ADVFN Morning London Market Report: Thursday 28 October 2021

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London open: Stocks nudge down amid raft of earnings; ECB in focus


London stocks nudged down in early trade on Thursday as investors waded through a raft of earnings news ahead of the latest policy announcement from the European Central Bank and the US third-quarter GDP reading.

At 0830 BST, the FTSE 100 was down 0.1% at 7,248.20.

Interactive Investor said policymakers appear divided at the ECB in terms of their desired policy response to rising inflation.

“However, it is clear the ECB is far behind the Bank of England or the Fed in terms of the path towards normalisation with inflation less severe and wages less responsive in the eurozone than elsewhere.”

In equity marketsRoyal Dutch Shell was weaker as it reported lower-than-expected third-quarter adjusted earnings after taking a $400m hit from Hurricane Ida’s impact on operations.

Going the other way, WPP was the standout gainer on the FTSE 100 after the advertising giant upgraded its guidance for 2021 as it hailed a “very strong” third-quarter performance.

Lloyds Banking Group was also a high riser as it improved its full-year guidance after reversed bad debts contributed to a near doubling of third-quarter profit.

DS Smith gained as the packaging company said its first half was in line with expectations as price rises offset rising input costs.

Airtel Africa rallied as the telecommunications provider posted a jump in first-half profit and revenue, with “strong” performances across its regional segments and key services.

Synthomer advanced after it announced the acquisition of Adhesive Technologies – the Adhesive Resins business of Eastman Chemical Company – for $1bn in cash.

C&C Group fizzed higher as the Magners, Bulmers and Tennent’s maker said it swung back to a profit in the first half as revenues grew thanks to the reopening of hospitality venues.

Car dealership Inchcape was up after it lifted its 2021 profit expectations following a “strong” third-quarter performance.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Wpp Plc +4.69% +45.30 1,011.50
2 Fresnillo Plc +2.39% +20.40 875.40
3 Lloyds Banking Group Plc +2.01% +0.98 49.95
4 Smith (ds) Plc +1.66% +6.30 386.00
5 Glaxosmithkline Plc +1.41% +20.40 1,462.20
6 Coca-cola Hbc Ag +1.01% +25.00 2,497.00
7 Smurfit Kappa Group Plc +0.90% +34.00 3,805.00
8 Bt Group Plc +0.70% +1.00 143.00
9 Direct Line Insurance Group Plc +0.60% +1.70 283.70
10 Mondi Plc +0.55% +10.00 1,825.50


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc -2.02% -7.50 363.70
2 Barratt Developments Plc -1.90% -12.80 662.20
3 Dcc Plc -1.86% -116.00 6,126.00
4 Sainsbury (j) Plc -1.76% -5.40 301.10
5 Royal Dutch Shell Plc -1.74% -30.80 1,737.20
6 Royal Dutch Shell Plc -1.72% -30.40 1,735.20
7 Carnival Plc -1.58% -23.20 1,440.60
8 Vodafone Group Plc -1.39% -1.56 110.46
9 Centrica Plc -1.39% -0.84 59.56
10 Persimmon Plc -1.35% -37.00 2,700.00


Europe open: Markets in subdued mood ahead of ECB meeting

European stocks edged ahead at the open on Thursday as investors waited for the European Central Bank policy meeting later in the day and digested a slew of corporate earnings.

The pan-European Stoxx 600 index was up 0.07 in early trade with regional bourses mixed.

Wall Street closed in subdued mood as gains in Microsoft and Google parent Alphabet on the Nasdaq were offset by declines on the S&P 500.

In equity news, shares in Anheuser-Busch InBev rose to the top of the index as the world’s largest brewer reported a surge in third quarter sales beyond pre-pandemic levels as drinkers imbibed its more expensive brands.

Dental implant maker Straumann Holdings also surged as it reported a 30% rise in third quarter revenues.

Airbus shares were up as the world’s largest commercial planemaker raised full-year financial targets.

Software maker Nemetschek fell to the bottom of the Stoxx despite reporting a rise in revenues and earnings and saying annual profits would be at the top end of expectations.

Spanish swimming pool equipment maker Fluidra was floundering, down almost 7%, despite a rise in profits and upgrade in sales forcecasts.

Volkswagen shares fell 2.7% as the carmaker cut its deliveries outlook and reporting lower-than-expected quarterly profit due to global shortage of microchips.


US close: Stocks mixed amid avalanche of earnings

Wall Street trading closed in a mixed state on Wednesday, as investors digested a slab of quarterly earnings reports.

At the close, the Dow Jones Industrial Average was down 0.74% at 35,490.69 and the S&P 500 lost 0.51% to 4,551.68, while the Nasdaq Composite eked out gains of just 0.12 points to 15,235.84.

The Dow closed 266.19 points lower on Wednesday, reversing modest gains in the previous session that saw the blue-chip index register a new record close.

Wednesday’s primary focus was corporate earnings, with a number of big-name US firms reporting throughout the course of the day.

First off, Bristol-Myers Squibb posted a 10% increase in quarterly revenues as sales grew amid increased research and development spending, and Kraft Heinz beat on both earnings and sales expectations.

Coca-Cola earnings topped estimates as consumers moved to drink more beverages outside of the home amid a reopening US economy, while Harley-Davidson third-quarter earnings blew past estimates after shipments topped expectations.

Boston Scientific narrowed its full-year guidance as quarterly profits topped expectations, Six Flags swung to a profit of $157.0m after welcoming 12.0m guests throughout the quarter, and Spotify recorded a profit of €2.0m during the quarter, up from a loss of €101.0m a year earlier, as average revenues per user increased from €4.29 to €4.34.

Carmaker General Motors beat Wall Street estimates with its third-quarter earnings and revenues on Wednesday and said its full-year results were now on track to be at the “high end” of previous guidance, while Boeing fell short of analysts’ estimates for both its top and bottom lines by a wide margin.

FordSpirit AirlineseBay and Netgear were in focus late in the session ahead of reporting after the close.

On the macro front, mortgage applications rose 0.3% in the week ended 22 October, according to the Mortgage Bankers Association, a marked improvement when compared to the 6.3% decline seen a week earlier.

Elsewhere, orders in the US for goods made to last more than three years slipped last month, according to the Department of Commerce, with durable goods orders declining at a month-on-month pace of 0.4% to $261.3bn in September – better than the 1.0% drop economists had pencilled-in.


Thursday newspaper round-up: Samsung, ISAs, British car production

The impact of Brexit on the UK economy will be worse than that caused by the pandemic, according to the chairman of the UK fiscal watchdog. Richard Hughes said the Office for Budget Responsibility (OBR) had assumed leaving the EU would “reduce our long run GDP by around 4%”, adding in comments to the BBC: “We think that the effect of the pandemic will reduce that (GDP) output by a further 2%.” – Guardian

Advertisers are expected to spend almost £1bn more marketing their products this festive season than last year, marking the return of the annual big-budget Christmas marketing battle. UK companies are forecast to spend a record £7.9bn on advertising during the critical “golden quarter” to Christmas, retailers’ most lucrative three-month sales period. – Guardian

South Korean tech giant Samsung Electronics posted a 28pc jump in operating profit on Thursday despite global supply chain challenges caused by the pandemic. The world’s top chipmaker saw its operating profit reach 15.8 trillion won (£9.8 billion) for the July-September period, it said in a regulatory filing. – Telegraph

The amount that savers can deposit in their Isas will be frozen until at least 2023, the Treasury said, in a blow for investors worried about higher tax bills and savers concerned about inflation. The Junior Isa allowance will be kept at £9,000 and the adult Isa allowance at £20,000, where it has been since 2017. – The Times

British car production has fallen to its lowest levels since the Thatcher recession and the industrial strife that met her economic reforms in the early 1980s. Just 67,000 cars came off the assembly lines in September, according to latest figures, a fall of 41.5 per cent year-on-year and the worst performance since 1982 when British Leyland phased out the Austin Allegro, Vauxhall was dropping the Chevette and Ford ditched its bestselling Cortina. – The Times

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