ADVFN Morning London Market Report: Friday 13 May 2022

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London open: Stocks recover poise after heavy losses

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London stocks rose in early trade on Friday, recovering from heavy losses earlier in the week as markets were rattled by worries about inflation and a global growth slowdown.

At 0855 BST, the FTSE 100 was up 1.1% at 7,310.79.

Victoria Scholar, head of Investment at Interactive Investor, said: “After a mixed session on Wall Street, Asian markets came bouncing back overnight with the Nikkei rebounding by more than 2.5% and positive momentum has carried forward into the European session.”

Despite the positive tone, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said investors were continuing to wrestle with worries over inflation as the oil price climbs back up again and supply concerns resurface amid ongoing geopolitical tensions.

“As the era of cheap money has hurtled to an end, lowering liquidity in the markets, trading in the sessions ahead is set to stay volatile,” she said.

Corporate news was thin on the ground, but company software provider Sage Group gained after it reported flat interim profits and revenue as organic growth in all regions was offset by disposals and foreign exchange headwinds. The company said pre-tax profit for the six months to March 31 fell 1% to £189m and revenue slipped to £934m from £937m.

Wholesale power firm ContourGlobal was also up after it said its diversified business remained “resilient and well positioned” despite “unprecedented turbulence” in global energy markets and that it had performed ahead of its expectations in the first quarter.

In broker note action, Drax was knocked lower by a downgrade to ‘underperform’ from ‘neutral’ at Credit Suisse, while Howden Joinery fell after a downgrade to ‘hold’ at Stifel.

Vodafone was also in the red after a downgrade to ‘hold’ from ‘buy’ at Jefferies, which cited “intractable headwinds”.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Ocado Group Plc +3.49% +27.00 801.00
2 Flutter Entertainment Plc +3.33% +282.00 8,750.00
3 Whitbread Plc +3.30% +85.00 2,658.00
4 Tui Ag +2.97% +6.70 232.40
5 Fresnillo Plc +2.92% +20.60 725.00
6 Marks And Spencer Group Plc +2.91% +4.10 145.00
7 Scottish Mortgage Investment Trust Plc +2.90% +21.80 772.60
8 Compass Group Plc +2.88% +49.50 1,767.00
9 Smith & Nephew Plc +2.87% +35.00 1,254.50
10 Hsbc Holdings Plc +2.78% +13.45 496.85

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Pearson Plc -2.65% -20.00 735.20
2 Bt Group Plc -1.52% -2.70 175.45
3 Vodafone Group Plc -1.38% -1.64 117.08
4 Auto Trader Group Plc -0.98% -5.40 547.20
5 Hiscox Ltd -0.96% -9.00 930.80
6 Mondi Plc -0.71% -11.00 1,541.50
7 Rightmove Plc -0.47% -2.60 555.60
8 Admiral Group Plc -0.31% -7.00 2,238.00
9 Smurfit Kappa Group Plc -0.26% -8.00 3,117.00
10 Centrica Plc -0.16% -0.12 76.16

 

US close: Stocks mostly lower as sell-off rolls on

Wall Street stocks were mostly weaker at the close on Thursday, although they were off their earlier troughs, as inflation data continued to weigh on sentiment.

At the close, the Dow Jones Industrial Average was down 0.33% at 31,730.30, as the S&P 500 lost 0.13% to 3,930.08, while the Nasdaq Composite managed gains of 0.06% to 11,370.96.

The Dow closed 103.81 points lower on Thursday, adding to the losses it recorded on Wednesday as April’s CPI data revealed that consumer prices had jumped 8.3%, higher than expected and close to a 40-year high of 8.5%.

The CPI reading led market participants to continue to offload risky assets such as tech stocks and bitcoin, with Apple stock heading south and pushing the tech behemoth into a bear market, while the benchmark cryptocurrency fell to roughly $23,150 in early trading.

With the CPI reading still in focus, growth in the US producer price index slowed as expected in April, according to figures released on Thursday by the Labor Department.

The producer price index for final demand rose 0.5%, in line with analysts’ expectations and down from 1.6% in March and 1.1% in February.

On the year, PPI rose 11% in April, versus 11.5% the month before and expectations for a 10.7% jump.

Core PPI, which excludes food and energy prices, was up 0.4% on the month compared with an upwardly-revised 1.2% in March.

On the year, core PPI rose 8.8%.

Elsewhere, US first-time jobless claims ticked up by 1,000 in the week ended 7 May to hit 203,000, ahead of both the prior week’s upwardly revised print of 202,000 and estimates for a reading of 195,000.

According to the Labor Department, the four-week moving average was 192,750, an increase of 4,250 from the previous week’s revised reading, which grew from 188,000 to 188,500,

In corporate headlines, Walt Disney shares closed 0.86% weaker after posting mixed earnings results overnight, with higher-than-expected streaming subscriber growth being paired with a warning regarding the impact of Covid-19 lockdowns on its Asian theme parks.

Six Flags Entertainment tumbled 4.71%, despite beating estimates with its first-quarter earnings per share and revenues, which came in at $1.04 and $138.0m, respectively.

 

Friday newspaper round-up: Twitter, water companies, Vodafone

Twitter announced the departure of two top leaders in a major shakeup that comes as billionaire Elon Musk is working to close a $44bn deal to acquire the company. In an email to employees on Thursday, chief executive Parag Agrawal said Twitter’s leaders for consumer product and revenue will leave the company. Agrawal said the company was temporarily pausing hiring, and would review all existing job offers to determine whether any “should be pulled back”. – Guardian

Pressure is mounting on the government to deliver an emergency summer mini-budget after recession fears were heightened by a surprise contraction in the economy in March. Evidence that the cost of living crisis was biting even before the arrival last month of dearer energy bills and higher taxes led to a sharp selloff in shares and a drop in the pound’s value to a two-year low against the US dollar. – Guardian

Water companies and broadband providers will be slapped with hundreds of thousands of pounds in penalties for botched works that leave potholes or poor quality roads under a crackdown by Grant Shapps. The Transport Secretary is targeting utility companies with the rollout of a new inspections unit to address “the plague of potholes” on the country’s roads. – Telegraph

Millions of homeowners face negative equity as interest rates rise and property prices collapse, leaving them unable to sell. Britain’s post-credit crunch age of rock-bottom borrowing costs is at an end, while interest rates on some mortgages have doubled in a matter of months. The housing market faces a reckoning. – Telegraph

Merger talks between Vodafone and Three in the UK have been revived as consolidation in the European telecoms market gathers pace. A tie-up between Britain’s third and fourth largest mobile network operators has been a prospect for some time, although discussions last year failed to lead to a deal. – The Times

 

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