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ADVFN Morning London Market Report: Wednesday 21 February 2024

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London open: Stocks fall as HSBC, Glencore weigh


London stocks fell in early trade on Wednesday, led lower by HSBC and Glencore after results, as investors mulled the latest UK borrowing figures.

At 0855 GMT, the FTSE 100 was down 0.7% at 7,668.50.

Data released earlier by the Office for National Statistics showed that the UK posted its largest budget surplus for the month of January since records began in 1993, at £16.7bn.

This exceeded the £7.5bn surplus in January 2023, but was smaller than consensus expectations of £18.5bn and the Office for Budget Responsibility’s Autumn Statement forecast of £18.2bn.

For the first 10 months of the year, government borrowing came in at £96.6bn, lower than the OBR’s official forecast of £105.8bn.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The government recorded a record budget surplus in January as the end of the energy support scheme and lower debt interest payments boosted coffers. January is a big month for tax receipts especially with the self-assessment deadline, but lower expenditure has put the finances on firmer footing.

“A large surplus was expected however, so it’s not going to move the dial much on wiggle room for pre-election sweeteners. However, coming hot on the heels of the assessment by the Bank of England that the UK recession will turn out to be super-mild, it does offer more rays of optimism. The Bank of England Governor Andrew Bailey, speaking to MPs, suggested the economy may already have turned a corner, adding that he is comfortable with market assessments that interest rate cuts will come this year. Relief is simmering that there could be light at the end of the tunnel for sectors hit hard by cost-of-living headwinds.”

In equity markets, HSBC tumbled as it posted a record jump in annual profits and announced a $2bn share buyback but missed forecasts as it was forced to take a $3bn hit from its exposure to a Chinese bank.

The Asia-focused lender said full-year pre-tax profit rose 78% to $30.3bn driven by high global interest rates, but it was below the $34.1bn average estimate of brokers compiled by the bank. However it also took a $3bn impairment on the its stake in China’s Bank of Communications.

Glencore fell as it reported a halving of its full-year adjusted earnings before interest, tax, depreciation and amortisation amid lower commodity prices.

BAE Systems was also in the red despite posting better-than-expected full-year profits and saying that sales would grow further this year as the rise in geopolitical tensions drove increases in military spending by governments.

On the upside, Barclays rallied for the second day in a row as investors continued to cheer the bank’s strategy overhaul.


Top 10 FTSE 100 Risers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 St. James’s Place Plc +2.08% +13.60 667.40
2 Barclays Plc +1.78% +2.88 164.68
3 Burberry Group Plc +1.41% +18.50 1,326.00
4 Diageo Plc +1.11% +33.00 2,999.50
5 Prudential Plc +0.88% +7.20 822.20
6 Carnival Plc +0.86% +9.00 1,060.00
7 Halma Plc +0.79% +18.00 2,300.00
8 Bt Group Plc +0.70% +0.75 107.60
9 Schroders Plc +0.60% +2.40 405.00
10 Itv Plc +0.52% +0.30 58.04


Top 10 FTSE 100 Fallers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Hsbc Holdings Plc -7.10% -45.70 598.10
2 Glencore Plc -6.08% -23.75 366.65
3 Bae Systems Plc -3.35% -42.00 1,211.00
4 Centrica Plc -2.47% -3.30 130.10
5 Rio Tinto Plc -1.82% -95.00 5,135.00
6 Rightmove Plc -1.26% -6.80 532.40
7 Gsk Plc -1.08% -18.20 1,659.60
8 Smith (ds) Plc -1.08% -3.50 320.70
9 Hargreaves Lansdown Plc -1.02% -8.20 797.20
10 Antofagasta Plc -0.99% -17.50 1,758.50


US close: Stocks lower in first session of holiday-shortened week

Wall Street stocks closed lower on Tuesday as market participants returned from the Presidents’ Day long weekend.

At the close, the Dow Jones Industrial Average was down 0.17% at 38,563.80, while the S&P 500 lost 0.60% to 4,975.51 and the Nasdaq Composite saw out the session 0.92% weaker at 15,630.78.

The Dow closed 64.19 points lower on Tuesday, taking a bite out of gains recorded in the previous session.

Despite Friday’s gains, major indices turned in their first losing week in more than a month, driven by fears that the Federal Reserve may not look to cut interest rates at quite the pace investors had hoped to see.

On Tuesday, the yield on the benchmark ten-year Treasury note was down a little less than one basis point at 4.277%, while its two-year counterpart was a little more than two basis points softer at 4.614%.

In the corporate space, Home Depot beat projections for its quarterly profit performance, even as sales came in lower than anticipated.

Elsewhere, retail giant Walmart revealed that it will acquire TV-maker Vizio for $2.3bn and also published quarterly earnings and revenue numbers that came in ahead of expectations, principally due to double-digit growth in e-commerce sales, while Capital One Financial traded lower on the back of news that it will reportedly purchase Discover Financial Services in an all-stock deal worth $35.3bn.

No major macro news was published on Tuesday.


Wednesday newspaper round-up: Fuel prices, electric vehicles, Klarna

Food businesses sending products to the EU have had to fork out an extra £170m in export costs because of Brexit red tape, with the changes described as being “catastrophic” for some exporters. Data shared with the Guardian shows that in the three years since leaving the single market, exporters of foods of animal origin have had to pay the sums to secure sign-offs by vets before they can send their shipments. – Guardian

The cost of filling up a family car in the UK increased by about £2 this month as the jump in the oil price caused by the Red Sea attacks is felt at the pumps. In the three weeks to 18 February petrol increased by 3.2p to 143.4p a litre, while diesel rose by 4p to 152p, according to the RAC, which said this was “worrying” for motorists. – Guardian

Britain and Europe must work together to resist an onslaught of cheap Chinese electric vehicles (EVs), the boss of Renault has warned. Luca de Meo, chief executive of the French car maker, said the switch to greener vehicles posed the biggest challenge to the industry in 150 years, but warned companies were being over-regulated and lacked financial support. – Telegraph

A boardroom row has broken out at Klarna, with some shareholders in the credit group seeking the removal of Sir Michael Moritz as its chairman. Sequoia, the American investment group that owns 22 per cent of the “buy now, pay later” lender, is calling for an extraordinary meeting to remove Moritz, who previously was a partner at Sequoia and was its nominee on the Klarna board. – The Times

Urban Logistics Reit has thrown its hat in the ring at the last minute in an attempt to hijack the takeover of a rival warehouse landlord. The owner of sheds worth £1.1 billion throughout the UK has tabled an indicative proposal to merge with Abrdn Property Income Trust, valuing the latter at about £226 million. – The Times


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