ADVFN Morning London Market Report: Friday 16 July 2021

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London open: Travel & leisure stocks pace the advance


London equity markets rose in early trade on Friday, with travel stocks pacing the gains following heavy losses earlier in the week.

At 0900 BST, the FTSE 100 was up 0.6% at 7,052.75.

Sales, marketing and support services group DCC was the standout gainer on the FTSE 100 after saying it traded “very well” in the first quarter, with operating profit growth well ahead of the prior year and modestly ahead of expectations.

Premier Inn owner Whitbread also rallied after Peel Hunt upgraded the shares to ‘buy’ from ‘add’, saying they have been oversold on reopening fears.

Travel and leisure stocks were on the up, recovering from Covid-related losses earlier in the week. British Airways parent IAGInterContinental Hotels, engine maker Rolls-RoyceCineworldTuiWetherspoons and Wizz Air all advanced.

Home repairs and improvements business HomeServe rose after it backed its full-year guidance ahead of its annual meeting.

On the downside, luxury goods maker Burberry slumped even after it reported a sharp rise in first-quarter sales and maintained full-year guidance as younger customers were attracted to the brand.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that Gobbetti’s exit is still causing concern.

“A big obstacle waiting to trip up the company on this catwalk of recovery is the departure of CEO Marco Gobbetti. He has been seen as the turnaround Czar for Burberry and investors are questioning the company’s ability to keep driving through the strategic turnaround without him in the front row,” she said.

“Finding the right replacement to fit his large shoes won’t be an easy task. Shares were down 2% with investors still uncertain about the direction of the company in the age after Gobbetti.’”

Rio Tinto was in the red after it posted a 12% fall in quarterly iron ore shipments as storms and labour shortages hit its Pilbara operations in Western Australia. Miners more generally were on the back foot, with AntofagastaAnglo American and Glencore also down.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Whitbread Plc +3.44% +99.00 2,973.00
2 Tui Ag +3.33% +10.40 322.30
3 Dcc Plc +3.16% +186.00 6,076.00
4 Intercontinental Hotels Group Plc +3.07% +142.00 4,768.00
5 Melrose Industries Plc +2.45% +3.65 152.60
6 International Consolidated Airlines Group S.a. +2.31% +3.82 169.18
7 Compass Group Plc +2.11% +30.50 1,473.50
8 Marks And Spencer Group Plc +1.96% +2.70 140.20
9 Rolls-royce Holdings Plc +1.90% +1.73 92.87
10 British American Tobacco Plc +1.68% +47.00 2,840.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Burberry Group Plc -3.38% -70.00 2,000.00
2 Rio Tinto Plc -1.48% -91.00 6,051.00
3 Antofagasta Plc -1.15% -16.00 1,372.50
4 Astrazeneca Plc -1.14% -95.00 8,251.00
5 Anglo American Plc -0.99% -29.50 2,943.50
6 Ocado Group Plc -0.85% -15.50 1,814.50
7 Pearson Plc -0.76% -6.20 804.60
8 Glencore Plc -0.70% -2.25 317.80
9 Direct Line Insurance Group Plc -0.55% -1.60 291.80
10 Fresnillo Plc -0.44% -3.60 813.60


Europe open: Shares rally on upbeat earnings

European stocks opened higher on Friday after travel stocks rallied and investor sentiment was boosted by upbeat earnings reports.

The pan-European Stoxx 600 index rose 0.22% with travel and retail the biggest gainers. All major regional bourses were higher.

Among earnings, Swedbank rose 3.4% after it reported a better-than-expected profit amid a booming mortgage market and record levels of commission income.

UK home repairs and improvements business HomeServe saw its shares rise as the firm backed its full-year guidance on Friday ahead of its annual meeting.

Cartier maker Richemont was up as quarterly constant-currency sales more than doubled, lifted by a strong performance in the Americas from its jewellery brands.

Sweden’s Ericsson slid 9.7% after it reported second-quarter core earnings below market estimates, hit by a decline in sales in mainland China.

Burberry shares fell 3.3% despite the British luxury brand reporting a return to pre-pandemic sales levels.


US close: Stocks mixed as more earnings roll in

Wall Street stocks were in a mixed state at the close on Thursday, as market participants thumbed over more bank earnings and the key jobless claims report from the Labor Department.

At the close, the Dow Jones Industrial Average was up 0.15%, while the S&P 500 lost 0.33% to 4,360.03 and the Nasdaq Composite was off 0.7% at 14,543.13.

The Dow closed 53.79 points higher on Thursday, adding to the gains recorded in the previous session as investors digested earnings from several of the nation’s biggest banks.

On the macro front, first-time unemployment claims dropped to a new Covid-19 pandemic-era low of 360,000 in the week ended 19 June, a marked decrease when compared to the previous week’s upwardly revised total of 386,000.

According to the Labor Department, initial unemployment claims came in at their best number since 14 March, 2020 last week, while continuing claims also fell sharply, declining by 126,000 to 3.24m – another new low for the US jobs market.

Sharp declines in claims in Texas and Georgia accounted for almost all the decline, indicating that the early end to benefits may have encouraged people to re-enter the workforce.

The number of Americans collecting benefits under all government programmes also fell sharply, dropping 449,642 to 14.2m – well above anything seen pre-coronavirus but far below the 33.2m citizens in the dole queue twelve months prior.

Also in economic headlines, the price of goods purchased overseas rose roughly as expected last month despite a large increase in energy costs.

According to the Department of Labor, in seasonally adjusted terms the US import price index jumped at a month-on-month pace of 1.0%, just shy of consensus expectations for 1.2%.

While that was less than anticipated by economists, the ‘miss’ was offset by an upwards revision of three-tenths of a percentage point to the print for May to 1.4%.

Elsewhere, industrial output in the US grew more slowly than anticipated in June as a shortage of semiconductors kneecapped auto manufacturing.

The Department of Commerce said that total industrial production rose by 0.4% month-on-month, against forecasts for 0.6%, and revised down its estimates for February, April and May.

Still on data, the Philadelphia Fed’s July manufacturing index revealed that factory activity in the US mid-Atlantic region slowed sharply for a third straight month in July to hit its lowest growth since December, with the bank’s business activity index falling to 21.9 from 30.7 in June – well below economists’ expectations for a reading of 28.0.

Corporate earnings were again in focus at the open on Thursday, with Morgan Stanley rising 0.18% after its second-quarter revenues and profits exceeded expectations on the Street, driven by strength in both equities trading and investment banking.

Morgan Stanley reported revenues of $14.8bn, ahead of estimates of $13.98bn, while earnings per share smashed expectations of $1.65 each at $1.85.

Net income was $3.5bn, up from $3.2bn a year ago.

US Bancorp added 3.21% after it posted second-quarter revenues of $5.78bn and earnings per share of $1.28, beating estimates for prints of $5.62bn and $1.14, respectively.

Bank of New York Mellon, meanwhile, fell 1.22% after reporting that quarterly earnings per share had grown 12% year-on-year to $1.13 despite total revenues slipping 1% to $4.0bn in the three months ended 30 June as the group’s investments in digitisation and open-architecture modular solutions continued to pay off.

Moving on from lenders, UnitedHealth, seen as somewhat of an industry bellwether, closed up 1.28% even after it posted a 35.7% fall in quarterly profits as a recovery in the elective medical care market normalised costs for the country’s largest health insurer.


Friday newspaper round-up: Alfresco dining, Shell, Glaxo, Vectura

Independent high street businesses could face a “tsunami of closures” after their debt climbed to almost five times the level it was before the Covid-19 pandemic, as shops, hairdressers, bars and restaurants battle to survive. About 150,000 small businesses have racked up £2.3bn in debt, up from £500m before the pandemic, based on government-backed loans and not including rent debt, according to a report from Bill Grimsey, the former boss of Wickes and Iceland, who has backed a series of investigations into the state of the high street. – Guardian

Alfresco dining and drinking could become a permanent fixture in England after the government said it would extend “pavement licences” to aid the recovery of pubs, bars and restaurants hit by the pandemic. The plan is part of a hospitality strategy, announced on Friday, aimed at a sector that has lost 10,000 premises, forgone £87bn in sales and shed more than 350,000 jobs across the UK since the onset of the coronavirus crisis. – Guardian

Britain’s electricity grid is now balancing supply and demand with the help of a giant battery in Wiltshire funded by Chinese investment. The 100 megawatt system has been developed by UK company Penso Power with funding from China’s state-owned Huaneng Group utility and CNIC Corporation. Shell, the FTSE 100 oil and gas giant, has a deal to trade all of the power from the battery, which is now fully operational. – Telegraph

GlaxoSmithKline is seeking a development partner to help transform land at its existing 92-acre research and development site in Stevenage into one of Europe’s largest clusters for life science companies. The British pharmaceuticals group believes that the project could unlock up to £400 million of investment from a private-sector developer and potentially create up to 5,000 “highly skilled” jobs over the next five to ten years. – The Times

The £927 million takeover of Vectura, the listed British respiratory drugs company, by Philip Morris International risks allowing the tobacco company to subvert health legislation designed to cut cigarette consumption, anti-smoking charities warned in a joint letter to ministers. In a growing backlash to the deal, which has been recommended to shareholders by Vectura’s board, the chief executives of Cancer Research UK, Asthma UK and British Lung Foundation, and Action on Smoking and Health have written to Kwasi Kwarteng, the business secretary, and Sajid Javid, the health secretary, calling on the government to block the deal. – The Times


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