ADVFN Morning London Market Report: Thursday 11 November 2021

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London open: Stocks rise, pound edges lower after GDP data

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London stocks edged higher in early trade on Thursday amid a strong performance from the mining sector and lifted by a weaker pound, as investors digested the latest UK GDP data.

At 0910 GMT, the FTSE 100 was up 0.3% at 7,364.32, while sterling was down 0.2% against the dollar at 1.3382 after figures from the Office for National Statistics showed that economic growth slowed in the third quarter amid supply chain issues.

GDP grew 1.3% between July and September, down from 5.5% in the second quarter and missing expectations for 1.5% growth. That leaves quarterly GDP 2.1% below where it was in the last quarter of 2019, before the pandemic hit.

GDP growth for July was revised down from a 0.1% drop to a 0.2% decline, while August’s was revised to 0.2% growth from 0.4%.

On a monthly basis for September, GDP grew 0.6%, which was ahead of the 0.4% increase expected.

Grant Fitzner, chief economist at the ONS, said: 2Growth picked up in September and the UK economy is now only slightly below pre-pandemic levels.

“This latest increase was led by the health sector, boosted by more visits to GP surgeries in England.

“Lawyers also had a busy month as house buyers rushed to complete purchases before the end of the stamp duty holiday.

“However, these were partially offset by falls in both the manufacture and sale of cars.

“Notably, business investment remained well down on pre-pandemic levels in the three months to September.”

Paul Dales, chief UK economist at Capital Economics, said: “The big point is that the best of the recovery is now behind us. And we think progress is going to slow over the next six to nine months as shortages remain an issue and the real spending power of businesses and households is reduced by higher taxes and rising utility prices.

“This won’t prevent the Bank from raising interest rates from +0.10% (perhaps in December), but we think it will contribute to rates going no higher than 0.50% next year.”

On the corporate front, investors were wading through a raft of earnings news.

Miners were among the best performers as copper prices rose, with Anglo AmericanBHPGlencoreRio and Antofagasta all higher.

Auto Trader was standout gainer on the FTSE 100 after saying it had achieved its highest ever six-monthly revenue and profits following solid performances from both the trade and retail segments.

On the downside, Johnson Matthey tumbled after it announced the departure of its chief executive alongside plans to sell its battery materials business and said the trading outlook for the full year was towards the lower end of market expectations.

B&M European Value Retail was weaker after the discount retailer reported lower half-year earnings, but said its supply chain remained “robust”, despite constraints that have plagued the global economy, along with labour shortages in Britain due to Brexit.

Burberry lost ground even as the luxury fashion brand said revenues are now back at pre-Covid levels, as it reported a jump in interim pre-tax profit and said reinstated its dividend.

TI Fluid Systems slumped after BC Omega – which is indirectly controlled by investment funds advised by Bain Capital – sold 40m shares in the company in a placing.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Auto Trader Group Plc +10.84% +67.20 687.40
2 3i Group Plc +2.82% +38.50 1,404.00
3 Anglo American Plc +2.45% +67.00 2,803.50
4 Bhp Group Plc +1.98% +37.60 1,938.60
5 Glencore Plc +1.83% +6.50 361.85
6 Barclays Plc +1.66% +3.20 195.96
7 Rio Tinto Plc +1.56% +69.50 4,514.50
8 Marks And Spencer Group Plc +1.46% +3.30 229.80
9 Fresnillo Plc +1.44% +13.80 973.00
10 Standard Chartered Plc +1.26% +5.70 457.40

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Johnson Matthey Plc -18.13% -501.00 2,262.00
2 Burberry Group Plc -8.08% -159.00 1,808.00
3 Flutter Entertainment Plc -2.12% -265.00 12,245.00
4 Itv Plc -2.11% -2.65 123.20
5 Smiths Group Plc -1.76% -25.50 1,426.50
6 Royal Dutch Shell Plc -1.75% -29.40 1,651.80
7 Carnival Plc -1.75% -28.20 1,587.40
8 Ocado Group Plc -1.73% -30.50 1,733.00
9 Micro Focus International Plc -1.67% -6.80 399.40
10 Royal Dutch Shell Plc -1.37% -23.00 1,661.60

 

US close: Stocks fall as consumer inflation busts through expectations

Wall Street stocks finished in negative territory on Wednesday, as market participants sifted through consumer inflation numbers that came in hotter than anticipated.

At the close, the Dow Jones Industrial Average was down 0.66% at 36,079.94, as the S&P 500 lost 0.82% to 4,646.71 and the Nasdaq Composite was off 1.66% at 15,622.70.

The Dow lost 240.04 points through the course of Wednesday’s session, extending the points it gave up on Tuesday after October’s producer price index dropped 0.6%.

“Markets don’t like surprises, particularly not when they come in the form of 30-year high inflation numbers,” said AJ Bell financial analyst Danni Hewson.

“Fuel and food were two of the main drivers, which means pretty much every US consumer is feeling the heat.

“There is still a valid argument that these price hikes are transitory and that supply chains just need to work through the kinks, but transitory can feel like a long time especially when there’s no way to know when things will get back on some kind of stable ground.”

Wednesday’s primary focus was October’s inflation report, which revealed the cost of living in the US rose more quickly than expected in October on the back of further spikes in energy and food prices.

According to the Department of Labor, in seasonally adjusted terms, the headline consumer price index increased at a month-on-month pace of 0.9%, which pushed the year-on-year rate up to 6.2%. Economists had pencilled-in a smaller 0.6% jump to 6.2%.

Energy inflation shot higher by 4.8% versus September, nearly tripling the previous month’s advance, while food costs jumped by 0.9%.

Elsewhere on the macro front, the initials jobless claims report from the Labor Department, coming in a day earlier than usual due to tomorrow’s Veteran’s Day holiday, came in at another fresh Covid-era low of 267,000 in the seven day’s ended 5 November, down from the previous week’s revised reading of 271,000.

Continuing claims for the week ended 30 October increased slightly to 2.16m from the prior week’s revised print of 2.1m.

Still on data, mortgage rates slipped for a second straight week in the seven days ended 5 November, down to 3.16% from 3.24%, helping boost refinance demand across the US.

As a result, total mortgage application volume rose 5.5% week-on-week, according to the Mortgage Bankers Association‘s seasonally-adjusted index.

Finally, a report from the Census Bureau revealed that wholesale inventories rose 1.4% in September as US businesses prepared for the all-important holiday trading period.

Sales in the month increased 1.1%, while the inventory-to-sales ratio was unchanged at 1.23 months.

On the equity front, Perrigo was down 11.01% after the Ireland-domiciled maker of own-brand painkillers disappointed on earnings and issued a profit warning, while Coinbase Global slid 8.06% after saying it had suffered a slow summer for cryptocurrency trading.

On the upside, food delivery provider DoorDash was 11.58% firmer after it reported record sales, and announced it was acquiring Finnish delivery platform Wolt in an all-shares deal worth over $8bn.

In after-hours trading, dating app developer Bumble was last down 8.9% and media behemoth Walt Disney was 4.44% weaker as both companies released their numbers post-close.

 

Thursday newspaper round-up: Tesla, fraud victims, Rivian

Elon Musk has sold about $5bn in shares amounting to roughly 3% of his Tesla holdings, the billionaire reported in filings on Wednesday, just days after he polled Twitter users about selling 10% of his stake. About $4bn worth of the sale – 3.6m shares – could be considered as counting towards his 10% pledge on Twitter. Another $1.1bn worth, amounting to 934,000 shares, was sold under an options arrangement to acquire nearly 2.2m shares that was already in train before the poll. – Guardian

Scam victims are facing a “reimbursement lottery” when they ask their banks to compensate them for their losses, the consumer group Which? has claimed. Three-quarters of customers who were turned down by their banks and took their cases to the financial ombudsman have been told that they should have received a payout, and the consumer group said with some banks this rose to eight in 10. – Guardian

Brussels has been forced to extend London’s lucrative euro clearing rights in a post-Brexit boost for the City as it seeks to protect its role as a global hub. The European Commission has granted permission for banks on the Continent to continue accessing Britain’s €660 trillion (£563 trillion) clearing market beyond an initial deadline of June 2022, amid fears that cutting them off would damage financial stability. – Telegraph

The centrepiece of the Nine Elms development in London, Europe’s biggest regeneration project, has sold fewer than one in 15 homes in its first year of marketing, fuelling fears of a multibillion-pound white elephant close to the heart of the capital. Nine Elms Square, a £3bn joint venture between Chinese developers R&F and CC Land due for completion in 2023, has struggled to sell properties at the former industrial site south of the Thames near Vauxhall, Telegraph analysis of regulatory filings shows. – Telegraph

The largest initial public offering in the world this year and one of the biggest in American history made a spectacular start yesterday as shares in a company touted as a future rival to Tesla surged by as much as 53 per cent. The market value of Rivian Automotive, an electric vehicle start-up, briefly eclipsed $100 billion after its shares started trading on New York’s Nasdaq exchange. In contrast, Ford, one of the company’s investors and a titan of the American carmaking sector, is valued at $77.4 billion, while General Motors, another traditional industry heavyweight, is worth $86 billion. – The Times

 

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