ADVFN Morning London Market Report: Wednesday 13 October 2021

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London open: Stocks fall after GDP data; Barratt bucks trend

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London stocks fell in early trade on Wednesday as investors digested the latest UK GDP reading.

At 0840 BST, the FTSE 100 was down 0.5% at 7,097.55.

Figures released earlier by the Office for National Statistics showed the economy grew less than expected in August despite the easing of Covid measures.

The economy grew 0.4% in August following a 0.1% contraction in July. This was a little weaker than consensus expectations for a 0.5% increase and leaves GDP 0.8% below its pre-pandemic level in February 2020.

July’s contraction was revised down from a previous estimate of 0.1% growth.

The service sector grew by 0.3% in August, while manufacturing was 0.5% higher. Production output rose 0.8%, thanks mainly to the reopening of oil rigs, while construction output shrank 0.2%.

Darren Morgan, director of economic statistics at the ONS, said: “The economy picked up in August as bars, restaurants and festivals benefited from the first full month without Covid-19 restrictions in England.

“This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing.

“However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July.”

Paul Dales, chief UK economist at Capital Economics, said: “The improvement in August probably had a lot to do with the fading of the restraint from July’s ‘pingdemic’, which at one point meant more than 1m people were self-isolating.”

Later in the day, investors will turn their attention to US inflation data and the latest minutes from the Federal Open Market Committee.

In equity markets, house builder Barratt was the standout performer on the FTSE 100 after it said strong demand for its homes had continued into the current fiscal year despite a reduction in government incentives, adding it was on track to deliver full-year medium targets. Peers Taylor WimpeyPersimmon and Berkeley also pushed higher.

Man Group was the top gainer on the FTSE 250 after it posted a rise in third-quarter assets under management, driven by “strong” net inflows.

On the downside, Just Eat Takeaway fell sharply even as it reported a 25% jump in third-quarter orders and reiterated its full-year guidance.

In broker note action, Britvic was boosted by an upgrade to ‘buy’ at HSBC, while BT was knocked lower by a downgrade to ‘reduce’ by the same outfit.

RHI Magnesita was in the red after a downgrade to ‘sector perform’ at RBC Capital Markets.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Barratt Developments Plc +3.93% +25.20 667.00
2 Persimmon Plc +2.73% +70.00 2,635.00
3 Taylor Wimpey Plc +2.44% +3.65 153.05
4 Coca-cola Hbc Ag +1.93% +48.00 2,535.00
5 Carnival Plc +1.92% +30.60 1,627.80
6 Johnson Matthey Plc +1.91% +50.00 2,661.00
7 Berkeley Group Holdings (the) Plc +1.74% +73.00 4,279.00
8 Marks And Spencer Group Plc +1.70% +3.00 179.70
9 Bunzl Plc +1.64% +40.00 2,483.00
10 Ashtead Group Plc +1.37% +76.00 5,626.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Informa Plc -3.56% -20.40 552.60
2 Rio Tinto Plc -2.81% -140.50 4,864.50
3 Bt Group Plc -2.27% -3.30 141.95
4 Centrica Plc -1.83% -1.12 59.96
5 Astrazeneca Plc -1.82% -162.00 8,734.00
6 Bhp Group Plc -1.44% -28.00 1,922.00
7 Admiral Group Plc -1.28% -39.00 3,010.00
8 Vodafone Group Plc -1.24% -1.38 109.64
9 Anglo American Plc -1.20% -33.50 2,757.00
10 British American Tobacco Plc -1.18% -30.00 2,509.50

 

Europe open: Shares muted as inflation worries weigh; Entra soars

European stocks continued in downbeat mood at the opening on Wednesday as investors continued to fret about rising inflation and supply-chain issues.

The pan-European Stoxx 600 index was down 0.3% in early deals, with the UK’s FTSE down 0.53% on weaker-than-expected GDP figures.

Official data revealed the UK economy grew a touch less than expected in August despite the easing of Covid measures.

The economy grew 0.4% in August following a 0.1% contraction in July – weaker than consensus expectations for a 0.5% increase and leaves GDP 0.8% below its pre-pandemic level in February 2020, according to figures released by the Office for National Statistics.

July’s contraction was revised down from a previous estimate of 0.1% growth.

In equity news, shares in Norwegian property company Entra soared 7.58% to the top of the Stoxx after Swedish rival Balder said Tuesday that it intends to submit a 24.5 billion kroner mandatory offer after building a 33.67% stake.

Under the Norwegian Securities Trading Act, it must make a mandatory offer to acquire all the shares it doesn’t currently hold.

German business software group SAP shares rose after the company raised its full-year outlook for a third time following a strong quarterly showing as more customers shift their IT operations to the cloud.

Online food ordering and delivery service Just Eat Takeaway.com fell to the bottom of the index, down 3.4%, after its third-quarter orders fell short of analysts’ estimates.

Man Group shares rose 6.6% after reporting that funds under management at the end of the third quarter were 3.1% higher compared with the prior three months, with positive momentum carrying over into the fourth quarter.

 

US close: Stocks turn weaker ahead of third quarter earnings season

Wall Street closed in negative territory on Tuesday after the International Monetary Fund cut its global growth forecast.

At the close, the Dow Jones Industrial Average was down 0.34% at 34,378.34, the S&P 500 lost 0.24% to 4,350.65, and the Nasdaq Composite was off 0.14% to 14,465.92.

The Dow closed 117.72 points lower on Tuesday, adding on to the losses it recorded in Monday’s session.

Earlier in the day, the IMF cautioned that the Federal Reserve should be ready to tighten monetary policy if inflation ran too hot.

In its World Economic Outlook, the IMF said it expects global gross domestic product to grow by 5.9% in 2021, a 0.1% decrease on its July estimate.

“We’re seeing major supply disruptions around the world that are also feeding inflationary pressures, which are quite high and financial risk-taking also is increasing, which poses an additional risk to the outlook,” said IMF economist Gita Gopinath.

Investors were also preparing their pocketbooks for third-quarter earnings season – with the likes of JP Morgan Chase and other major US banks all prepped to release their latest quarterly figures on Wednesday.

On the macro front, the Bureau of Labor Statistics revealed the number of job openings declined to 10.4m on the last business day of August following a series high in July.

Hires decreased to 6.3m, while total separations were little changed at 6.0m.

No major corporate earnings were released on Tuesday.

 

Wednesday newspaper round-up: Apple, The Hut Group, Sterling

Apple may slash the number of iPhone 13s it will make this year by up to 10m because of a shortage of computer chips amid a worldwide supply chain crunch that led the White House to warn that “there will be things that people can’t get” at Christmas. Apple was expected to produce 90m units of the new iPhone models this year but has told its manufacturers that the number would be lower because chip suppliers including Broadcom and Texas Instruments were struggling to deliver components, Bloomberg reported on Tuesday. – Guardian

The EU will offer to remove a majority of post-Brexit checks on British goods entering Northern Ireland as it seeks to turn the page on the rancorous relationship with Boris Johnson. Up to 50% of customs checks on goods would be lifted and more than half the checks on meat and plants entering Northern Ireland would be abandoned under the bold offer from Brussels. – Guardian

Steel, chemical and ceramics manufacturers hit by soaring energy prices are to be offered state-backed rescue loans in return for limiting bosses’ bonuses and dividends under plans being considered by ministers. Kwasi Kwarteng, the Business Secretary, is understood to have submitted the proposal to the Treasury as one of several options to save energy-intensive companies from collapse in the face of rocketing wholesale gas prices. – Telegraph

The world’s largest shipping firm has diverted giant cargo ships away from the UK, leading to fears of a shortage of toys, clothes and electronics at Christmas. Maersk, the Danish shipping giant, announced that larger vessels would be ordered to dock elsewhere in Europe to avoid growing congestion at Felixstowe Port in Suffolk caused in part by a shortage of lorry drivers. – Telegraph

A key investor presentation intended to soothe City jitters over The Hut Group backfired spectacularly yesterday when it was followed by a barrage of sell orders and £1.9 billion was wiped from the company’s value. Matt Moulding, co-founder, chief executive and executive chairman of the online retailer, said at the start of the virtual meeting that he intended to set the record straight about the scepticism over the company’s Ingenuity platform – doubts that have already led to some short-selling attacks on the company. – The Times

Traders are placing ever larger bets against the pound despite growing expectations that the Bank of England will soon raise interest rates to tame the UK’s rocketing inflation. Positions that will pay out if sterling falls have been built at the quickest pace in more than two years, according to a Bloomberg report that cited data from America’s Commodity Futures Trading Commission. – The Times

 

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