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ADVFN Morning London Market Report: Friday 6 May 2022

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London open: Stocks edge lower ahead of payrolls

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London stocks edged lower in early trade on Friday, taking their cue from a downbeat session on Wall Street, amid concerns about surging inflation and rate hikes.

At 0830 BST, the FTSE 100 was down 0.4% at 7,476.14, with all eyes on the release of the latest US non-farm payrolls report.

Oanda analyst Jeffrey Halley said: “Market expectations are for around 400,000 jobs to be added, roughly the same as March, with unemployment edging lower to 3.50%. A sharp divergence, up or down, from the median forecast, should produce a very binary outcome given the schizophrenic nature of the short-term financial markets at the moment.

“A print north of 500,000 should provoke a faster tightening by the Fed possible recession equals selling equities, bonds, gold, cryptos, DM and EM FX, buy US dollars reaction.

“Conversely, a print under 300,000 should see a sigh of relief less Fed tightening rally. Buy equities, bonds, gold, cryptos, DM and EM currencies and sell US dollars. It’s that sort of market.”

On home shores, the latest construction PMI is due at 0930 BST.

In equity markets, BA and Iberia owner IAG slid despite saying it expects to turn profitable from the second quarter as it reported narrower losses in the first three months of the year as passenger demand continued to recover from the Covid pandemic.

InterContinental Hotels was also in the red even as it reported a 61% jump in first-quarter group revenue per available room and said it had attained 82% of 2019’s level.

Promotional merchandise distributor 4imprint rallied after saying it expects annual operating profit to be above forecasts as revenue is on track to hit a better-than-expected £1bn.

Insurer Beazley was trading up as it said that 2022 had “started well”, with both gross premiums written and premium rates on renewal business increasing in the first quarter.

Outside the FTSE 350, shares of convenience store chain McColl’s tumbled after it said late on Thursday that it was increasingly likely to call in administrators as it continued to talk to lenders about a rescue deal.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Hiscox Ltd +5.74% +50.20 925.20
2 Admiral Group Plc +2.41% +56.00 2,377.00
3 Bp Plc +2.27% +9.50 428.40
4 Mondi Plc +2.04% +32.00 1,598.50
5 Direct Line Insurance Group Plc +1.43% +3.30 234.70
6 Shell Plc +1.26% +29.00 2,322.00
7 Bae Systems Plc +1.13% +8.60 768.60
8 Johnson Matthey Plc +1.01% +23.00 2,294.00
9 Informa Plc +0.39% +2.20 572.00
10 Barclays Plc +0.15% +0.22 150.04

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. -8.18% -11.72 131.60
2 Ocado Group Plc -7.18% -59.60 770.40
3 Segro Plc -4.59% -54.50 1,133.00
4 Rightmove Plc -4.20% -25.40 579.00
5 Croda International Plc -4.18% -312.00 7,158.00
6 Auto Trader Group Plc -3.86% -23.80 592.00
7 Micro Focus International Plc -3.45% -13.10 366.40
8 Hargreaves Lansdown Plc -3.39% -30.00 855.20
9 Intertek Group Plc -3.35% -173.00 4,989.00
10 Sage Group Plc -3.09% -22.20 696.00

 

US close: Dow loses more than 1,000 points as stocks plunge

US stocks tumbled by the close on Thursday, with the Dow losing more than 1,000 points, as market participants continued to digest the Federal Reserve’s move to raise interest rates by half a point.

At the close the Dow Jones Industrial Average was down 3.12% at 32,997.97, while the S&P 500 lost 3.56% to 4,146.97 and the Nasdaq Composite was 4.99% weaker at 12,317.69.

The Dow closed 1,063.09 points lower on Thursday, reversing the gains it recorded in the previous session after the Federal Reserve confirmed its first 50-basis point rate hike in more than two decades.

“After a strong finish last night US markets look set to give up all their post Fed gains after opening lower earlier today,” said CMC Markets chief market analyst Michael Hewson.

“The Nasdaq 100 is leading the way lower, while weekly jobless claims posted a surprise rise to 200k, from 181k the week before.

“On the earnings front e-commerce companies are getting hammered after eBay, Shopify and Etsy all reported disappointing revenues and/or guidance numbers.”

Stocks were in the red at the open after rising for a third straight session on Wednesday on the back of an announcement that the US central bank had hiked its benchmark interest rate by 50 basis points.

The Fed also said it would start cutting its balance sheet in June.

However, investor sentiment, which got a boost during chairman Jerome Powell’s news conference when he stated the Fed was “not actively considering” a larger 75 basis point rate hike, became somewhat more cautious at the start of trading on Thursday as traders continued to assess the Fed’s ability to slow inflation without triggering a recession.

On the macro front, new unemployment claims rose to 200,000 in the seven days ended 30 April, according to the Department of Labor, up from a revised print of 181,000 in the previous week for the highest reading since mid-February.

On a non-seasonally adjusted basis, initial claims slipped 7,164 week-on-week to 196,962, with marked declines in California and Ohio, while the four-week moving average, which aims to strip out week-to-week volatility, came in at 1.41m – down 3,250 from the previous week’s revised print.

In the corporate space, Shell slipped 0.05% on Wall Street even after it recorded its best quarterly profit since 2008, amid soaring commodity prices following Russia’s invasion of Ukraine.

E-commerce platform provider Shopify plunged 14.91% after it reported a first quarter loss, and announced its acquisition of Deliver Inc in a $2.1bn deal.

On the upside, cereal giant Kellogg was ahead 3.5% after it beat expectations on first quarter earnings, and lifted its guidance.

 

Friday newspaper round-up: Big tech, Chelsea FC, McColl’s, KPMG

A new tech watchdog will be given the power to impose multibillion-pound fines on major firms such as Google and Facebook if they breach rules designed to protect consumers and businesses. The Digital Markets Unit (DMU) will protect small businesses from predatory practices and will give consumers greater control over how their data is used, the government said. – Guardian

Todd Boehly’s consortium’s bid to buy Chelsea is now expected to be put forward for Premier League and government approval. On the day that Roman Abramovich denied he wants his £1.6bn loan to Chelsea repaid, the likelihood of the Boehly bid being successful moved a step closer. – Guardian

Ministers are to pit homeowners against property developers in housing reforms to tackle “generation rent” to be signalled in the Queen’s Speech. In a shake-up inspired by the sale of council houses under Margaret Thatcher, 2.5m households in England who rent properties from housing associations will be given the power to purchase their homes at a discounted price. – Telegraph

McColl’s is close to calling in administrators as the convenience store chain teeters on the brink of becoming one of Britain’s biggest retail failures with 16,000 jobs at risk. The retailer insisted no decision had been made and it was still in talks to secure emergency cash to keep it afloat. – Telegraph

KPMG has fired the latest shot in the professional services sector’s battle for talent by giving all its rank-and-file staff in the UK a pay rise of at least £2,000. Some workers will receive a flat pay increase of £2,000, but others will get a £4,000 rise. The new salaries will be backdated to April and are in addition to the the Big Four accountancy firm’s annual pay review in October. KPMG said the pay rises would be given only to its 15,800 UK employees and not to the 766 partners and associate partners. – The Times

 

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