ADVFN Morning London Market Report: Friday 29 October 2021

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London open: Stocks fall after disappointing US earnings; NatWest in the red

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London stocks fell in early trade on Friday following disappointing earnings from Apple and Amazon overnight, with NatWest under the cosh after its latest results.

At 0825 BST, the FTSE 100 was down 0.8% at 7,193.29.

Oanda market analyst Jeffrey Halley said: “Asian markets were handed a Wall Street hospital pass this morning as Apple and Amazon both missed quarterly earnings expectations in after-market announcements.

“Rising labour costs, rising input costs, supply chain disruptions, semi-conductor disruptions were all rolled out as the usual suspects.”

In UK equity marketsNatWest Bank slumped despite reporting a surge in third-quarter profits as it released £242m set aside to cover bad loans during the Covid crisis. The bank said operating pre-tax profits rose to £1.07bn from £355m a year ago, but lower than the £1.5bn in the second quarter.

CMC Markets analyst Michael Hewson said: “Having seen decent numbers from Lloyds and Barclays, expectations were high for NatWest Group’s Q3 numbers today.

“NatWest share price has been a notable outperformer so far this year, its shares up over 35%, and at 20-month highs, so the bar was quite high for today’s Q3 numbers, and quite frankly the market reaction has been a little underwhelming.”

Glencore fell even as the mining giant said it expected annual earnings to beat the top end of guidance and maintained production forecasts. The company forecast earnings before interest and tax at its marketing unit to exceed the top end of its $2.2bn to $3.2bn long-term guidance.

Computacenter nudged lower despite saying it was on course to deliver record revenue, profit and earning per share for the full year after the third quarter ended “marginally above” its expectations.

On the upside, Hilton Food advanced after announcing the acquisition of UK foodservice meat supplier Fairfax Meadow Europe for £23.8m.

Medical products company ConvaTec rallied as it said full-year organic revenue growth was set to be towards the upper end of its guidance range after an in-line third-quarter, which saw sales slow from the second quarter.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Carnival Plc +1.49% +21.60 1,472.80
2 Centrica Plc +1.32% +0.80 61.18
3 Lloyds Banking Group Plc +1.23% +0.61 50.19
4 Wpp Plc +1.01% +10.50 1,054.50
5 Kingfisher Plc +0.81% +2.70 334.00
6 Rolls-royce Holdings Plc +0.79% +1.04 133.06
7 Bp Plc +0.68% +2.40 354.45
8 Melrose Industries Plc +0.66% +1.05 160.05
9 United Utilities Group Plc +0.63% +6.50 1,045.50
10 3i Group Plc +0.55% +7.50 1,364.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Smith & Nephew Plc -3.10% -40.00 1,248.50
2 Ocado Group Plc -1.71% -31.00 1,783.00
3 Sainsbury (j) Plc -1.64% -4.90 294.70
4 Whitbread Plc -1.47% -49.00 3,277.00
5 Micro Focus International Plc -1.46% -5.30 356.90
6 Admiral Group Plc -1.45% -42.00 2,848.00
7 Rightmove Plc -1.40% -9.80 691.80
8 Croda International Plc -1.37% -130.00 9,334.00
9 Fresnillo Plc -1.35% -11.80 861.00
10 Tui Ag -1.21% -3.00 244.00

 

Europe open: Shares lower as Apple, Amazon disappoint investors

European shares opened lower on Friday as results overnight from tech giants Amazon and Apple results missed expectations.

The pan-European Stoxx 600 index was down 0.71% in early deals with all major regional bourses lower.

In equity news, shares in UK state-owned lender NatWest fell despite third quarter profits tripling. The bank revealed it had set aside almost £300m to cover an as yet levied fine for money laundering.

BNP shares gained slightly as the bank beat third quarter expectations and unveiled a €900m share buyback

German carmaker Daimler was up as the company said it was on track to meet 2021 targets despite the global chip shortage.

Shares in computer game maker Ubisoft soared by almost 10% to the top of the Stoxx as the company missed second quarter earnings estimates, but beat revenue expectations.

Air France-KLM shares bucked the with the shares up 5.68% as it narrowed losses in the third quarter thanks to favourable summer business. The airline said it planned to boost capacity as countries reopen their economies from coronavirus lockdowns.

 

US close: Street finishes green as the earnings keep coming

Wall Street stocks finished in the green on Thursday, as traders digested some key data points and more corporate earnings.

At the close, the Dow Jones Industrial Average was up 0.68% at 35,730.48, the S&P 500 added 0.98% to 4,596.42, and the Nasdaq Composite was ahead 1.39% at 15,448.12.

The Dow closed 239.79 points higher on Thursday, clawing back the previous session’s losses that saw the blue-chip index knocked off its record high.

Thursday’s primary focus was news that US economic growth had slowed more sharply than anticipated over the three months ended 30 September.

According to the Department of Commerce, a preliminary reading showed that the rate of growth in US gross domestic product decelerated to a quarterly annualised pace of 2.0% in the third quarter – down from the 6.7% clip observed during the preceding three months.

In other data news, Americans applied for unemployment benefits at a slower pace last week, indicating that the US job market and economy were continuing to recover from the coronavirus-induced recession.

Initial jobless claims dropped by 10,000 to 281,000 in the week ended 23 October, a fresh pandemic-era low, according to the Labor Department.

The prior week’s figure was upwardly revised from 290,000 to 291,000, while continuing claims slid to 2.24m for the week ended 16 October, beating median estimates for a print of 2.42m – another new Covid-19 era low.

Still on the macro front, pending home sales fell unexpectedly in September, down 2.3% month-on-month, according to the National Association of Realtors, principally due to a sharp increase in mortgage rates in the middle of the month.

Corporate earnings were also one of the session’s primary focuses, with another batch of big-name results scheduled for release throughout the course of the day.

Bombardier was down 4.41% on Wall Street after reporting that its quarterly loss had narrowed and revenues had increased 17% to $1.4bn amid heightened demand for its business jets, while toolmaker Stanley Black & Decker was off 0.62% even after it beat estimates with its adjusted third-quarter earnings.

Merck & Co jumped 6.14% after it posted an earnings beat on the top and bottom lines, while trade bellwether Caterpillar advanced 4.06% after it topped profit estimates but fell shy on revenue.

KFC and Taco Bell parent Yum! Brands eked out gains of 0.07% after earnings topped estimates, while Hershey’s slipped 0.06% despite reporting that the Halloween chocolate rush had sweetened its full-year outlook.

Amazon closed up 1.59%, Apple added 2.5%, Western Digital was ahead 3.24% and Gilead Sciences was 0.85% firmer, while Starbucks lost 0.33%, ahead of all of them updating on recent trading after the closing bell.

 

Friday newspaper round-up: Homeowners, Greensill, Wizz Air

Homeowners face the biggest rise in mortgage costs since the financial crisis, with the amount of interest they pay set to jump by 13% in 2023, data from the government’s independent forecasting unit suggests. Politicians and analysts seized on a table “buried” in a report published by the Office for Budget Responsibility (OBR) alongside the budget, which stated that mortgage interest payments were set for their biggest rise since at least 2008. – Guardian

Whitehall’s independent watchdog has found “no evidence” that ministers or officials considered potential conflicts of interest before giving the disgraced financier Lex Greensill government contracts just months after he had left a job as a No 10 adviser. The National Audit Office said Greensill left a job as an adviser to David Cameron, then the prime minister, in 2017. Eight months later, his firm was involved in a bid for a large public sector contract. – Guardian

Wizz Air has fired an executive after an investigation by regulators revealed he had breached rules governing trading by company insiders. András Sebők, the budget airline’s chief supply officer, bought and sold shares on 114 different occasions without notifying the Financial Conduct Authority (FCA). – Telegraph

Joe Biden is preparing to launch an unprecedented tax raid on US millionaires as he scrambles to raise $2 trillion to fund a flagship spending package. The Senate is poised to vote on a 5pc tax on earnings above $10m (£7.2m) a year, with an extra 8pc for incomes above $25m. – Telegraph

Apple and Amazon both disappointed investors with their earnings reports last night as they warned of continuing disruption to their supply chains. Shortages knocked Apple’s sales by $6 billion in the latest three-month period and it said that the impact could get worse in the remainder of the year. – The Times

Bentley Motors is on course to make record annual profits of more than double any figure it has made in a year in its history. The Crewe-based luxury carmaker yesterday reported operating profits of €275 million for the first nine months of the year. – The Times

 

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