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London open: FTSE rallies as oil prices rise
London stocks rose in early trade on Monday, helped along by strength in the energy sector, although trade was expected to be fairly quiet as US markets will be closed for the July 4 holiday.
At 0840 BST, the FTSE 100 was up 1.2% at 7,252.66.
Richard Hunter, head of markets at Interactive Investor, said: “Markets have generally started the new half year in more positive mood, possibly boosted by some early quarter portfolio positioning.
“US markets started July on a stronger note, ahead of another shortened trading week due to the Independence Day holiday today. The week will nonetheless bring some more economic clues, with the release of the latest Federal Reserve minutes and the non-farm payrolls report on Friday.
“The latter will be of particular interest to investors, since recent economic data has tended to suggest that the Fed’s recent aggressive tightening policy is already starting to have some impact. A slowing of consumer spending and income, alongside a higher than expected drop in manufacturing activity has left the door open to more bullish investors, who anticipate a lighter touch from the Fed if the contractionary signs continue.”
As far as UK equity markets are concerned, Hunter said: “With the second quarter reporting season closing in quickly amid lower expectations, hopes remain that there could be some rather more upbeat noises coming from boardrooms on the immediate outlook.”
Oil and gas company Harbour Energy was the standout gainer on the FTSE 100 index, closely followed by BP and Shell, as oil prices rose amid concerns about supply.
Spirax-Sarco Engineering gained as the thermal energy management specialist said it had entered into exclusive negotiations to buy Vulcanic from French private equity group Qualium for €261.7m.
Low-cost carrier Wizz Air flew a little higher after saying it almost trebled passenger numbers last month as more people resumed travelling as Covid restrictions eased.
On the downside, Pets at Home slid after RBC Capital Markets downgraded the shares to ‘underperform’ from ‘sector perform’ and slashed the price target to 280p from 330p. The bank said PETS has a strong position as a specialist player in the UK pet care market. “However, we believe valuation looks full and consensus forecasts look demanding.”
Homeware retailer Dunelm was also knocked lower by a rating downgrade at RBC, which cut the stock to ‘sector perform’ from ‘outperform’. The bank said it expects margins to moderate in the near term, given more normalised promotional activity and input cost pressure.
Builders’ merchant Grafton was down after it announced that Gavin Slark would be stepping down as chief executive later in the year after 11 years in the role.
AO World tumbled following a report the online electrics retailer was facing a cash crunch after a leading credit insurer cut cover for suppliers following a deterioration in its finances. The Sunday Times cited market sources as saying that Atradius has slashed cover for suppliers to AO.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp Plc | +3.16% | +12.15 | 396.65 |
| 2 |  |
Spirax-sarco Engineering Plc | +3.03% | +305.00 | 10,360.00 |
| 3 |  |
Bt Group Plc | +2.72% | +5.05 | 190.40 |
| 4 |  |
Auto Trader Group Plc | +2.69% | +14.60 | 556.80 |
| 5 |  |
Hikma Pharmaceuticals Plc | +2.59% | +42.00 | 1,663.50 |
| 6 |  |
Shell Plc | +2.36% | +50.00 | 2,171.00 |
| 7 |  |
Vodafone Group Plc | +2.03% | +2.58 | 129.94 |
| 8 |  |
Standard Chartered Plc | +2.02% | +12.40 | 625.40 |
| 9 |  |
Flutter Entertainment Plc | +1.74% | +144.00 | 8,426.00 |
| 10 |  |
Halma Plc | +1.59% | +32.00 | 2,042.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Micro Focus International Plc | -2.95% | -8.20 | 270.10 |
| 2 |  |
Tui Ag | -2.73% | -3.75 | 133.40 |
| 3 |  |
Carnival Plc | -1.86% | -12.20 | 644.60 |
| 4 |  |
Ocado Group Plc | -1.25% | -10.20 | 803.80 |
| 5 |  |
International Consolidated Airlines Group S.a. | -1.05% | -1.14 | 107.70 |
| 6 |  |
Prudential Plc | -0.87% | -9.00 | 1,022.00 |
| 7 |  |
Kingfisher Plc | -0.81% | -2.00 | 244.90 |
| 8 |  |
Whitbread Plc | -0.64% | -16.00 | 2,493.00 |
| 9 |  |
3i Group Plc | -0.64% | -7.00 | 1,095.00 |
| 10 |  |
Sainsbury (j) Plc | -0.58% | -1.20 | 206.20 |
US close: Stocks move higher in first session of Q3
Wall Street stocks closed higher on Friday ahead of the Independence Day holiday as major indices looked to put a horrific first half behind them.
At the close, the Dow Jones Industrial Average was up 1.05% at 31,097.26, while the S&P 500 was 1.06% firmer at 3,825.33 and the Nasdaq Composite saw out the session 0.90% stringer at 11,127.85.
The Dow closed 321.83 points higher on Friday after the blue-chip index wrapped up the previous session in the same state it spent much of the last two quarters – in the red.
Friday’s primary focus will be the Institute for Supply Management’s manufacturing purchasing managers index, which fell to 53 in June, down from 56.1 in May and pointing to the slowest growth in factory activity in two years. Economists were expecting a print of 54.9. New orders contract from 55.1 in May to 49.2 in June, while employment also further declined from 49.6% to 47.3.
The ISM’s report also showed that business sentiment remained optimistic regarding demand, but companies cautioned that continued supply chain and pricing issues were still very much their primary concerns going forward.
Elsewhere on the macro front, the S&P Global manufacturing PMI was revised slightly higher to 52.7 in June, up from a preliminary reading of 52.4, but still pointed to the slowest growth in factory activity since July 2020. New orders fell, primarily due to inflationary pressures, weak client confidence in the outlook, and supply-chain disruptions.
Finally, construction spending in the United States decreased 0.10% month-on-month in May to hit $1.77trn, according to the Census Bureau, as spending on private construction was virtually unchanged and public construction spending slipped 1.6% to $343.8bn.
In terms of company news, Micron and Kohl’s both issued disappointing guidance, while General Motors warned that Q2 manufacturing issues could drag net income for the quarter to between $1.6bn and $1.9bn – well and truly short of the $2.5bn expected on the Street.
No major corporate earnings were slated for release on Friday.
Monday newspaper round-up: Russian assets, Amazon, City banks
Truss told MPs last week she was supportive of the idea that the government could seize frozen Russian assets in the UK and redistribute them to victims of Russia’s war in Ukraine. She said: “I am supportive of the concept. We are looking at it very closely. The Canadians have in fact just passed legislation This is an issue that we are working on jointly with the Home Office and the Treasury, but I certainly agree with the concept. We just need to get the specifics of it right.” – Guardian
Amazon is launching a fleet of e-cargo bikes and a team of on-foot delivery staff to replace thousands of van deliveries on London’s roads. The online retailer is opening its first “micromobility” hub in Hackney, east London, which – along with an existing fleet of electric vehicles – will contribute to 5m deliveries a year across about a 10th of the capital’s ultra low emission zone postcode districts. The bikes will be operated by a variety of partner businesses, not directly by Amazon, it is understood. – Guardian
British banks have made more profit than French rivals for the first time since 2015, despite efforts by EU officials to shift more jobs out of London and onto the continent post-Brexit. UK banks generated $55.1bn (£46bn) in pre-tax profits last year as big lenders benefited from an economic bounce back from Covid, a private equity deal-making boom and a soaring housing market. – Telegraph
Elon Musk’s Tesla is facing a $440m (£363.5m) writedown on its Bitcoin holdings after a spectacular slump in the digital currency’s value. Tesla bought $1.5bn worth of Bitcoin early last year in a radical move that made it the biggest company to move part of its cash reserves into cryptocurrency. – Telegraph
One of Europe’s largest clusters for life science companies is to be created via a joint venture between UBS Asset Management and Reef Group to invest up to £900 million to develop land at a GSK research site in Stevenage. UBS Asset Management, other unnamed investors and Reef, as development partner, have acquired 33 acres of land from GSK, the FTSE 100 drugs group, to create an estimated 1.4 million sq ft of laboratory and office facilities, providing space for up to 5,000 “highly skilled” new jobs. The Hertfordshire site hosts one of GSK’s two main global research and development facilities as well as the Cell and Gene Therapy Catapult, a biotechnology hub, and the Stevenage Bioscience Catalyst. – The Times
The Manufacturing Technology Centre, an organisation that develops and implements technology emerging from universities, is offering its 820 staff the option of a four-day week. The decision follows a two-year trial of flexible working conducted with more than 600 of its staff members, which saw half of them reporting higher productivity and morale when they were able to choose how and when they worked. – The Times
