ADVFN Morning London Market Report: Wednesday 12 May 2021

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London open: Stocks gain after UK GDP data; US inflation eyed

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London stocks rose in early trade on Wednesday following heavy losses in the previous session, as investors mulled the latest UK GDP reading.

At 0840 BST, the FTSE 100 was up 0.5% at 6,979.21, having slumped 2.5% on Tuesday amid fears over rising inflation.

Spreadex analyst Connor Campbell said: “Following a stark – and arguably long-awaited – plunge in equities on Tuesday, Europe attempted to pick itself up on Wednesday.

“The FTSE received an early helping hand thanks to a better-than-forecast Q1 GDP reading, showing the UK contracted by 1.5% in the lockdown-hit opening months to the year, compared to the -1.6% forecast.

“A stronger sign of recovery was news that the economy actually grew by 2.1% in March, instead of the 1.5% expected, as the country cautiously started to open up. That’ll only boost hopes of a robust rebound in the second and third quarters.”

Despite the positive tone, Campbell said the gains “should be caveated as they come before this afternoon’s US inflation reading for April has been unveiled”.

“And given that Monday and Tuesday’s losses can in large part be explained by fears of surging inflationary pressures, the trading landscape could look very different once the figure has been released.”

In corporate newsSpirax-Sarco Engineering rallied after it said margins in the four months to 30 April were higher than expected after a rise in sales.

Diageo was also a high riser as the drinks maker said it has restarted its £4.5bn plan to return capital to shareholders after business continued to recover in the second half of its financial year.

Compass was trading up as the catering group said it expected a gradual recovery in third-quarter margins after interim profits and revenue slumped due to the coronavirus pandemic.

UDG Healthcare surged as it agreed to be bought by private equity firm Clayton, Dubilier & Rice in a £2.6bn deal, and reported a “strong” first half.

Marshalls gained after the landscape products company said trading for the full year was set to be ahead of its previous expectations amid increased demand.

On the downside, Flutter Entertainment lost ground after saying the boss of its US FanDuel operation had resigned and that his departure would affect the timing of a potential listing for the business in the US.

4Imprint was knocked lower by a downgrade to ‘hold’ at HSBC.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Spirax-sarco Engineering Plc +3.12% +360.00 11,915.00
2 Diageo Plc +2.95% +94.00 3,284.00
3 Glencore Plc +2.00% +6.55 334.45
4 Scottish Mortgage Investment Trust Plc +1.94% +21.00 1,106.00
5 Morrison (wm) Supermarkets Plc +1.73% +3.15 185.50
6 Sse Plc +1.67% +24.00 1,458.50
7 Ferguson Plc +1.46% +134.00 9,286.00
8 Rio Tinto Plc +1.35% +88.00 6,629.00
9 Sainsbury (j) Plc +1.34% +3.40 257.30
10 Bp Plc +1.12% +3.40 308.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Tui Ag -2.36% -10.10 417.50
2 Flutter Entertainment Plc -2.32% -310.00 13,045.00
3 Marks And Spencer Group Plc -1.03% -1.60 154.15
4 British Land Company Plc -0.91% -4.80 524.80
5 Smith & Nephew Plc -0.85% -13.00 1,513.50
6 Next Plc -0.76% -60.00 7,872.00
7 Fresnillo Plc -0.62% -5.60 897.40
8 International Consolidated Airlines Group S.a. -0.56% -1.08 193.24
9 Croda International Plc -0.49% -32.00 6,510.00
10 Easyjet Plc -0.48% -5.00 1,027.50

 

Europe open: Shares edge ahead as UDG Healthcare deal cheers investors

European stocks edged ahead at the opening on Wednesday after the previous session’s selloff as investors eyed positive corporate earnings despite continuing worries about higher inflation.

The pan-European Stoxx 600 index rose 0.2% after falling by almost 2% on Tuesday as investors were spooked by the prospect of rising US inflation. US April consumer price data is due out later in the day at 1330 BST.

“Inflation is the watchword, so today’s US CPI numbers are going to be closely watched. The data is expected to show consumer prices up 3.6% year-on-year in April, and +0.2% vs March 2021,” said Markets.com analyst Neil Wilson.

“The question is really for later – at what point does transitory turn into something more lasting? Wages are the key. Federal Reserve officials still see the pick-up in inflation as temporary.”

In equity news, shares in UDG Healthcare soared 21% after the company said it had agreed to be bought by private equity firm Clayton, Dubilier & Rice in a £2.6bn deal, as it reported a “strong” first half.

German lender Commerzbank jumped 7% after it beat expectations for first-quarter profit and raised its revenue outlook.

Diageo was also a high riser as the drinks maker said it has restarted its £4.5bn plan to return capital to shareholders after business continued to recover in the second half of its financial year.

Compass was trading up as the UK catering group said it expected a gradual recovery in third-quarter margins after interim profits and revenue slumped due to the coronavirus pandemic.

 

US close: Major indices end session lower despite tech reversal

Wall Street stocks closed lower on Tuesday despite big-name tech stocks staging a late reversal.

At the close, the Dow Jones Industrial Average was down 1.36% at 34,269.16, while the S&P 500 was 0.87% softer at 4,152.10 and the Nasdaq Composite saw out the session 0.09% weaker at 13,389.43.

The Dow closed 473.66 points lower on Tuesday, extending losses recorded on Monday as last week’s ransomware attack on a major US fuel pipeline and a rotation out of growth stocks both dominated headlines.

In focus throughout the session, big tech stocks were again in the red early in the day, with shares in FacebookApple and Amazon all moving lower before paring losses later, while Tesla shares slumped following a report from Reuters that claimed the electric carmaker had halted plans to expand its Shanghai plant into an export hub.

Elsewhere in the corporate space, Hanesbrands said first-quarter net sales had shot up 25% to $1.51bn on the back of double-digit growth in both its global innerwear and activewear businesses, while Electronic Arts earnings forecasts fell short of expectations on the Street,

On the macro front, both small and large US businesses moved to increase wages and benefits as part of an effort to attract workers amid rising demand for their goods and services, according to the National Federation of Independent Business‘ small-business optimism, which index advanced 1.6 points in April to a pandemic-era high of 99.8. However, the reading was one point shy of the 100.8 print expected by economists.

Elsewhere, March’s JOLTs job openings report came in ahead of expectations for a print of 7.5m at 8.12m, according to the Bureau of Labor Statistics. Hires were little changed at 6.0m, as were total separations at 5.3m. The layoffs and discharges rate decreased to a series low of 1.0%.

 

Wednesday newspaper round-up: Greensill, HS2, Just Eat Takeaway

David Cameron lobbied ministers and senior officials 56 times at the height of the pandemic in an increasingly desperate attempt to beg the government to support a controversial bank he worked for and owned a stake in. The scale of the former prime minister’s chummy lobbying – by text, WhatsApp, email and phone calls – on behalf of Greensill Capital was revealed by Parliament’s Treasury select committee on Tuesday. – Guardian

A senior manager at Goldman Sachs in London has quit the US investment bank after making millions from investing in Dogecoin, the joke crypto asset which has risen by more than 1,000% in value this year. City sources said Aziz McMahon, a managing director and head of emerging market sales, had resigned from the bank after making money from investing in the digital currency based on the Doge internet meme. – Guardian

Campaigners have urged Boris Johnson not to abandon a high-speed rail link connecting Leeds to London after the Queen’s Speech stoked fresh fears that the £32bn eastern branch of HS2 could be axed. Ministers will press ahead with the western portion of HS2 which will link Manchester to the capital in a new bill unveiled alongside today’s speech setting out the Government’s agenda. – Telegraph

The boss of Just Eat Takeaway.com aimed an astonishing rant at analysts yesterday, claiming that “some can’t even do basic maths”. Jitse Groen, who runs the FTSE 100 food delivery group, tweeted that he was “amazed how bad these analysts have become”, adding: “All of them mix up definitions. It’s unbelievable.” It was unclear what prompted the tirade, particularly as it was launched in the wake of an upgrade by analysts at Exane of Just Eat Takeaway’s shares from “underperform” to “neutral”. – The Times

A group of MPs has called on the governor of the Bank of England to intervene in the proposed sale of the mutual insurer LV= to a private equity group. They are concerned that the board of LV= may be misleading its 1.25 million members and have asked Andrew Bailey to take a look at the proposal and the background to it. – The Times

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