdaq index rose 1.3% overnight on the Musk/Twitter deal.

However, the mood was tempered by mixed Asian markets, where fears of an economic slowdown in China persist as the country battles rising Covid cases and ponders a lockdown of the capital Beijing.

In the UK, official data showed the government borrowed less than expected in March and the estimate of borrowing for the rest of the past financial year was revised down.

Public sector net borrowing, excluding public sector banks, was £18.1bn in March – lower than the average 19.8bn analysts’ forecast. The government borrowed £151.8bn in the year to the end of March – £24bn more than forecast by the government’s fiscal watchdog, the Office for National Statistics said.

In equity news, shares in Danish shipping giant Maersk rose as the company revised its full year guidance for 2022 upwards to underlying EBITDA of around $30bn from $24bn.

Swedish medical technology company Getinge slumped after first quarter profits fell on supply chain woes.

Office space provider IWG fell, despite a rise in first-quarter revenue.

Shares in Primark owner AB Foods fell as the company reported a surge in interim profits but warned that prices would rise at the clothing retail chain.


US close: Dow Jones reverses early losses, ends session firmly in the green

Wall Street stocks ended the session in the green on Monday as major indices attempted to put a stop to a recent sell-off that has seen the Dow Jones put on a losing performance for four-straight weeks.

At the close, Dow Jones Industrial Average was 0.70% firmer at 33,049.46, while the S&P 500 was 0.57% stronger at 4,296.12 and the Nasdaq Composite saw out the session 1.29% higher at 13,004.85.

The Dow closed 238.06 points higher on Monday, taking a bite out of losses recorded at the end of last week as market participants continued to mull over the likelihood of interest rate rises.

Fears regarding a fresh Covid-19 outbreak in China were weighing on sentiment early in the session, dragging down oil prices. However, a rally in tech stocks like AlphabetMeta Platforms and Microsoft, all of which will report before the week is out, saw the Dow reverse an almost 500-point intraday loss to end the session in positive territory.

As far as today’s corporate headlines went, Tesla boss Elon Musk won over the board of Twitter and struck a $44.0bn deal to take over the social media giant.

In terms of earnings, Coca-Cola beat first-quarter earnings projections with an EPS of $0.64 per share on revenues of $10.5bn, up 16% and ahead of the $9.83bn expected on the Street. Despite the cessation of its Russian unit, Coca-Cola also reiterated full-year guidance for revenue growth of 7-8% and comparable earnings per share growth of 5-6%.

On the macro front, the Chicago Federal Reserve‘s national activity index fell from 0.54 in February to 0.44 in March, the lowest reading in three months.


Tuesday newspaper round-up: Twitter, Elon Musk, Bulb, Brexit exports, China lockdowns

Elon Musk’s takeover of Twitter offers shareholders the “best path forward”, its chairman declared last night after bowing to the billionaire’s $44 billion bid. The social media group dropped its resistance and approved the Tesla chief executive’s initial offer of $54.20 per share. – The Times

The UK government has defended a decision to pay millions of pounds in bonuses to staff at the collapsed energy supplier Bulb, despite the fact that it has been effectively nationalised as part of a bailout that could cost taxpayers £2.2bn. Quarterly “retention bonuses” were deemed necessary to prevent an exodus of staff that could have scuppered efforts to keep the business afloat while a buyer is found, multiple sources familiar with the situation said. – Guardian

There is no evidence of a “sustained decline” in UK exports to the EU since the Brexit deal kicked in, a report has found. Experts said sales into Europe remained strong, despite a 25pc relative decline in imports from the bloc compared with the rest of the world. – Telegraph

Six hundred employees of Interactive Investor will be awarded “celebratory payments” of up to a year’s pay as the investment platform completes a deal to sell itself to abrdn, the FTSE 100 asset management company. Richard Wilson, the chief executive, said that all staff on the payroll before December 2021 would get 20 percent of pay for each year of service, with the 200 long-servers hired before December 2016 receiving an entire year’s salary. – The Times

Markets tumbled across the world on Monday as fears of a new Chinese lockdown sparked panic buying in Beijing. Around £40bn was wiped off the FTSE 100 which dropped 1.9pc, amid concerns over a wave of draconian restrictions to prevent the collapse of China’s zero Covid policy. – Telegraph

Rupert Murdoch’s TalkTV fears being hit with an advertising boycott as the opinionated news network prepares to challenge the BBC. The insurgent news channel launching on Monday night at 7pm is wary of facing a similar backlash that struck rival broadcaster GB News when some of the world’s biggest brands paused their campaigns following pressure from Stop Funding Hate, the Left-wing social media campaign group. – Telegraph

It’s a position that most businesses would love to find themselves in: booming demand for their products. But soaring requests for hormone replacement therapy (HRT) among British women going through menopause have seen some manufacturers fail to keep up, leading to months of supply shortages and stories of women struggling to sleep or work effectively after being unable to obtain their prescriptions. – Guardian

About 15,000 Russian troops have been killed since President Putin launched his invasion of Ukraine nearly nine weeks ago, according to British intelligence. Ben Wallace, the defence secretary, told MPs that more than 2,000 Russian armoured vehicles had either been destroyed or captured, as he pledged to send more weapons to Ukraine. – The Times

Sue Gray expects to complete her report into Covid law-breaking parties across Westminster at the end of May at the earliest, the Guardian has been told. Sources said that the senior civil servant, who for months has been forced to sit on her findings about illegal gatherings while Scotland Yard carries out its own inquiry, believes the police investigation could drag on for several more weeks. – Guardian

More than a quarter of British Netflix subscribers allow their friends and family to use their accounts, with at least 17m homes estimated to be password sharing across the embattled streaming platform’s biggest markets in Europe. Netflix announced plans to crack down on the practice as one of a number of strategic moves designed to stem investor panic after it had more than $60bn (£47bn) wiped off its market value last week when it reported its first loss of subscribers in a decade. – Guardian

Summer holidays are at risk for millions because of huge delays in processing passports, ministers are warning as they urge people to get applications in “as soon as possible”. The government said there had been an unprecedented surge in demand after the lifting of coronavirus restrictions because five million people had delayed renewing their passports during the pandemic. – The Times

Lockdown and social distancing have been linked to a “worrying” surge of hepatitis cases in young children. Officials said a lack of exposure to common infections during children’s “formative” years, owing to pandemic measures, may be fuelling a global outbreak in cases of the deadly liver disease. – Telegraph


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