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ADVFN Morning London Market Report: Wednesday 4 May 2022

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London open: Stocks edge down ahead of Fed announcement


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

At 0845 BST, the FTSE 100 was down 0.3% at 7,537.54.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The beady eye of the Federal Reserve is keenly trained on soaring inflation and right now the central bank is set on bringing it down swiftly. It’s pretty much a given that there will be a fresh ratcheting up of rates announced by the Fed today, with expectations of a 0.5% rate hike. What is uncertain is just how hawkish the central bank will be in its forecasts and to what extent it will swoop on its $9 trillion balance sheet by offloading bonds.

“The worry winding through financial markets is that hunting down rampant inflation too aggressively could squeeze life out of the US economy, particularly as unemployment rates have only recently dropped back to pre-pandemic levels. But coming down hard on demand, when supply issues are fuelling much of the spiralling price rises, either through the war in Ukraine or China’s zero-Covid policy may not have the desired effect very quickly.”

In equity markets, Direct Line slid after the insurance company reported lower gross premiums for the first quarter as new rules on pricing practices impacted results. Admiral also slumped.

Wetherspoons was in the red as the pub chain posted a dip in third-quarter sales and warned over rising costs but said it expects to break even this year as sales improve slowly.

On the upside, Flutter Entertainment rallied as it said group revenues grew IN the three months ended 31 March as the number of average monthly players rose by 15%.

Aston Martin Lagonda also gained after it reported a rise in adjusted core earnings amid strong retail demand and announced the appointment of former Ferrari boss Amedeo Felisa as chief executive.

Elsewhere, Johnson Matthey was boosted by an upgrade to ‘buy’ from ‘hold’ at Jefferies.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Flutter Entertainment Plc +4.61% +382.00 8,672.00
2 Johnson Matthey Plc +1.75% +39.00 2,264.00
3 Bae Systems Plc +1.75% +13.40 780.00
4 Standard Chartered Plc +1.38% +7.80 573.80
5 Hsbc Holdings Plc +1.31% +6.70 519.50
6 Bp Plc +0.86% +3.55 417.80
7 Shell Plc +0.77% +17.00 2,233.00
8 Intertek Group Plc +0.60% +30.00 5,032.00
9 Pearson Plc +0.58% +4.60 794.00
10 Relx Plc +0.51% +12.00 2,363.00


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Direct Line Insurance Group Plc -6.77% -17.30 238.20
2 Kingfisher Plc -4.76% -12.10 242.20
3 Admiral Group Plc -3.87% -99.00 2,462.00
4 Segro Plc -3.57% -43.00 1,161.00
5 Easyjet Plc -3.19% -17.60 533.60
6 Associated British Foods Plc -3.16% -50.50 1,549.50
7 Ocado Group Plc -3.15% -29.00 890.40
8 United Utilities Group Plc -2.89% -32.50 1,093.00
9 Coca-cola Hbc Ag -2.85% -46.50 1,583.50
10 St. James’s Place Plc -2.57% -33.50 1,268.50


Europe open: Shares slip as investors eye Fed meeting

European markets slipped into the red at the open on Wednesday as investors eyed a monetary policy decision from the US Federal Reserve later in the day.

The pan-European Stoxx 600 was down 0.6% in early deals with all major regional bourses lower. Markets are looking for a US rate hike rates of half a percentage point as it looks to stymie surging inflation.

“Whether the Fed hikes by 0.50% or not has been analysed to death. The crux will be the statement and the Fed’s forward guidance on the path of interest rates,” said OANDA analyst Jeffery Halley.

“Markets, perhaps like the Fed, are clinging to the hope that the terminal Fed Funds rate is mostly priced into the market now. There remain definite upside risks to that point of view, as there are across much of the Anglo-Saxon world.”

“Perhaps the only mitigating factor will be the start of quantitative tightening by the Fed. That may have more of an impact than Fed Fund hikes if it starts pushing the US yield curve higher once again.”

On the Ukraine war front, the European Union is expected to propose additional oil sanctions on Russia as Moscow’s forces continue to bombard random targets in eastern Ukraine.

The European Commission has put forward new sanctions against the Kremlin which will include a six-month phase out of Russian crude imports.

In equity news, Kindred Group shares climbed more than 5% in early trade after US hedge fund Corvex Management disclosed a 10% stake in the online gambling company.

Shares in Belgian chemicals company Solvay also added more than 5% after raising its guidance.

Swedish construction company Skanska slid more than 7% after its first-quarter earnings report disappointed investors.

Direct Line shares fell as the UK insurer reported lower premium revenues as new rules banning excessive price hikes for loyal customers kicked in.


Wednesday newspaper round-up: Network Rail, Klarna, Brewdog

Cuts to rail funding could lead to more serious rail accidents as well as fewer, more crowded trains, unions have said. A TUC report said passenger safety will be compromised should Network Rail press ahead with reductions to its maintenance workforce to save £100m a year. About 2,500 jobs are expected to go and the TUC said it would be impossible to make such cuts without putting passengers at risk. It warned that the Treasury was also demanding cuts from train operators that would disrupt services and leave fewer trains running, leaving commuters “packed like sardines”. – Guardian

The buy now, pay later company Klarna will start reporting UK customer debts to credit agencies for the first time next month, in a move that could affect shoppers’ credit ratings from 2023. The move is understood to be the result of two years of talks with the credit reference companies Experian and TransUnion, and comes as buy now, pay later (BNPL) firms face pressure from MPs and campaigners who say they should prevent customers from taking on more debt than they can afford. – 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

Former employees of the Bank of England, the institution responsible for controlling inflation, may soon be the only pensioners in the country more than fully insulated from the cost-of-living crisis. The 5,500 retired members of the Bank’s staff pension fund are set to receive a pension increase of about 11 per cent this summer because of a generous quirk in the terms of their scheme. Unusually, the vast majority of Bank pensioners still get their incomes raised by the growth in the retail prices index, which hit 9 per cent last month and is forecast to rise well into double figures in the coming months. – The Times

The boss of Brewdog is to give £100 million of shares to staff and hopes to lead the business for years to come. James Watt intends to donate a 5 per cent stake over the next four years to salaried workers at the firm. The company said that 750 of its 2,200 people were eligible for the scheme, which could mean that each receives shares valued at about £120,000. – The Times


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