ADVFN Morning London Market Report: Wednesday 3 November 2021

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London open: Stocks tick lower ahead of Fed announcement

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London stocks nudged lower in early trade on Wednesday as investors sifted through a raft of earnings news and eyed the latest policy announcement from the US Federal Reserve.

At 0900 GMT, the FTSE 100 was down 0.1% at 7,266.59.

Neil Wilson, chief market analyst at Markets.com, said: “The focus today is squarely on the Fed. It’s certain to announce the start of tapering, and push against interest rate hikes. Sounds easy enough but there are details which could affect the market reaction later.

“Key questions relate to the pace and timing of tapering, and comments about the path of inflation and jobs from chair Jay Powell. The Fed is likely to begin tapering its $120-a-month QE programme this month, or potentially wait until Dec. I don’t think this matters a huge amount, though delay could be marginally negative for the dollar and good for risk. It’s the pace of the tapering that really counts as this will determine when bond buying ends and could help shape expectations for when the Fed will begin raising rates.

“It’s expected that the Fed will reduce asset purchases at a rate of $15bn-a-month, which would mean the taper takes 8 months to complete. However, the Fed could go ahead at $20bn-a-month, ending two months earlier. Markets would likely see $20bn as more hawkish and suggest an earlier rate hike.”

In equity marketsNext fell as the retailer reported better-than-expected full-price sales in the last five weeks, but warned that momentum would slow in the final quarter due to diminishing pent-up demand from Covid lockdowns and supply-chain constraints.

Darktrace slumped after private equity firm Vitruvian Partners sold 11m shares in the cybersecurity group in a placing. The shares were sold at 580p each, raising gross proceeds of around £63.8m.

Trainline slid even as the online ticket seller said it had it returned to profitability in the first half as passengers returned to rail and shifted to digital ticketing.

Pets at Home lost ground as it upgraded its full-year profit expectations but announced the departure of chief executive Peter Pritchard.

On the upside, miners were the standout gainers as copper and iron ore prices rose, with AntofagastaAnglo American and Glencore all higher. Anglo was also boosted by an upgrade to ‘buy’ from ‘hold’ at Liberum.

Micro Focus rose as it agreed the sale of its archiving and risk management portfolio to Smarsh Inc for $375m in cash.

Morgan Sindall was higher after the construction and regeneration group said full-year results were set to be ahead of its expectations amid continued strong trading.

Ibstock and Quilter also rallied after well-received results.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Micro Focus International Plc +5.01% +18.20 381.60
2 Antofagasta Plc +2.98% +40.50 1,400.50
3 Anglo American Plc +2.79% +76.00 2,796.00
4 International Consolidated Airlines Group S.a. +2.72% +4.44 167.80
5 Pearson Plc +2.64% +15.60 605.60
6 Glencore Plc +2.31% +8.20 362.45
7 Evraz Plc +1.87% +11.40 622.60
8 Rio Tinto Plc +1.68% +75.00 4,535.50
9 Bhp Group Plc +1.57% +29.40 1,896.60
10 Fresnillo Plc +1.50% +12.80 865.60

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Next Plc -2.62% -218.00 8,094.00
2 Hiscox Ltd -2.48% -20.20 793.40
3 Informa Plc -2.02% -10.80 524.00
4 Bp Plc -1.86% -6.40 338.55
5 Ocado Group Plc -1.36% -24.00 1,743.00
6 Royal Dutch Shell Plc -1.10% -18.20 1,643.40
7 Royal Dutch Shell Plc -1.05% -17.40 1,641.00
8 Whitbread Plc -0.94% -31.00 3,261.00
9 Sainsbury (j) Plc -0.92% -2.70 290.60
10 Prudential Plc -0.81% -12.00 1,470.00

 

Europe open: Shares hit record highs as Lufthansa returns to profit

European shares hit record levels at the opening on Wednesday as a return to profit from Lufthansa helped lift investor sentiment ahead of key central bank meetings this week.

The pan-European Stoxx was flat having risen 0.2% in early deals. The US Federal Reserve is expected to announce a tapering of its its $120 billion monthly bond-buying programme and the Bank of England tipped to lift interest rates amid rising inflation.

In equity news, Lufthansa was up 4% as the airline posted a return to profit for the first time since the coronavirus crisis, boosted by the easing of travel restrictions.

BMW edged ahead as the German automaker reported higher quarterly profit, though it reiterated its warning on the global chip crunch.

Shares in remote working software maker Teamviewer rose 7% as the company maintained annual guidance and said it would reconfigure growth initiatives and cost structure.

Shares in Vestas, the world’s largest maker of wind turbines, slumped 11% after posting a lower-than-expected third-quarter operating profit and trimming its full-year profit forecast.

 

US close: Stocks close firmer as investors look to Fed meeting

Wall Street trading finished in the green on Tuesday, as investors awaited the outcome of this week’s FOMC meeting.

At the close, the Dow Jones Industrial Average was up 0.39% at 36,052.63, as the S&P 500 added 0.37% to 4,630.65 and the Nasdaq Composite advanced 0.34% to 15,649.60.

The Dow closed 138.79 points higher on Tuesday after all three major indices hit fresh intraday highs before closing at records levels in the previous session.

Tuesday’s primary focus was the beginning of the Federal Reserve’s potentially market-moving two-day Federal Open Market Committee meeting that kicked off during the day, with the central bank expected to announce that it will soon begin to unwind the $120.0bn monthly bond-buying programme it implemented as a result of the Covid-19 pandemic.

In terms of earnings, Under Armour jumped 13.93% by the closing bell after a third-quarter earnings beat prompted the sportswear retailer to hike its full-year guidance.

Pharmaceutical giant Pfizer added 4.15% after it raised its full-year forecasts, with the group now expecting to see $36.0bn in Covid-19 vaccine sales in 2021.

Ride-hailing outfit Lyft closed down 2.33%, but was 12.86% higher in after-hours action, as it reported earnings after the close.

Also in the corporate space, Tesla shares were 3.03% weaker after the carmaker was said to be recalling 11,700 of its vehicles due to a communications error.

No major data points were slated for publication on Tuesday.

 

Wednesday newspaper round-up: Energy suppliers, Jes Staley, Sensyne Health

Another four energy suppliers have gone bust in a single day as historic gas market highs continue to rip through the UK’s energy market amid fresh fears that Russia may curb gas supplies to Europe. The energy regulator, Ofgem, said the collapse of four small energy suppliers on Tuesday would leave about 24,000 households in need of a new supplier, and bring the total number of bust energy companies to 17 since the start of September, affecting more than 2 million households. – Guardian

NHS mobile test-and-trace units run by Mitie are cutting the guaranteed pay of workers by a third after winning a new contract from the government. The outsourcing firm, which employs about 1,000 people at mobile testing sites, has told workers that from 8 November they will be guaranteed pay for an eight-hour shift each day, rather than 12 hours, slashing secure pay to £80 a day from £120. – Guardian

Jes Staley is in line for bonus payouts worth up to £22m after quitting as chief executive of Barclays in the wake of an investigation into his links with paedophile financier Jeffrey Epstein. The banker – who is being treated as a “good leaver” after he stood down on Monday – is in line for as many as 11.4m shares valued at £22.5m if the bank hits targets in coming years, according to its annual report. – Telegraph

New RAF drones will cost the taxpayer an extra £300 million because of delays by the MoD, a report by the public accounts committee (PAC) on military waste has found. Parliament’s spending watchdog said “broken” systems for purchasing military kit by the MoD meant billions of pounds were being wasted by officials who “continually fail to learn” from their mistakes. – Telegraph

Lord Drayson, a former science and business minister, is attempting to take private the healthcare technology company he floated three years ago after a turbulent time on the markets. The Labour peer, 61, has approached the board of Sensyne Health requesting approval to speak to third-party investors to pursue a management buyout of the Aim-quoted company. – The Times

An industrial products provider has scrapped plans for an initial public offering in London, citing “difficult ongoing conditions”. Rubix Group, owned by Advent International, the private equity firm, said that it had received strong backing for its business model and strategy from institutional investors, but added that it believed now might not be the right time for a listing. – The Times

 

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