ADVFN Morning London Market Report: Monday 28 June 2021

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London open: Stocks edge lower after subdued Asian session; Burberry slumps

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London stocks edged lower in early trade on Monday following a subdued session in Asia, with Burberry under the cosh as it announced the departure of its chief executive.

At 0915 BST, the FTSE 100 was down 0.3% at 7,112.66.

Neil Wilson, chief market analyst at Markets.com, said: “Heading into the last three trading days of the quarter, the FTSE 100 is up around 1.5% in June and almost 6% for the quarter as it holds above 7,100. Sentiment may be cool this morning but it’s been a solid turnaround from last Monday, when it struck 6,950.

“US futures are little changed after the S&P 500 notched a fresh record on Friday and enjoyed its best week since February. Core PCE inflation was a tad cooler than expected, giving investors the green light to give equities some bid despite the myriad risks on the horizon, including rising Covid cases in Asia. There is also a strong hope that President Biden’s $1tn bipartisan infrastructure deal will be passed.”

In equity markets, travel stocks were under pressure as German Chancellor Angela Merkel attempts to secure an EU-wide quarantine policy for British tourists. InterContinental Hotels, British Airways owner IAG, Premier Inn owner Whitbread, Upper Crust owner SSP, travel company Tui and budget airline easyJet were all lower.

Luxury fashion Burberry was the worst performer on the FTSE 100 on news that chief executive officer Marco Gobbetti was planning to step down at the end of the year to take up the role of CEO at Italy’s Salvatore Ferragamo.

Wilson said: “It presents near-term risks – investors will want to know who takes over the reins and whether there is change in strategy. Given the consolidation in the luxury sector, and the current valuation versus peers, it could be a target.

“Whilst there are some pandemic-related issues still being washed out, Burberry remains a strong brand in the luxury space with room to appeal to a broader consumer base over the coming years.”

NatWest lost ground after saying it was selling most of its Irish commercial lending business to Allied Irish Banks as part of its exit from Ireland.

Ultra Electronics slumped after the aerospace and defence group said it had terminated “very early stages” of exploratory talks with Cobham about a possible combination of some of their units. The shares rallied sharply on Friday on news of a possible deal.

On the upside, High Street bakery chain Greggs gained after it reported a stronger-than-expected recovery in sales from the Covid pandemic since May 10, with like-for-like growth of 1%-3% against the same period in 2019 before the crisis began.

In broke note action, Dr Martens was on the rise after an upgrade to ‘buy’ at HSBC, but St James’s Place fell after a downgrade to ‘hold’ by the same outfit.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Hiscox Ltd +1.30% +11.00 860.00
2 British American Tobacco Plc +1.18% +33.00 2,819.50
3 Astrazeneca Plc +0.93% +79.00 8,578.00
4 Phoenix Group Holdings Plc +0.92% +6.20 678.60
5 Centrica Plc +0.85% +0.44 52.00
6 Informa Plc +0.83% +4.20 507.80
7 Hikma Pharmaceuticals Plc +0.74% +18.00 2,437.00
8 Ocado Group Plc +0.73% +14.50 1,999.50
9 Morrison (wm) Supermarkets Plc +0.69% +1.60 234.30
10 Berkeley Group Holdings (the) Plc +0.67% +31.00 4,665.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Burberry Group Plc -6.40% -144.00 2,106.00
2 International Consolidated Airlines Group S.a. -3.72% -6.98 180.50
3 Tui Ag -3.43% -13.90 391.70
4 Rolls-royce Holdings Plc -2.80% -2.98 103.52
5 Easyjet Plc -2.64% -25.20 929.80
6 Whitbread Plc -2.60% -83.00 3,113.00
7 Carnival Plc -2.36% -39.60 1,637.80
8 Intercontinental Hotels Group Plc -1.97% -98.00 4,882.00
9 St. James’s Place Plc -1.66% -25.00 1,478.00
10 Standard Chartered Plc -1.66% -7.80 461.40

 

Europe open: Shares make muted start on Covid worries

European shares were flat at the opening on persistent inflation worries and a fall in travel stocks as governments battled to stymie the Delta variant of Covid-19.

The pan-European Stoxx 600 was hovering on the flatline with only Germany’s DAX making any real gains, up 0.35%. Shares followed a mixed session for Asia-Pacific stocks after official data showed that China’s industrial profits for May slowed.

Data released Sunday by China’s National Bureau of Statistics showed profits at China’s industrial firms rose 36.4% in May as compared with a year earlier. That was a slowdown from the 57% year-on-year growth posted in April.

Travel-related stocks were down as Covid outbreaks continued dampening hopes of a return to international travel. TUI, Trainline, Ryanair easyJet, IAG and SSP all fell.

The World Health Organization on Friday urged fully-vaccinated people to continue to wear masks as the highly contagious Delta variant, which started in India, spreads rapidly throughout the globe, leading many countries to re-impose tighter restrictions.

In the UK Monday, new Health Secretary Sajid Javid was set to update parliament on when Britain can expect to further ease Covid-19 measures. Restrictions are currently due to end on July 19, the date already having been extended due to the spread of the delta variant.

In other company news, Burberry Group fell to the bottom of the Stoxx, down almost 10% as the high-end fashion retailer said chief executive Marco Gobbetti was resigning to join Italian luxury group Salvatore Ferragamo.

Ferragamo shares initially jumped 2.9% on the news.

On the upside, Finnish telecoms giant Nokia topped the index with a rise of more than 6% after a Goldman Sachs upgrade.

 

Monday newspaper round-up: Homebuyers, Binance, Oxford Biomedica

The strength of the UK jobs market and rates of pay has been overstated, according to new research, just as the government prepares to cut back its wage support scheme for furloughed workers this week. There is a risk of “dangerous complacency”, the Resolution Foundation warned, as people are still working fewer hours than they were before the pandemic and headline pay growth is overstated. – Guardian

With days to go until the phased ending of the stamp duty holiday, thousands of homebuyers will be desperately hoping they can complete their purchase before Wednesday night, because if they don’t they face having to find as much as £15,000. A significant proportion of home purchases – some agreed as far back as the spring – are thought to be hanging by a thread as conveyancing solicitors struggle to complete purchases before the 30 June deadline. – Guardian

The City watchdog has banned one of the world’s largest Bitcoin exchanges from operating in Britain amid mounting fears over the rise of cryptocurrency crime. The Financial Conduct Authority ordered Binance Markets Limited to remove all advertising and financial promotions by Wednesday and told the firm it must not carry out any regulated activities in Britain without prior consent. – Telegraph

Ministers are under fire for allowing scores of unaccredited “backyard” Covid testing labs to operate, which could be providing unreliable results. Tony Cooke, chief executive of Cambridge Clinical Laboratories, has warned of dozens of “pop-up labs” that have come into existence to cater to growing numbers of people hoping to access private testing to go on holiday and do other activities. – Telegraph

Suggest to the boss of Britain’s biggest nightclub operator that the drinking in his venues inevitably leads to snogging and he’ll give you an earful. “How outdated!” he snorts. “Nightclubs haven’t done slow dances for 25 years. Get real!” Peter Marks’s outburst is hardly surprising given that his company’s 47 sites have not been able to operate as fully fledged nightclubs since March 2020 because they are regarded by the government as hotbeds of physical contact and, by implication, propagators of coronavirus. – The Times

The British biotechnology company making the Oxford Covid-19 vaccine is awarding US-based non-executive directors up to £50,000 more a year and overseas executives significantly higher share bonuses under a new pay policy which governance experts have warned creates a “two tiered” system. Oxford Biomedica, the FTSE 250 company, has introduced a maximum long-term share incentive for overseas executive directors of 500 per cent of salary, compared with an increase from 100 per cent to 175 per cent for domestic executive directors and from 125 per cent to 200 per cent for John Dawson, its chief executive. – The Times

 

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