ADVFN Morning London Market Report: Friday 2 July 2021

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London open: Slights gains ahead of US non-farm payrolls data


UK stocks have started the session on the front foot ahead of the release of the monthly US non-farm payrolls report later in the session.

As of 0917 BST, the FTSE 100 was adding 0.27% or 19.09 points to 7,144.19.

The FTSE 250 meanwhile was up 0.35% or 79.78 points at 22,702.32.

Consensus is for the US jobs report, which is due out at 1330 BST, to show an increase in hiring from May’s 559,000 to 700,000 people in June.

Economists at Unicredit however are calling for a slightly larger jump in job creation of 750,000, arguing that the “likely temporary” factors dragging on labour supply probably eased somewhat last month.

Some of those factors include workers’ fear of infection if they return to work, childcare constraints and enhanced unemployment benefits.

Unicredit believes that a jobs report in line with its forecasts would support risk appetite.

For their part, analysts at Pantheon Macroeconomics are anticipating an even stronger reading of 1.0m jobs.

On a related note, overnight the International Monetary Fund projected that the Federal Reserve, America’s central bank, will likely need to start hiking interest rates in late 2022 or early 2023.

The so-called ‘tapering’ of the Fed’s asset purchases meanwhile is seen kicking off in the front half of next year.

As an aside, investor sentiment was likely also being helped by news from America’s Johnson&Johnson that its Covid-19 vaccine is capable of neutralising the fast-spreading delta variant.

The UK reported 27,989 new Covid-19 cases between 25 June and 1 July, for a 72% jump versus the prior week, government data published the day before had revealed.

Yet as Kallum Pickering at Berenberg noted, the nine-fold rise in recorded infections in the UK since early May had been mostly recorded among people who had not yet been inoculated – namely the young.

“As long as the vaccines continue to work, we see no serious risk of further lockdowns. This reduces the risk of a major economic set-back,” Pickering added.

Data on US durable goods orders in May and foreign trade figures for that same month were also due out, at 1330 BST and 1500 BST, respectively.

No major economic reports are scheduled for release in the UK on Friday.

On the broker front, analysts at Berenberg have upgraded their recommendation for shares of Informa from ‘hold’ to ‘buy’. Over at Jefferies meanwhile, analysts have initiated coverage of defence group Chemring‘s shares at ‘buy’ with a target price of 370.0p.

Grafton completes purchase of Finland’s IKH

Building materials distributor and retailer Grafton Group has completed the acquisition of Isojoen Konehalli Oy and Jokapaikka Oy, or ‘IKH’, it announced on Friday. It said IKH is one of the largest workwear, personal protective equipment (PPE), tools, spare parts and accessories technical wholesalers and distributors in Finland.

A shareholder revolt at JD Sports Fashion has resulted in the head of the company’s remuneration committee being voted off the board over anger at the retailer’s pay policies. JD Sports said almost 55% of voting shareholders rejected the re-election of Andrew Leslie, who had sat on the fashion group’s board for 11 years, forcing him to step down with immediate effect. The company said it would elect a temporary chair of its remuneration committee and begin the search for Leslie’s long-term replacement.

QinetiQ Group on Friday said David Smith will be retiring as chief financial officer and stepping down from the board on November 30 to be replaced by Lightsource CFO Carol Borg. Smith joined Qinetiq in January 2017. Borg will start work on October 11 “to enable a smooth transition period”, the company said in a statement.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Informa Plc +2.97% +15.20 527.80
2 Anglo American Plc +2.37% +68.50 2,958.00
3 Evraz Plc +1.84% +11.00 609.40
4 Barratt Developments Plc +1.80% +12.80 724.20
5 Glencore Plc +1.47% +4.55 315.05
6 Persimmon Plc +1.29% +39.00 3,059.00
7 Micro Focus International Plc +1.29% +6.00 472.10
8 Taylor Wimpey Plc +1.26% +2.05 165.00
9 Rolls-royce Holdings Plc +1.25% +1.26 102.12
10 Imperial Brands Plc +1.08% +17.00 1,593.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Standard Chartered Plc -0.88% -4.10 463.50
2 Hsbc Holdings Plc -0.76% -3.20 420.15
3 Kingfisher Plc -0.68% -2.50 365.10
4 Rightmove Plc -0.61% -4.00 653.40
5 Lloyds Banking Group Plc -0.50% -0.24 47.38
6 Royal Dutch Shell Plc -0.47% -7.00 1,481.60
7 Standard Life Aberdeen Plc -0.44% -1.20 273.50
8 Next Plc -0.43% -34.00 7,956.00
9 Bt Group Plc -0.41% -0.80 195.20
10 Marks And Spencer Group Plc -0.39% -0.60 151.55


Europe open: Shares higher as Neles-Valmet merger boosts sentiment

European shares opened higher on Friday as a merger between Finnish industrial firms Valmet and Neles boosted sentiment.

The pan-European STOXX 600 index rose 0.39%. Investors were also awaiting a US monthly jobs report later in the day with a consensus forecast of 690,000 jobs to have been added in June, compared to a lower-than-expected figure of 559,000 in May.

“A particularly strong reading would raise fresh questions of the Federal Reserve policy, although there is mounting evidence that a shortage of labour could imply that wage inflation is on the way,” said Richard Hunter, head of markets at Interactive Investor.

“This follows on from a reading of manufacturing activity which remained positive, but at a lighter clip than the previous month, partly fuelled by a lack of available workers.”

“Even so, the fact remains that for the moment the Fed is retaining its accommodative stance, with the likelihood of tapering and particularly interest rate rises not on the immediate horizon. Complemented by the multi-trillion dollar stimulus packages being introduced by the White House, conditions are set fair for further economic recovery.”

In equity news, Finnish industrial firms Valmet and Neles said they have agreed to merge, forming a combined company that will provide enhanced growth opportunities and benefit from broader revenue and cost synergies.

Neles shares topped the Stoxx on the news, rising 10.1% while Valmet was down 5.6%.

UK housebuilders Bellway and Barratt were gainers after a ‘buy’ recommendation from broker Jefferies.

Shares in Danish endoscopy, diagnostic and life-supporting equipment maker Ambu fell to the bottom of the Stoxx, down 11.3%, after the firm lowered revenue growth and earnings guidance due to a slower recovery of elective procedures than expected Covid pandemic from the and shipment delays impacting its core portfolio caused by global container freight market congestion.


US close: Stocks kick off new quarter in the green

Wall Street equities closed the first session of the new quarter in positive territory on Thursday, amid a flurry of data points.

At the close, the Dow Jones Industrial Average was up 0.38% at 34,633.53, as the S&P 500 added 0.52% to 4,319.94 and the Nasdaq Composite was ahead 0.13% at 14,522.38.

The Dow closed 131.02 points higher on Thursday, extending solid gains recorded in the previous session.

Thursday’s primary focus was this week’s jobless claims figures from the Labor Department, which revealed that first-time jobless claims retreated to their lowest level since March 2020.

According to the Department of Labor, initial unemployment claims fell by 51,000 to 364,000 over the week ending on 26 June.

Economists had pencilled in a reading of 410,000.

Still on the macro front, global outplacement firm Challenger, Gray & Christmas said job cuts announced by US-based employers had tumbled 16.7% to 20,476 in June – the lowest level since June 2000.

Elsewhere, IHS Markit‘s US manufacturing PMI said output growth had eased as supply-chain disruptions worsened despite a “marked rise” in client demand.

The seasonally-adjusted manufacturing purchasing managers’ index came to 62.1 in June, unchanged on May, but slipping slightly from the earlier flash estimate of 62.6.

Another report showed economic activity in the manufacturing sector grew in June, with the US economy growing for the 13th month in a row, according to the Institute of Supply Management.

The ISM‘s June Manufacturing PMI came in at 60.6%, a decrease of 0.6% from the May reading of 61.2%, indicating expansion in the overall economy.

Lastly, construction spending during May was estimated to be $1.54trn, according to the Census Bureau, a 0.3% drop month-on-month when compared to the revised April estimate of $1.54trn but 7.5% above the May 2020 estimate of $1.43trn.

In the corporate space, Walgreens Boots Alliance plunged 7.41% even after it posted third-quarter results that exceeded expectations.

McCormick & Company was off 0.4%, having raised its full-year guidance after revenues topped $1.56bn as the firm continued to benefit from at-home cooking.


Friday newspaper round-up: Carbon scheme, vaccine passports, GlaxoSmithKline, CMA

Ministers have drawn up radical plans to reduce carbon emissions that would increase gas bills and the cost of running a car by hundreds of pounds a year, The Times has learnt. The government is planning to introduce a carbon reduction scheme that could put up the costs of gas and petrol as part of an attempt to decarbonise the economy. – The Times

Up to five million Britons face being locked out of European holidays because their vaccines are not recognised by the EU’s passport scheme, the Telegraph has learned. Millions of vaccines administered here do not qualify for the European Union’s vaccine passport scheme, because the shots were manufactured in India and are not yet authorised by the European Medicines Agency (EMA). – Telegraph

Labour has narrowly won the Batley and Spen byelection, holding on to the West Yorkshire seat after a hotly contested campaign. Labour won 13,296 votes with the Conservatives recording 12,973, according to official results. Kim Leadbeater defeated Ryan Stephenson, the Tory candidate, by 323 votes. George Galloway, representing the Workers Party of Britain, came third with 8,264 votes. – Guardian

An American hedge fund has called on GlaxoSmithKline to consider an overhaul of its board and a sale of its consumer healthcare business. In an open letter to Sir Jonathan Symonds, the British drugs company’s chairman, Elliott Management made a series of demands and criticised years of “severe” underperformance and “under-management”. – The Times

Ireland has joined a rebellion against Joe Biden’s global deal on corporation tax as it seeks to maintain the low rate that has made it an EU haven for tech giants. The country is among nine others which have rejected the deal, with Ireland’s finance minister saying it was not in a position to join the agreement due to proposals for a global minimum tax rate of at least 15pc which have been championed by the US. – Telegraph

The former chair of the Competition and Markets Authority (CMA) has said the huge online marketplace fostered by tech companies such as Amazon, Facebook and Google means the opportunity to “rip off ordinary people” is growing and that the regulator is struggling to keep up. In a new report, Andrew Tyrie, who quit as chair of the competition watchdog last year, argues that one of the CMA’s biggest problems is that many consumers and businesses have “never heard of it”. – Guardian


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