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ADVFN Morning London Market Report: Friday 23 February 2024

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London open: Stocks edge up as StanChart surges on buyback


London stocks were a little firmer in early trade on Friday, with Standard Chartered racing ahead as it unveiled a $1bn share buyback.

At 0845 GMT, the FTSE 100 was up 0.2% at 7,698.32.

Investors were mulling a survey which showed that consumer confidence faltered in February as concerns about the economy continued to weigh heavily.

According to the latest GfK consumer confidence barometer – which has been running since January 1974 – the overall index fell two points to -21.

Within that, the measure for the general economic situation over the last 12 months dipped two points to -43, while the gauge for the outlook for the coming year fell three points, to -24.

The major purchase index was also lower, off five points at -25.

However, respondents did appear marginally more confident about how their personal finances would fare over the coming months, with the measure unchanged on January at 0.

While the measure has yet to move into positive territory, GfK said, it is a notable improvement on the -18 recorded in February 2023.

Joe Staton, client strategy director at GfK, said: “The metric is key to understanding the financial mood of the nation, because confident householders are more likely to spend despite the cost of living crisis.”

He continued: “It will be interesting to see what the forthcoming budget delivers in terms of taxation and inflation.

“These are important issues to everyone, especially in an election year; the recent performance of the economy will play a crucial role in determining results at the ballot box.”

The highest-score ever achieved by the consumer confidence barometer was 21 in January 1978, while the lowest was -49 in September 2022.

The largest monthly drop occurred in March 2020, at the start of the first Covid-19 lockdown, when it plunged 25 points.

In equity markets, Asia-focused bank Standard Chartered surged as it unveiled a new $1bn buyback, increased dividend and higher annual profits, but reined in guidance on income for the current year.

The bank reported an 18% rise in pre-tax profit to $5.1bn and lifted its full-year dividend 50% to 27 cents a share, well above estimates of 23.7 cents.

However, it also forecast income growth at the upper end of 5-7% this year, down from the previous estimate of 8-10% given last October. The lender reported a 13% rise in income in 2023 on a constant currency basis.

Chemring edged lower as it held guidance but said that annual results will now be increasingly weighted to the second half after severe winter conditions interrupted manufacturing operations at the start of the financial year.

The aerospace and defence firm said the current environment of heightened geopolitical uncertainty continues to position it well for growth as it reported an order book of £991m at 30 January, up 51% on the same point a year ago.

In broker note action, Breedon Group gained after an upgrade to ‘overweight’ from ‘equalweight’ at Barclays, while Domino’s Pizza fell after a downgrade to ‘equalweight’ by the same outfit.

Outside the FTSE 350, Hornby surged after Mike Ashley’s Frasers Group lifted its stake in the model train maker to 8.9%.


Top 10 FTSE 100 Risers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Standard Chartered Plc +7.93% +48.00 653.60
2 Direct Line Insurance Group Plc +1.83% +3.00 166.60
3 Hsbc Holdings Plc +1.42% +8.40 598.90
4 Anglo American Plc +1.20% +21.20 1,791.00
5 Rentokil Initial Plc +1.10% +4.70 430.70
6 Bae Systems Plc +0.89% +11.00 1,243.00
7 Kingfisher Plc +0.84% +1.90 228.00
8 Smiths Group Plc +0.68% +11.00 1,637.50
9 Mondi Plc +0.64% +9.00 1,419.50
10 Rio Tinto Plc +0.62% +32.00 5,202.00


Top 10 FTSE 100 Fallers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Tui Ag -3.23% -19.00 568.50
2 Wpp Plc -2.38% -17.40 713.20
3 International Consolidated Airlines Group S.a. -1.66% -2.55 150.80
4 Vodafone Group Plc -1.45% -0.95 64.79
5 Easyjet Plc -1.44% -8.00 548.00
6 Rolls-royce Holdings Plc -1.37% -4.90 351.90
7 Carnival Plc -1.26% -14.00 1,093.00
8 Bt Group Plc -1.21% -1.30 106.15
9 Ocado Group Plc -1.19% -6.20 516.80
10 St. James’s Place Plc -1.15% -7.60 655.00


US close: Stocks rise amid Nvidia-led tech rally

Wall Street saw a surge in stock performances on Thursday, buoyed by robust earnings reports from chipmaker Nvidia and positive data trends.

The Dow Jones Industrial Average rose 1.18%, closing at 39,069.11 points, while the S&P 500 climbed 2.11% to reach 5,087.03 points, and the tech-heavy Nasdaq Composite jumped 2.96% to 16,041.62 points.

In currency markets, the dollar held steady against the British pound and the euro, last showing no change at 78.99p and 92.4 euro cents, respectively.

However, it experienced a marginal decline against the yen, slipping 0.01% to change hands at JPY 150.52.

“Nvidia’s 12% gains, and its Nasdaq 100 weighting, have pushed the index up … as risk on sentiment is back on the cards,” said IG senior market analyst Axel Rudolph earlier.

“The near-three month rise in the US Treasury yield to 4.35% and much weaker-than-expected initial jobless claims haven’t dampened the mood.

“The dollar reversed its initial post-FOMC minutes weakness on Thursday afternoon, putting an end to gold’s six straight days of gains.”

Jobless claims slow in latest data, private sector growth moderates

In economic news, the Labor Department reported Americans filed for state unemployment benefits at a slower pace in the week ended 17 February.

New claims dropped by 12,000 to 201,000, marking the lowest level in five weeks.

That figure came in significantly below market expectations of 218,000, and represented a notable decline from the 16-month low of 189,000 recorded five weeks earlier.

Continuing claims also decreased, by 27,000 to 1.86 million, surpassing expectations for a reading of 1.88 million.

The data suggested that unemployed people were finding employment more easily.

At the same time, the four-week moving average, which smooths out week-to-week volatility, fell by 3,500 to 215,250.

Elsewhere, private-sector activity growth in the US moderated slightly in February, as per figures released by S&P Global.

The composite purchasing managers’ index (PMI) declined to 51.4 this month, down from January’s 52.0.

Despite the dip, it still marked the second-fastest growth rate since July last year.

The services PMI dropped to 51.3 from 52.5, missing economists’ expectations but remaining in growth territory for the 13th consecutive month.

Conversely, the manufacturing PMI unexpectedly rose to a 17-month high of 51.5 from 50.7, surpassing the consensus forecast of 50.5.

That uptick was attributed to increased production and an improvement in supply chains following adverse weather conditions in January.

“Better weather conditions compared to January trumped shipping concerns, helping drive an overall improvement in supplier delivery times, which in turn facilitated higher factory production,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

“Signs of inventory reduction policies becoming less widespread also helped boost production and sustain high levels of business confidence in the outlook for the year ahead among manufacturers.”

Finally on data, existing home sales in the US saw a 3.1% month-on-month increase in January, according to the National Association of Realtors.

Sales reached a seasonally adjusted annualised rate of four million units, the highest level in five months and slightly above expectations.

Listings saw a modest increase, while buyers capitalised on lower mortgage rates compared to late 2023.

Sales surged in the Midwest, South, and West regions and remained steady in the Northeast.

The median existing-home price for all housing types hit an all-time high of $379,100 for January.

Nvidia leads tech charge, Newmont and Rivian slide

In equity markets, Nvidia Corporation surged 16.4% after the AI chip and graphics processor giant released a stellar set of quarterly results after Wednesday’s close.

Chip supply chain play Applied Materials rode Nvidia’s coattails with a rise of 4.94%, while Salesforce and ServiceNow – tech firms with their fingers in the AI pie – recorded gains of 3.62% and 2.81%, respectively.

Biotechnology company Moderna jumped 13.53% after it reported a surprise quarterly profit and sales that exceeded Wall Street’s expectations.

On the downside, Newmont declined 7.6% after it announced plans to cut its dividend and divest non-core assets.

Electric carmaker Rivian Automotive tumbled 25.6% after reporting a larger-than-expected quarterly loss, and guiding for slightly lower production for this year compared to 2023.


Friday newspaper round-up: Reddit, water suppliers, Britishvolt

The billionaire businessman Mike Ashley has claimed he was the victim of “abuse” by Morgan Stanley amid a high court dispute over the investment bank’s decision to impose a near $1bn (£790m) cash demand. Ashley’s Frasers Group is taking legal action against the US investment bank Morgan Stanley and Denmark’s Saxo Bank over the May 2021 move linked to bets placed on shares in the German retailer Hugo Boss. – Guardian

Reddit set the stage for its highly anticipated stock market debut, preparing investors for the largest initial public offering by a major social network in four years. A filing with the Securities and Exchange Commission on Thursday disclosed the financial performance of the social media group, and revealed that Sam Altman, the OpenAI founder and CEO, is its third-largest shareholder, with an 8.7% stake. – Guardian

Water suppliers such as Thames Water are at risk of collapsing into administration if they are fined for bad behaviour, MPs have warned, potentially landing taxpayers with a multi-billion pound bailout bill. In a letter to Ofwat, the Environment, Food and Rural Affairs Committee indicated that the watchdog has been rendered powerless to crack down on misdemeanours because of suppliers’ financial instability. – Telegraph

Telefonica has written down the value of its stake in Virgin Media O2 by €1.8bn (£1.5bn) as the telecoms company grapples with soaring debt costs. The Spanish mobile giant said it had booked a €1.8bn goodwill impairment in its 50pc stake in VMO2, blaming rising interest rates and “broader macroeconomic conditions in the UK”. – Telegraph

Administrators for the collapsed battery factory project Britishvolt have said they are still chasing money from the Australian buyer of the site and are considering other potential deals. Recharge Industries is still “in default” a year after it agreed to buy the site in Cambois, Northumberland, where Britishvolt had previously said it wanted to build a factory, according to EY. – The Times


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