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ADVFN Morning London Market Report: Monday 9 May 2022

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London open: Stocks edge lower on weak Asian cues

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London stocks edged lower in early trade on Monday, taking their cue from a downbeat Asian session after the release of disappointing Chinese trade data.

At 0845 BST, the FTSE 100 was down 0.3% at 7,364.96.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The week has got off to a negative start for the UK’s market, a result of poor sentiment coming from the US and China. In the US, the trend has been negative for weeks, but had started to look brighter, before comments from the Bank of England at the end of last week about weak economic growth applied the brakes to momentum.

“Anxiety is stemming from the Fed’s next moves, with uncertainty creeping in about the scale and speed of interest rate hikes. All this comes at the same time as China grapples with ongoing lockdowns and the prevailing economic storm these entail. We saw Chinese export growth slow to two-year lows in April. That said, there have been tentative hints that China is stepping away from its blanket zero-Covid policy, which may mean an easing of the very tough conditions in the all-important production lines in the country.

“There are of course ongoing geopolitical tensions, with the situation in Ukraine far from resolved. Victory Day in Russia is likely to increase tensions, as the world waits to hear President Putin’s long-awaited speech.”

In equity markets, property firms Shaftesbury and Capital & Counties were both weaker as they confirmed they are in advanced discussions about a possible merger.

Responding to press speculation of a £3.5bn deal, they said: “The possible merger would create a REIT focused on the West End of London with a portfolio of circa 2.9 million square feet of lettable space located in high-profile destinations including Covent Garden, Carnaby, Chinatown and Soho.

“The combined ownership would comprise c.1.8 million square feet of retail and hospitality space, together with office and residential accommodation of c.1.1 million square feet.”

Rightmove was in the red after it announced that chief executive Peter Brooks-Johnson will step down from the board and leave the company in the coming year.

Elsewhere, cyber security company NCC Group nudged up after saying it appointed a new chief executive and lifting revenue guidance for the second half of the year.

Energean rallied as the hydrocarbon exploration and production company said its Athena exploration well had made a commercial gas discovery off the coast of Israel.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Sainsbury (j) Plc +2.28% +5.20 233.10
2 Hiscox Ltd +0.99% +9.20 935.80
3 British American Tobacco Plc +0.91% +30.00 3,330.00
4 Imperial Brands Plc +0.63% +10.50 1,668.00
5 National Grid Plc +0.59% +7.00 1,186.50
6 Shell Plc +0.59% +13.50 2,313.00
7 Bt Group Plc +0.43% +0.75 176.45
8 Unilever Plc +0.38% +13.50 3,610.50
9 Bae Systems Plc +0.32% +2.40 758.40
10 Kingfisher Plc +0.21% +0.50 237.50

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Rightmove Plc -7.02% -39.20 519.60
2 Glencore Plc -4.69% -22.85 464.75
3 Flutter Entertainment Plc -4.49% -382.00 8,118.00
4 Scottish Mortgage Investment Trust Plc -4.28% -35.60 796.80
5 Smith (ds) Plc -4.01% -13.00 310.80
6 Croda International Plc -3.95% -278.00 6,760.00
7 Bhp Group Limited -3.89% -103.50 2,554.00
8 Antofagasta Plc -3.84% -56.00 1,401.00
9 Rio Tinto Plc -3.79% -206.00 5,234.00
10 Whitbread Plc -3.74% -101.00 2,603.00

 

US close: Stocks extend losses following nonfarm payrolls report

Wall Street stocks closed lower on Friday as stocks continued to head south despite a slightly better than expected nonfarm payrolls report.

At the close, the Dow Jones Industrial Average was down 0.30% at 32,899.37, while the S&P 500 was 0.57% weaker at 4,123.34 and the Nasdaq Composite saw out the session 1.40% softer at 12,144.66.

The Dow closed 98.60 points lower on Friday, extending losses recorded in the previous session when the blue-chip index shed more than 1,000 points and delivered its worst single-day performance since 2020.

Friday’s primary focus was news that hiring in the US continued growing at a steady pace last month. According to the Department of Labor, nonfarm payrolls increased by 428,000 in April, ahead of the rise of 390,000 pencilled in by economists.

The rate of unemployment was unchanged from the month before at 3.6%, as expected, while average hourly earnings expanded at a year-on-year pace of 5.5% – one-tenth of a percentage point less than in March but also in line with consensus estimates. However, the labour force participation rate was seen as somewhat of a weak area, little changed month-on-month and still 1.2% below pre-Covid levels.

The Treasury market also weighed on equities on Friday, with the yield on the benchmark 10-year note rising above 3.12% for the first time since 2018.

Elsewhere on the macro front, US consumer credit increased by $52.43bn in March, according to the Federal Reserve, up from a downwardly revised $37.7bn gain in the prior month, and well ahead of market expectations of $25bn, for the biggest monthly gain since December 2010. On an annual basis, consumer credit grew 14% following a downwardly revised 10.2% increase in February.

In the corporate space, Dish Network reported first-quarter earnings of $0.68 per share, just short of the $0.69 expected on the Street, on revenues of $4.33bn, which were also missed estimates of $4.38bn, while Under Armour shares slumped after the sportswear company’s earnings missed estimates on both the top and bottom lines.

 

Monday newspaper round-up: Barclays, McColl’s, Randall & Quilter

Barclays has avoided nearly £2bn in tax via a lucrative arrangement in Luxembourg that allowed it to pay less than 1% on profits in the tax haven for more than a decade. A Guardian analysis of Barclays’ tax bills shows it is still benefiting from a controversial decision in 2009, in which it booked profits from the $15.2bn sale of a fund management business in Luxembourg rather than in the UK where it is headquartered. – Guardian

The Conservative party donor at the centre of a bribery scandal that drew in two former prime ministers is to leave the oil group he ran for 20 years. Ayman Asfari, the Syrian-born executive who built London-listed Petrofac into a global oil engineering company, will leave the company next year. – Guardian

Morrisons sought to gatecrash a takeover for failed convenience store chain McColl’s last night in a snub to the billionaire owners of Asda who were on the brink of securing a deal. Morrisons, which is owned by the US private equity firm Clayton, Dubilier & Rice, has made a second offer to buy McColl’s that includes a pledge to repay its lenders in full immediately, one of the key sticking points of the supermarket’s previous bid, Sky News reported. – Telegraph

A new nuclear reactor plant in Essex is at risk of collapse because of political opposition to a Chinese investor’s involvement, French energy giant EDF has warned. The Big Six energy supplier has told investors it has no obligation to keep funding the project in Bradwell, Essex, and that there is now “great uncertainty” over whether it can be delivered. – Telegraph

One of the biggest shareholders in Randall & Quilter has rejected a £482 million takeover bid to take the Aim-listed insurer private. The decision by Slater Investments to oppose the deal raises the risk that the sale of the insurer to Brickell, an American investment vehicle, falls apart. – The Times

 

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