ADVFN Morning London Market Report: Wednesday 30 June 2021

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London open: Stocks nudge lower as investors mull GDP

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London stocks nudged lower in early trade on Wednesday as investors mulled the latest UK GDP figures.

At 0855 BST, the FTSE 100 was down 0.1% at 7,077.63.

Data released earlier by the Office for National Statistics showed the economy contracted a touch more than initially estimated in the first quarter as households saved more during the third national lockdown.

Gross domestic product fell 1.6% between January and March, compared to an initial estimate of a 1.5% decline. That leaves GDP 8.8% below pre-pandemic levels, revised from a first estimate of 8.7%.

The household saving ratio rose to 19.9% in the first quarter of 2021 from 16.1% in the fourth quarter of 2020, hitting its second-highest level on record after a 25.9% surge in the second quarter of last year.

Deputy national statistician for Economic Statistics Jonathan Athow said: “Today’s updated GDP figures show the same picture as our earlier estimate with schools, hospitality and retail all hit by the reimposition of the lockdown in January and February, with some recovery in March.

“With many services unavailable, households again saved at record levels with only last spring seeing more saved.

“Lower imports from Europe and delayed payments to EU institutions cut our total deficit with the rest of the world.”

Paul Dales, chief UK economist at Capital Economics said: “The small downward revision to Q1 GDP growth probably won’t stop the economy from rising back to its pre-pandemic peak in the coming months. And the larger rebound in the household saving rate increases the potential for faster rises in GDP further ahead.”

In equity markets, travel stocks were under the cosh yet again amid worries about restrictions and the impact of the Delta variant. British Airways and Iberia parent IAG, engine maker Rolls-RoyceInterContinental Hotels and Premier Inn owner Whitbread were all weaker. On the FTSE 250, cruise operator Carnival, travel company Tui, budget airline easyJet and WH Smith also fell.

Dixons Carphone was a touch lower after it reinstated its dividend as it swung back to profit on the back of a massive boost in online sales of electrical goods during Covid lockdowns.

On the upside, broadcaster ITV was the top riser on the FTSE 100, likely boosted by the Euros and the fact that England has reached the quarter finals.

Opioid addiction treatment maker Indivior surged after it lifted its 2021 guidance following a better-than-expected business performance through the first half of the year.

In broker note action, Workspace was boosted by an upgrade to ‘outperform’ at RBC, while Cairn Energy was knocked lower by a downgrade to ‘hold’ at Berenberg.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Itv Plc +1.08% +1.35 126.75
2 Micro Focus International Plc +0.96% +5.20 548.20
3 Smith & Nephew Plc +0.77% +12.00 1,570.50
4 Croda International Plc +0.76% +56.00 7,398.00
5 Flutter Entertainment Plc +0.75% +100.00 13,475.00
6 Morrison (wm) Supermarkets Plc +0.68% +1.60 237.60
7 Auto Trader Group Plc +0.66% +4.20 643.00
8 St. James’s Place Plc +0.61% +9.00 1,491.00
9 Experian Plc +0.60% +17.00 2,831.00
10 Halma Plc +0.55% +15.00 2,731.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Direct Line Insurance Group Plc -1.43% -4.20 289.70
2 Carnival Plc -1.18% -19.40 1,630.40
3 Bae Systems Plc -1.11% -5.80 517.60
4 Fresnillo Plc -1.04% -8.20 778.20
5 Hiscox Ltd -1.02% -8.80 853.40
6 Glencore Plc -1.00% -3.15 310.55
7 Barclays Plc -0.96% -1.66 171.54
8 Berkeley Group Holdings (the) Plc -0.90% -42.00 4,641.00
9 International Consolidated Airlines Group S.a. -0.81% -1.40 172.50
10 Marks And Spencer Group Plc -0.80% -1.20 148.40

 

Europe open: Shares open lower on renewed inflation worries, Delta cases

European shares fell in early trade on Wednesday as worries about rising inflation resurfaced and increase in Covid-19 Delta variant cases also dampened sentiment.

The pan-European STOXX 600 was down 0.14% with all regional bourses in the red. Investors were eyeing German unemployment figures and euro zone inflation data due later in the day.

In the UK, official data revealed the economy contracted a touch more than initially estimated in the first quarter as households saved more during the third national lockdown, according to figures released on Wednesday by the Office for National Statistics.

Gross domestic product fell 1.6% between January and March, compared to an initial estimate of a 1.5% decline. That leaves GDP 8.8% below pre-pandemic levels, revised from a first estimate 8.7%.

The household saving ratio rose to 19.9% from 16.1% in the fourth quarter of 2020, hitting its second-highest level on record after a 25.9% surge in the second quarter of last year.

Travel stocks were all in the red as Delta variant cases globally started to rise, threatening any hopes of a recovery in the leisure and airline sector this summer. EU states are also imposing greater restrictions on travellers from the UK, which is seeing severe spikes in daily cases.

Among the stocks affected were travel firm TUI, cruise line operator Carnival, Frankfurt airport owner FraportAeroports de Paris and Deutsche Lufthansa.

The European Commission on Tuesday announced that it had begun an in-depth study of British Airways parent IAG‘s planned takeover of Spain’s Air Europa. IAG shares were 1.15% lower on the news.

In other company news, Dutch eyewear store operator Grandvision surged as Ray-Ban maker EssilorLuxottica said it had decided to go ahead with a planned takeover of the company. EssilorLuxottica’s shares were up 1.3%.

 

US close: Dow Jones little changed following consumer confidence figures

Wall Street stocks were mostly flat at the end of trading on Tuesday after the Conference Board‘s consumer confidence index rose to its highest level since the beginning of the Covid-19 pandemic in June and several big-name US banks hiked their dividends.

At the close, the Dow Jones Industrial Average and S&P 500 were both up 0.03% at 34,929.29 and 4,291.80, while the Nasdaq Composite saw out the session 0.19% firmer at 14,528.33.

The Dow closed 9.02 points higher on Tuesday, doing little to reverse losses recorded in the previous session.

Bank stocks pushed the Dow into the green early on Tuesday after Morgan Stanley doubled its quarterly dividend and launched a $12.0bn buyback programme, while Wells Fargo will also double its dividend and Bank of AmericaGoldman Sachs and JPMorgan will increase theirs.

Boeing shares slipped despite United Airlines committing to purchasing 200 737 Max planes, while Facebook shares slipped after having picked up solid gains in the previous session on the back of a US judge’s decision to dismiss an antitrust suit brought against the social media behemoth.

On the macro front, house prices in the US continued to bound ahead at a quicker than expected clip in April, with the Federal Housing Finance Agency‘s house price index jumping at a month-on-month pace of 1.8% – ahead of consensus estimates for a reading of 1.7% and an upwardly revised 1.6% gain for March. The annual growth rate increased to 15.7% as a result.

Similarly, Standard&Poor’s CoreLogic Case-Shiller 20-city home price index, which was published alongside the FHFA measure, advanced by 2.11% on the month (consensus: 1.8%).

Elsewhere, following gains in the previous four months, the Conference Board‘s consumer confidence index improved again in June, advancing to 127.3 from an upwardly revised reading of 120.0 for May.

Elsewhere, Federal Reserve Bank of Richmond president Tom Barkin said the central bank would be ready to start tapering just as soon as what he called “substantial further progress” on employment had been met.

No major corporate earnings were released on Tuesday.

 

Wednesday newspaper round-up: Binance, Google ads, Bridgepoint

Boris Johnson’s government has been accused of rushing into post-Brexit trade deals with countries where workers’ rights are systematically violated or denied, including five out of the 10 worst offenders worldwide. Trade union leaders and Labour said the UK government was turning its back on workers around the world and neglecting its commitment to fundamental human and labour rights in the scramble to demonstrate the benefits of Brexit by striking free trade deals outside the EU. – Guardian

Almost two million UK bitcoin traders have been blocked from cashing in their cryptocurrency gains after trading hub Binance suspended the use of bank cards. The ban on card withdrawals leaves customers with no easy way of taking out their funds, and comes after Binance previously blocked transfers directly to a bank account. It follows a rare intervention by the Financial Conduct Authority (FCA), which has said the company cannot offer regulated finance services. – Telegraph

Google will crack down on scam advertisements following pressure from the FCA, and require all financial services to verify their identity with the City’s regulator before promoting on the platform. The online giant said the new measures would come into place from September 6, while advertisers must prove their authorisation by the FCA (Financial Conduct Authority) beforehand. – Telegraph

The 144 partners and senior executives at the private equity group behind itsu sushi and MotoGP racing are set to crystallise personal wealth of about £1.6 billion by floating their business. Bridgepoint, which was spun out of NatWest Bank 21 years ago, announced plans to seek a premium listing in London, where it is based, and raise £300 million in equity in a flotation expected to value the enlarged business at between £2 billion and £2.5 billion. – The Times

The cost of servicing Britain’s £2.2 trillion debt could rise to a postwar high if inflation is allowed to take off, the Bank for International Settlements has warned. Sounding the alert about the risk of a global surge in inflation, the Swiss-based institution known as the central bank for central banks said that the combination of households spending their lockdown savings and government stimulus plans could unlock a price spiral. – The Times

 

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