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ADVFN Morning London Market Report: Tuesday 3 May 2022

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London open: Stocks nudge lower but BP gains after results

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London stocks nudged lower in early trade on Tuesday as traders returned to their desks after the Bank Holiday weekend, with results from oil giant BP in focus.

At 0855 BST, the FTSE 100 was down 0.1% at 7,533.91.

BP gained ground even as it said it swung to a massive first-quarter loss as a result of its decision to exit Russia after the country’s invasion of Ukraine. Analysts said investors were encouraged by better-than-expected underlying profits.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘”$20.4bn is an eye-watering quarterly loss for BP but it’s far from unexpected. The market had already factored in a huge hit due to its Russia exit and now the company has unveiled the price to pay is a big and bold $25.5bn. That’s the amount it has set aside in pre-tax charges and the cost of extricating itself from Rosneft.

“But surprising on the upside is the boost to underlying profits which came in at $6.2bn, sharply higher than the consensus expected of around $4.5bn. The company has been raking in cash as the supply squeeze on oil markets has intensified. The war and the high geopolitical tensions have brought about a surge in the oil price which is up 40% since the start of the year, spiking in the first weeks of the war at $139.”

Elsewhere, Avast was fell after the cybersecurity firm said it expected annual revenue to slow and margins to be squeezed amid a “challenging global backdrop”.

In broker note action, M&G and St James’s Place both rallied after upgrades to ‘buy’ at HSBC.

Meanwhile, AO World was knocked lower by a downgrade to ‘underweight’ at JPMorgan, but Auction Technology was lifted by an upgrade to ‘overweight’ by the same outfit.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Micro Focus International Plc +5.29% +20.10 399.80
2 Bae Systems Plc +3.86% +28.60 768.60
3 Bp Plc +3.46% +13.55 405.10
4 International Consolidated Airlines Group S.a. +3.15% +4.54 148.50
5 Whitbread Plc +2.80% +79.00 2,896.00
6 Bt Group Plc +2.79% +4.95 182.30
7 Marks And Spencer Group Plc +2.36% +3.25 141.00
8 Sainsbury (j) Plc +1.63% +3.80 237.10
9 Standard Chartered Plc +1.49% +8.20 560.00
10 Tui Ag +1.48% +3.40 233.70

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Segro Plc -8.86% -119.00 1,223.50
2 Croda International Plc -4.23% -330.00 7,474.00
3 Glencore Plc -3.58% -17.80 479.50
4 Land Securities Group Plc -3.19% -24.00 728.60
5 Ferguson Plc -2.96% -300.00 9,840.00
6 Antofagasta Plc -2.90% -45.00 1,506.00
7 Spirax-sarco Engineering Plc -2.88% -350.00 11,800.00
8 Unilever Plc -2.72% -101.00 3,618.00
9 British Land Company Plc -2.70% -14.00 503.80
10 Ocado Group Plc -2.58% -23.80 900.20

 

Europe open: Shares rally as investors eye central bank moves

European markets edged ahead at the open on Tuesday after losses in the previous session as Australia raised interest rates for the first time in more than a decade and investors monitor key monetary policy decisions around the world.

The pan-European Stoxx 600 index climbed 0.5% in early deals as momentum from a Wall Street rally overnight boosted sentiment.

Investors were also eyeing monetary policy decisions from major central banks, with the US Federal Reserve expected to announce a half-percentage point increase to its benchmark interest rate on Wednesday.

Banks are taking more aggressive stances to combat soaring inflation.

Australia on Tuesday hiked its interest rate for the first time in more than a decade as consumer prices surge.

“The decision by the Reserve Bank of Australia to lift its key interest rate a notch more than expected highlights the growing consensus among central banks that much tougher action is needed to rein in soaring inflation which is causing such a headache for economies,” said Hargreaves Lansdown analyst Susannah Streeter.

“With wage growth also picking up steam along with consumer prices, the signs and signals are coming thick and fast that more hikes should be expected.”

In equity news, shares in UK energy giant BP rose as the company reported better-than-expected underlying first-quarter profits despite booking a $23bn writedown on its exit from Russia after Moscow’s unprovoked invasion of Ukraine.

Portuguese energy company Galp slid 5.2% after its results.

 

Tuesday newspaper round-up: Executive pay, grain, Apple, global slowdown

Six in 10 people think company bosses should be prevented from earning more than 10 times the average paid to employees, according to polling shared exclusively with the Guardian. A poll for the High Pay Centre, a thinktank that campaigns for fairer pay for workers, found that 63% of Britons said chief executives should be paid no more than 10 times the earnings of lower- or mid-ranking employees. – Guardian

The director of the United Nations World Food Programme in Germany has warned that millions of tonnes of grain is stuck in Ukraine due to sea ports being blocked by Russian military action. Martin Frick said about 4.5 million tonnes of grain in containers at Ukrainian ports could not be shifted due to unsafe or occupied sea routes, some of which had been mined, as well as inaccessible ports. – Guardian

In the wake of unprecedented upheaval during the Covid crisis, much of Britain has returned to normal. From large Northern cities to seaside towns, footfall is up, restaurants are busy again and public transport use is recovering. But this rebound largely seems to have passed by the biggest city of them all. London has been left at the back of the pack as commuters and tourists stay away. The Centre for Cities, a think tank, has London languishing at the bottom of its recovery rankings. – Telegraph

Apple has been accused of breaking competition law by limiting rivals’ ability to create contactless payment apps as a Brussels assault on US big tech gathers pace. Regulators in the European Union have claimed that the company is preventing competitors from easily creating a system for tap-and-go transactions on the iPhone “to the benefit of its own solution Apple Pay”. Apple faces a multi-billion euro fine if found to have broken the rules. – Telegraph

Fears about the health of the global economy have mounted after downbeat data from Europe, China and the United States fuelled concern that rampant inflation, disrupted supply chains and Russia’s invasion of Ukraine threaten a prolonged global slowdown. The S&P Global eurozone manufacturing purchasing managers’ index fell to 55.5 last month, down from 56.5 in March and to its lowest level in 15 months. It was the third consecutive month that the figure in the survey has declined and was accompanied by a warning that the bloc had slowed to a “near standstill”. – The Times

 

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