ADVFN Morning London Market Report: Tuesday 2 November 2021

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London open: Miners pace the decline; StanChart, BP in focus

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London stocks fell in early trade on Tuesday, with miners pacing the decline as investors mulled results from the likes of BP and Standard Chartered.

At 0835 GMT, the FTSE 100 was down 0.4% at 7,260.83.

Victoria Scholar, head of Investment at Interactive Investor, said: “European markets have kicked off Tuesday’s session on a negative note driven by declines in basic resources as iron ore extends losses to hit a 16-month low.

“The FTSE 100 is hovering below key resistance at 7,300 with the next key support at 7,250. Investors are weighing up the largely resilient results coming out of European earnings season against a busy week for central banks with the potential for hawkish shifts from the Fed and the Bank of England as soon as this week.”

In equity markets, miners were under the cosh as copper and iron ore prices declined, with BHPAnglo AmericanRio Tinto and Glencore all down.

Paddy Power owner Flutter Entertainment tumbled after it posted a jump in third-quarter revenue but downgraded its earnings guidance for the year due to unfavourable sports results in October and its Netherlands exit.

Standard Chartered was also weaker despite saying that underlying pre-tax profit rose 44% to $1.08bn in the third quarter as income rose and bad debts fell sharply. The bank said it expected annual income to be similar to the year before on a constant currency basis but to be lower in the fourth quarter than in the third.

BP was in the red even as the energy giant said surging oil and gas prices had helped it to report better-than-expected third quarter profits as demand for its products soared on the back of economic recovery from the Covid pandemic.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Associated British Foods Plc +1.19% +21.50 1,834.00
2 Carnival Plc +1.15% +17.60 1,546.40
3 Astrazeneca Plc +1.06% +97.00 9,235.00
4 Sainsbury (j) Plc +1.05% +3.10 297.80
5 Hiscox Ltd +0.87% +7.40 856.00
6 Rightmove Plc +0.81% +5.60 699.80
7 Rentokil Initial Plc +0.77% +4.60 599.40
8 Coca-cola Hbc Ag +0.74% +19.00 2,587.00
9 Next Plc +0.71% +58.00 8,242.00
10 Marks And Spencer Group Plc +0.69% +1.30 189.90

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Flutter Entertainment Plc -7.37% -1,035.00 13,000.00
2 Standard Chartered Plc -6.13% -31.00 474.80
3 Anglo American Plc -3.84% -108.00 2,704.50
4 Bhp Group Plc -3.39% -65.20 1,858.80
5 Glencore Plc -3.02% -11.05 354.85
6 Antofagasta Plc -2.71% -39.00 1,399.50
7 Rio Tinto Plc -2.68% -122.00 4,438.50
8 Pearson Plc -2.43% -15.00 602.00
9 Evraz Plc -2.15% -13.40 610.00
10 Direct Line Insurance Group Plc -2.09% -6.10 286.00

 

Europe open: Shares slip ahead of policy meetings, miners weaker

European slipped at the opening on Tuesday as investors continued to wait for key central bank meeting this week for decisions on rate rises and asset purchase tapering.

The pan-European STOXX 600 index slipped 0.3% in early deals with most regional bourses lower. Germany’s DAX outperformed with a 0.2% rise.

Asian stocks finished the overnight session mixed. Traders are eying US Federal Reserve, Bank of England and Reserve Bank of Australia policy meetings.

Mining stocks were lower on the back of a fall in the iron ore market and copper prices. Anglo AmericanBHPGlencoreAntofagasta and Rio Tinto all fell.

In equity news, Standard Chartered slumped 5.85% despite reporting a stronger-than-expected pre-tax profit for the third quarter helped by lower credit charges.

Online betting group Flutter Entertainment slumped 7.4% after lowering full-year guidance due to unfavourable sports results and a temporary exit from the Netherlands.

THG was in the wars again, falling 4.78% on the back of reports BlackRock was preparing to sell nearly half of its stake in the company.

On the other side of the ledger, shares in meal-kit delivery firm HelloFresh soared 14% after raising its sales forecast for 2021.

 

US close: AMC butters investor popcorn as stocks finish higher

Wall Street stocks closed in positive territory on Monday, as a week headlined by corporate earnings and the Federal Reserve’s two-day policy meeting started off with both the ISM and IHS Markit‘s manufacturing PMIs.

At the close, the Dow Jones Industrial Average was up 0.26% at 35,913.84, the S&P 500 added 0.18% to 4,613.67, and the Nasdaq Composite was ahead 0.63% at 15,595.92.

The Dow closed 94.28 points higher on Monday after all three major averages saw out the previous session at fresh record highs.

On the macro front, IHS Markit‘s manufacturing purchasing managers index expanded at a slightly slower pace in October, with the PMI dropping from 60.7 in September to 58.4 last month, short of a flash estimate of 59.2.

“October saw US manufacturers report yet another near-record lengthening of supply chains, with shortages of components constraining production growth to the lowest since July of last year,” said Chris Williamson, chief business economist at IHS Markit.

“Around half of all companies reporting lower production in October attributed the decline to a lack of supplies.

“However, a further one-in-ten cited a lack of labour, and one-in-four reported that demand had fallen, often as a result of customers either lacking other inputs or pushing back on higher prices.”

Elsewhere, ISM‘s manufacturing PMI revealed that economic activity in the manufacturing sector grew in October, albeit at a slightly slower pace than in September.

The October manufacturing PMI registered 60.8%, a decrease of 0.3 percentage points from the September reading of 61.1%, indicating expansion in the overall economy for the 17th month in a row.

“Manufacturing performed well for the 17th straight month, with demand and consumption registering month-over-month growth, in spite of continuing unprecedented obstacles – including the Imports Index moving into contraction territory – and ever-increasing demand,” said Timothy Fiore of the Institute for Supply Management.

“Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labour turnover.

“As workers opt for more attractive job opportunities, panelists’ companies and their suppliers struggle to maintain employment levels.”

Still on data, the Commerce Department revealed that construction spending unexpectedly fell 0.5% in September, reversing August’s 0.1% increase.

Traders were also looking ahead to the Federal Reserve’s two-day meeting on Tuesday and Wednesday, with the central bank expected to reveal that it will soon start to unwind its $120.0bn monthly bond-buying programme before halting it entirely by the midway point of 2022.

Reopening plays were in focus on Monday, with Ford Motor Company up 5.09% and Occidental Petroleum 3.82% higher.

Shares in America’s newest trillion-dollar company Tesla were also in the green, ending the day 8.49% firmer.

With the third-quarter earnings season set to continue throughout the course of the week, ‘meme stock’ favourite AMC Entertainment was up 4.81% at the closing bell after the cinema chain reported its best month in October since the start of the Covid-19 pandemic.

The company once again offered investors a “free large popcorn” if they registered for its ‘AMC Investor Connect’ platform, having previously served up the puffed maize incentive in June.

“It is a high priority for us that our shareholders become, or continue to be, customers at our theatres,” said AMC chairman and chief executive officer Adam Aron.

“What better way is there for them to indulge themselves with movie theatre popcorn, especially when it is free, than by visiting an AMC?”

The offer of free food came with a caveat, however, with shareholders needing to purchase a movie ticket at a US theatre to redeem the benefit.

 

Tuesday newspaper round-up: French Connection, Rolls-Royce, EY partners

French Connection shareholders have backed the £29m takeover of the fashion brand led by a Newcastle-based businessman, putting the company back into private hands for the first time since 1983. The new owners are expected to take over on 8 November. The 75-year-old chair and chief executive, Stephen Marks, who co-founded the chain in 1972 and owns nearly 42% of the company, is to receive about £12m for his stake in the business. – Guardian

The engine maker Rolls-Royce has entered into a long-term partnership with the Gulf state of Qatar to invest billions in green engineering projects to fund entrepreneurs finding new ways to help transition to net zero. The deal will include the creation of about 1,000 jobs at two campuses – one in northern England and one in Qatar – where climate technology businesses will be created, launched and developed. – Guardian

Partners at EY were handed record pay of nearly £750,000 in the year to July as the accountant shrugged off Covid and was boosted by a shift to home working. The firm handed an average £749,000 in shared profits to its most senior UK staff in the 12 months, up 12pc on the previous year. – Telegraph

Funds managed by one of the world’s biggest investment institutions are preparing to sell a block of shares in THG as the ecommerce group struggles to allay investors’ concerns over its business model. Shares in the Manchester-based group have fallen sharply over the past two months amid corporate governance concerns and questions surrounding the true value of its Ingenuity technology platform. That included a 35 per cent drop as its management tried to allay fears via a capital markets day. – The Times

Ministers have been accused of failing to get a grip on the impact of the cladding crisis after it emerged that the fiscal watchdog did not consider the cost of repairs in its forecast of residential investment in Britain. Sir Charlie Bean, a member of the budget responsibility committee, told MPs that the Office for Budget Responsibility’s economic forecasts, published alongside the budget last week, had not factored in the impact of costs to remove dangerous cladding. – The Times

 

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