ADVFN Morning London Market Report: Friday 25 June 2021

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London open: Stocks edge up on Biden infrastructure deal


London stocks edged up in early trade on Friday, with sentiment boosted after US President Joe Biden announced a bipartisan agreement on an infrastructure deal, but gains were limited ahead of the release of US inflation data.

At 0825 BST, the FTSE 100 was up 0.2% at 7,127.10.

Jeffrey Halley, senior market analyst at Oanda, said: “A bipartisan group of Senators presented an acceptable, but much slimmed-down infrastructure agreement to the President that will still total around $1.2 trillion over the next eight years.

“That will still pay for a lot of Bobs to build ‘stuff’ to move people around in the US, stay connected on the internet and keep lights and heating on. However, challenges remain with the additional $1.8 trillion of social spending plans and proposed tax increases on the wealthy and corporations still stuck in a deep freeze. Mr Biden and Ms Pelosi expect those bills to progress along with the infrastructure as part of a greater overall package.”

On home shores, a survey released earlier by GfK showed consumer sentiment was stable in June but concerns about rising inflation appear to have undermined households’ confidence in the economic outlook.

The UK consumer confidence index was unchanged at -9 in June and four of the index’s measures improved from a month earlier.

People’s view of their financial situation over the past 12 months improved to zero from -4 and the personal financial outlook edged up one point to 11. Views on the economic situation over the past year and whether to make a large purchase also improved slightly.

The biggest change was in household’s view of the general economic situation over the next 12 months, which dipped to -2 from +4 in a month. The score was still 46 points higher than June 2020.

Joe Staton, GfK’s client strategy director, said: “The upwards trajectory for the index since the dark days at the start of the pandemic is currently still on track. However, forecasts for rising retail price inflation could weaken consumer confidence quickly and that may account for the six-point dip in June in our measure for the wider economy in the coming year.”

Looking ahead to the rest of the day, investors will be eyeing the release of US inflation data for May at 1330 BST.

In equity marketsJD Sports was the standout gainer on the FTSE 100 following well-received fourth-quarter results from Nike in the US.

Irish building materials group CRH and equipment rental firm Ashtead, both of which do business in the US, rallied on news of the infrastructure deal.

Elsewhere, UDG Healthcare was a little firmer after it said US private equity firm Clayton Dubilier & Rice was considering an improved final offer of 1,080p a share for the company. The two companies in May had agreed a 1,023p-a-share deal in May, valuing UDG at £2.6bn, but major shareholders, including Allianz Global Investors and M&G Investments, said the offer undervalued the Irish outfit.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Crh Plc +2.60% +96.00 3,784.00
2 Wpp Plc +2.04% +20.00 999.60
3 Ashtead Group Plc +1.74% +92.00 5,392.00
4 Dcc Plc +1.43% +84.00 5,968.00
5 Bp Plc +1.02% +3.30 327.60
6 Bhp Group Plc +1.02% +21.50 2,136.50
7 Royal Dutch Shell Plc +0.98% +14.00 1,448.00
8 Itv Plc +0.94% +1.20 128.20
9 Royal Dutch Shell Plc +0.90% +13.40 1,496.00
10 Easyjet Plc +0.85% +8.20 977.60


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Persimmon Plc -1.66% -49.00 2,907.00
2 Flutter Entertainment Plc -1.36% -195.00 14,175.00
3 Barratt Developments Plc -1.28% -9.00 693.80
4 Carnival Plc -1.14% -19.40 1,676.00
5 Taylor Wimpey Plc -1.11% -1.80 160.00
6 Hargreaves Lansdown Plc -1.03% -16.50 1,579.00
7 Intercontinental Hotels Group Plc -0.85% -43.00 4,999.00
8 Halma Plc -0.81% -22.00 2,701.00
9 Vodafone Group Plc -0.72% -0.90 124.40
10 Centrica Plc -0.70% -0.36 51.20


Europe open: Shares mixed despite US infrastructure bill optimism

European shares were mixed at the open on Friday despite US and Asian markets cheering a large US infrastructure spending bill.

The pan-European STOXX 600 was flat with major regional bourses hovering near the flatline. Britain’s FTSE 100 outperformed with a 0.16% rise.

German stocks were flat even as a report showed consumer sentiment improved more than expected heading into July.

“The $1.2trn infrastructure deal approved by the president will provide a boost to roads, bridges, broadband, passenger and freight services,” said Interactive Investor analyst Richard Hunter.

“Quite apart from the further injection into revitalising the economy, the amount is less than the $3trn which had been sought by the President, thus having lower tax implications than had been thought to pay for it.”

However, Hunter noted that signs of inflation are emerging in the housing market as some raw materials were temporarily in short supply.

Investors were also eyeing the release of US inflation data for May at 1330 BST.

In equity markets, JD SportsAdidas and Puma shares were all higher following well-received fourth-quarter results from Nike in the US.

Irish building materials group CRH and equipment rental firm Ashtead, both of which do business in the US, rallied on news of the infrastructure deal.

Credit Suisse rose after a report it was considering a potential merger with UBS.

British subprime lender Amigo surged 12.1% after saying it had secured a three-month extension to a funding line as it scrambles to secure its future after a court rejected a rescue plan for the firm last month.


US close: Dow Jones and S&P 500 close at fresh record highs

Wall Street stocks closed higher on Thursday, with the S&P 500 and Nasdaq Composite both finishing up the session at fresh record highs.

At the close, the Dow Jones Industrial Average was up 0.95% at 34,196.82, while the S&P 500 was 0.58% firmer at 4,266.49 and the Nasdaq Composite saw out the session 0.69% stronger at 14,369.71.

The Dow closed 322.58 points higher on Thursday, erasing losses recorded in the previous session.

Thursday’s main focus was this week’s jobless claims data from the Labor Department, which revealed that initial jobless claims came to 411,000 in the week ended 19 June, a modest decline from the previous week’s print of 418,000 that came short of estimates for a reading of 380,000.

Continuing claims decreased by 144,000 to 3.39m, while the four-week moving average for initial claims, which aims to smooth out the fluctuations in the data from one week to the next, increased by 1,500 to 397,750.

On the macro front, orders in the US for goods made to last more than three years continued growing at a steady clip last month, helped by strong demand from the transportation sector. According to the Census Bureau, total durable goods orders jumped at a month-on-month pace of 2.3% in May to reach $253.3bn. Economists had pencilled-in an increase of 3.0%.

Elsewhere, the US economy grew at a 6.4% clip over the first three months of 2021, leading economists to expect this year to be the strongest year for the economy in growth. According to the Commerce Department, growth in US gross domestic product was unchanged from two previous estimates but economists reckon GDP growth will accelerate in the April-June quarter to an annual rate of 10% or better and around 7% for the year as a whole.


Friday newspaper round-up: BuzzFeed, office return, NS&I

The UK’s largest business lobby group has joined the Trades Union Congress (TUC) and the human rights watchdog in calling for mandatory ethnicity pay gap reporting, saying data collection will help tackle racial inequalities at work. In a letter to the Cabinet Office minister Michael Gove, the Confederation of British Industry (CBI), TUC and Equality and Human Rights Commission, said the move would help draw attention to pay disparities and a lack of minority representation across senior positions, and hopefully spark action by employers. – Guardian

BuzzFeed, the news, digital media and lifestyle company, has announced plans to become a publicly traded company through a special purpose acquisition company (Spac) that could value the 15-year-old New York-based firm at $1.5bn. The company, initially known for listicles and online quizzes, also announced plans to buy Complex Networks, a global youth network that engages with millennials and Gen Z, from phone giant Verizon and publisher Hearst for $300m. – Guardian

The Competition and Markets Authority (CMA) has opened a probe into Amazon and Google because of worries the companies might not have been sufficiently clamping down on fake online reviews. The CMA said it plans to look into whether the firms broke consumer law by not doing enough to protect shoppers. – Telegraph

Britain’s business leaders are in good heart, proud of their record during the worst of the pandemic, delighted by the economic bounce of the past few months – but starting to be unsettled by skills shortages and inflationary pressures. At least those were the conclusions to take from the bosses who gathered virtually and in person for The Times CEO Summit yesterday. – The Times

National Savings & Investments has abandoned moves to stop sending Premium Bond prizes by cheque after opposition from thousands of customers. The Treasury-backed bank has scrapped an earlier plan to force bondholders to register their bank details in order to receive prizes into their bank accounts. Its customers have been receiving prizes by cheque since 1964. – The Times


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