ADVFN Morning London Market Report: Thursday 21 July 2022

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London open: Stocks edge down ahead of ECB announcement

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London stocks edged lower in early trade on Thursday as investors waded through an avalanche of corporate updates, mulled the latest borrowing figures and looked ahead to the latest policy announcement from the European Central Bank.

At 0910 BST, the FTSE 100 was down 0.4% at 7,235.20.

Victoria Scholar, head of investment at Interactive Investor, said: “Markets are treading water ahead of the crucial European Central Bank rate decision at lunchtime. The ECB is expected to hike rates for the first time in 11 years, ending its experiment with negative interest rates. Financial markets are pricing in a 25-basis point hike although a 50-basis point increase remains a possibility amid pressure to follow the Fed and other central banks with more aggressive interest rate increases.”

On home shores, data out earlier from the Office for National Statistics showed that public sector net borrowing rose by £4.1bn to £22.9bn in June, which is the second-highest for June since monthly records began in 1993.

The figure was above consensus expectations of £22.5bn and higher than the Office for Budget Responsibility’s March forecast of £22.3bn.

In equity markers, Dechra Pharmaceuticals tumbled after it raised around £180m in a discounted share placing for the acquisition of US-based Piedmont Animal Health.

Anglo-Russian precious metals miner Polymetal was also in the red after the release of its second-quarter production results.

On the upside, kitchen supplier Howden Joinery rallied after it posted a jump in first-half profit and revenue as it said it was trading “well ahead” of pre-Covid levels and backed its outlook for the year.

3i Group gained after saying it had made a good start to the new financial year, with both portfolios trading “resiliently”.

JD Sports was in the black following reports it is looking to sell the Footasylum chain to Aurelius Group.

Frasers surged after lifting its full-year profit outlook despite a “challenging” backdrop. The company now expects adjusted pre-tax profit for the full year to be between £450m and £500m, up from previous guidance of £300m to £350m.

MoneysupermarketVolution and IG Group were all trading higher after updates.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Itv Plc +2.24% +1.54 70.40
2 Admiral Group Plc +2.17% +38.00 1,787.00
3 Sage Group Plc +2.17% +15.00 706.20
4 Croda International Plc +2.09% +144.00 7,018.00
5 Experian Plc +2.03% +56.00 2,815.00
6 Auto Trader Group Plc +1.93% +11.60 612.00
7 Halma Plc +1.88% +41.00 2,218.00
8 Intertek Group Plc +1.73% +76.00 4,463.00
9 3i Group Plc +1.71% +20.50 1,217.50
10 Bunzl Plc +1.70% +50.00 2,986.00

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Carnival Plc -7.93% -62.00 719.60
2 Bae Systems Plc -3.61% -29.00 774.20
3 Ocado Group Plc -3.59% -27.80 747.00
4 Micro Focus International Plc -2.67% -7.80 283.80
5 Anglo American Plc -2.40% -62.50 2,541.50
6 Easyjet Plc -2.23% -8.70 381.70
7 Antofagasta Plc -2.19% -23.00 1,026.00
8 International Consolidated Airlines Group S.a. -2.10% -2.44 113.52
9 Glencore Plc -2.00% -8.50 417.55
10 Bp Plc -1.89% -7.35 381.15

 

US close: Major indices extend gains as Q2 earnings season carries on

Wall Street stocks closed higher on Wednesday as market participants remained firmly focussed on corporate earnings.

At the close, the Dow Jones Industrial Average was up 0.15% at 31,874.84, while the S&P 500 was 0.59% firmer at 3,959.90 and the Nasdaq Composite saw out the session 1.58% higher at 11,897.65.

The Dow closed 47.79 points higher on Wednesday, extending gains recorded in the previous session.

Earnings were again in focus on Wednesday, with streaming giant Netflix reporting subscriber numbers had continued to fall in the second quarter, losing around 1.0m subscribers during the three months ended 30 June, below the 2.0m it had forecast,

Oilfield services company Baker Hughes reported Q2 revenues and earnings per share that missed analysts’ expectations, Biogen posted adjusted profits of $5.25 per share for the second quarter, well above consensus estimates of $4.06, and healthcare group Abbott Laboratories raised full-year earnings guidance after posting an earnings beat.

On the macro front, US mortgage applications fell 6.3% in the week ended 15 July, a third consecutive drop and the lowest level since 2000, according to the Mortgage Bankers Association. The drop in the overall index came as a result of a 7.3% decline in the applications index and a 4.3% decrease in the refinancing index.

Elsewhere, the National Association of Realtors revealed US existing home sales dropped 5.4% in June to a seasonally adjusted annual rate of 5.12m, well below forecasts for a reading of 5.38m and the lowest reading seen since June 2020.

 

Thursday newspaper round-up: Tesla, insurance scams, Gatwick

Tesla’s second quarter of 2022 came to a shaky end as the electric carmaker reported a drop in profit after it struggled to meet demand due to a shutdown of its Shanghai factory and production challenges at new plants. The company also sold 75% of its bitcoin holdings, leading to a slide in the cryptocurrency price. Tesla’s second-quarter profit fell 32% from record levels in the first quarter, with the company reporting a $2.26bn net profit on Wednesday. – Guardian

A growing number of financially squeezed households are “turning to crime” by submitting bogus insurance claims, with data revealing a sharp rise in cases over the past year. Zurich UK, one of Britain’s biggest insurers, said the cost of living crisis was fuelling the increase in insurance fraud, where people exaggerate or make up claims for items such as jewellery and electrical goods. – Guardian

As inflation surged to a fresh 40-year high of 9.4pc in June, it may seem times could not get much tougher for the Bank of England – and its prospects of achieving the 2pc target. Yet under the bonnet lie dangerous signs that price rises are becoming embedded across the UK. Price rises in June are even higher than officials anticipated – and they expect it to get worse, surging to 11pc in October when the energy price cap jumps again. – Telegraph

Gatwick has hired hundreds of new security staff in a last-ditch effort to avoid the repeat of travel chaos witnessed at airports up and down the country. Some 400 workers have been cleared by a Government-sponsored vetting process to cut down waiting times at the UK’s second-busiest airport. – Telegraph

Insurers are on a collision course with the Bank of England after the industry warned that a post-Brexit revamp of capital rules risked falling short of triggering the investment “Big Bang” sought by the government. The Association of British Insurers said proposals by regulators to overhaul Solvency II regulations would result in life companies holding more, rather than less, capital. In its response to a government consultation on the reform, the lobby group argued that pension customers would be stung by higher costs under the plans. – The Times

 

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