ADVFN Morning London Market Report: Wednesday 23 November 2022

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London open: Stocks rise as investors eye Fed minutes

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London stocks rose in early trade on Wednesday, taking their cue from positive US and Asian sessions, as investors eyed the latest readings on the UK manufacturing and services sector, and minutes form the Federal Reserve.

At 0825 GMT, FTSE 100 was up 0.3% at 7,475.95.

Richard Hunter, head of markets at Interactive Investor, said: “The optimists were back in the driving seat, amid light volumes in a shortened US trading week and ahead of the latest Federal Reserve minutes.

“In a slight change to sentiment, there are hopes that the aggressive Fed rate hikes so far means that the terminal rate will be hit sooner, which is currently estimated to be around 5% from the current 4%. Alongside comments from some Fed members suggesting that reduced hikes may be possible if a recently promising inflation number is the beginning of a downward trend, investors sought solace in the fact that the end of the year could signal the start of a slowdown for both.

“Asian markets were also generally positive, despite some concerning Covid-19 developments in China. The authorities are tilting towards a reiteration of another tight lockdown policy after the first deaths in the mainland were reported at the weekend and with case numbers still steadily rising.”

On home shores, the S&P Global/CIPS manufacturing and services PMIs for November are due at 0930 GMT.

In equity markets, miners were among the top performers, with GlencoreAnglo American and Antofagasta all up.

Drinks maker Britvic fizzed higher as it posted a rise in full-year profit and revenue, hailing growth in both the retail and hospitality channels, which benefited from good weather over the summer and no lockdown restrictions.

Rotork advanced after it reported a jump in revenues for the four months to 30 October and backed its full-year profit expectations.

On the downside, United Utilities slumped after saying that half-year earnings dipped, hit by surging inflation and the long dry summer.

Pets at Home also fell after it backed its full-year profit guidance but reported a drop in interim profit as energy and freight costs rose.

Industrial thread maker Coats lost ground even as it posted a rise in revenues and held full-year guidance, despite strengthening forex headwinds.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Glencore Plc +4.37% +22.50 537.40
2 Bp Plc +1.74% +8.50 496.50
3 3i Group Plc +1.63% +21.50 1,342.00
4 Marks And Spencer Group Plc +1.63% +2.00 124.85
5 Whitbread Plc +1.54% +39.00 2,578.00
6 Centrica Plc +1.39% +1.32 96.20
7 Severn Trent Plc +1.39% +38.00 2,777.00
8 Anglo American Plc +1.34% +42.00 3,180.50
9 Imperial Brands Plc +1.25% +27.00 2,182.00
10 Compass Group Plc +1.24% +22.50 1,833.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Johnson Matthey Plc -3.84% -78.00 1,955.00
2 Admiral Group Plc -1.20% -25.00 2,063.00
3 Vodafone Group Plc -1.11% -1.05 93.95
4 Fresnillo Plc -0.93% -8.20 877.80
5 Ferguson Plc -0.84% -85.00 10,000.00
6 Intertek Group Plc -0.59% -23.00 3,879.00
7 Rentokil Initial Plc -0.55% -3.00 538.80
8 Croda International Plc -0.53% -36.00 6,792.00
9 Persimmon Plc -0.46% -6.00 1,290.50
10 Scottish Mortgage Investment Trust Plc -0.42% -3.20 767.80

 

US close: Stocks higher as traders digest comments from Fed speakers

Wall Street stocks closed higher early on Tuesday as market participants digested comments from a pair of central bankers.

At the close, the Dow Jones Industrial Average was up 1.18% at 34,098.10, while the S&P 500 and Nasdaq Composite advanced 1.36% to 4,003.58 and 11,174.41, respectively.

The Dow closed 397.82 points higher on Tuesday, easily reversing losses recorded in the previous session.

China was in focus on Tuesday after the country reported its first Covid-related deaths on the mainland since May, sparking fears that it may reinstitute restrictions aimed at slowing the spread of the virus and pushing investors away from growth stocks and into defensive sectors. China’s three-week Covid case tally has topped 253,000 and the government stated the daily average is increasing.

Elsewhere, the Federal Reserve’s Loretta Mester stated that lowering inflation remained the bank’s primary goal but indicated that the Fed was ready to downshift from its 75 basis point rate hikes.

However, Esther George said ample US savings would assist in buffering households but may also lead to higher interest rates needing to be implemented in order to calm spending. George noted that if savings were concentrated in wealthier households it would likely fail to provide any real boost to spending.

On the macro front, the Richmond Federal Reserve‘s manufacturing index edged slightly higher in November, jumping to -9 from October’s print of -10, which was the lowest reading since May 2020.

Investors also patiently awaited the publication of minutes from the Federal Reserve’s November meeting on Wednesday, with traders preparing for policymakers to announce that they’ll likely continue to raise rates as part of an effort to tame inflation.

In the corporate space, Best Buy traded higher after the retailer posted an earnings beat and raised its full-year guidance, while Dick’s Sporting Goods delivered a quarterly revenue and profit beat, as well as better-than-expected Q3 sales.

HP reported an 11% drop in quarterly sales and issued earnings guidance that came up short of analysts’ expectations as the tech giant announced it would cut as many as 6,000 jobs in an effort to cut costs in what it called “a challenging environment”.

 

Wednesday newspaper round-up: Manchester United, Ovo, Royal Mail, HP

The Glazer family has announced it is “commencing a process to explore strategic alternatives” for Manchester United, potentially bringing an end to its 17-year ownership of the club. On the day it was also confirmed that Cristiano Ronaldo had left Old Trafford by mutual consent, a statement from United on Tuesday night revealed plans to identify new investment that could lead to a potential sale. The club said the process led by their American owners will consider a number of options “including new investment into the club, a sale, or other transactions involving the company”. – Guardian

Customers of the energy supplier Ovo were left shocked and dismayed when they received bills of up to £49,000 because of data errors that led to vastly overinflated energy projections for some households. Julie Lines [not her real name] was told she owed £44,800 for two months’ supply to her one-bedroom flat. “I’d been asked to send photos of my meters in August as Ovo believed there was an issue,” she said. “I did so and my account went from £600 in credit to £19,000 in debt. Despite Ovo assuring me this was a mistake, the debt rose to over £44,000 in September.” – Guardian

Tens of thousands of British traders have been left out of pocket by the implosion of the cryptocurrency exchange FTX, US bankruptcy proceedings have revealed. Some 8pc of FTX’s users were based in the UK, a Delaware court heard, suggesting that 80,000 Britons may have lost money. FTX left around one million creditors, the vast majority of whom were unsecured users of the exchange. – Telegraph

Royal Mail has made an improved pay offer in a final effort to avoid 10 days of strike action by post men and women in the run-up to Christmas. The FTSE 250 company is understood to have offered a 9pc pay rise spread over 18 months, rather than two years, as previously tabled. Royal Mail’s “best and final” offer to union leaders has also been sweetened by rowing back on its demand to force staff to work on Sundays. Meanwhile, “family-friendly” working hours are to be offered so that posties can finish in time to pick their children up from school. – Telegraph

One of America’s best-known computer makers last night became the latest big technology company to announce heavy job cuts. HP said it expected to reduce its 61,000 global workforce by about 4,000 to 6,000 by the end of 2025 financial year. – The Times

 

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