ADVFN Morning London Market Report: Friday 12 November 2021

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London open: Stocks edge lower ahead of US data; AstraZeneca in focus

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London stocks edged lower in early trade on Friday, with AstraZeneca under the cosh after results, as investors eyed a number of data releases due across the pond.

At 0905 GMT, the FTSE 100 was down 0.3% at 7,361.88.

Neil Wilson, chief market analyst at Markets.com, said: “Inflation is front of mind for investors this week after the US CPI report, which has driven a sharp rally in gold and the US dollar.

“Today’s University of Michigan inflation expectations will be closely watched, although it is unlikely to drive any material shift in the post-CPI momentum. Expectations are forecast to rise to 5% from 4.8% last month. We’re also watching the UoM consumer sentiment data and JOLTS job openings – a marker for the health of the US labour market, although these days not such a great signal due to the massive mis-matches and dislocation in the market post-pandemic.”

In equity marketsAstraZeneca fell after its quarterly profit missed expectations but the company said it would start making a profit from its Covid vaccine from the fourth quarter onwards.

Wood Group slumped after cutting its full-year revenue and earnings guidance, while software group Aveva was knocked lower by a downgrade to ‘hold’ from ‘buy’ at Jefferies.

On the upside, Burberry and B&M European Value gained, having fallen sharply a day earlier on the back of results.

Housebuilder Redrow was also on the rise after saying it expects 2022 results to be similar to those achieved in 2019.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Burberry Group Plc +3.04% +56.50 1,918.00
2 Itv Plc +1.74% +2.15 125.60
3 Ocado Group Plc +1.70% +30.00 1,792.00
4 3i Group Plc +1.61% +23.00 1,452.00
5 Barratt Developments Plc +1.56% +10.60 688.20
6 Marks And Spencer Group Plc +1.20% +2.80 235.30
7 Bunzl Plc +1.19% +33.00 2,798.00
8 Persimmon Plc +1.10% +30.00 2,751.00
9 Rightmove Plc +1.10% +7.80 717.00
10 Melrose Industries Plc +1.09% +1.85 171.15

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Astrazeneca Plc -2.59% -245.00 9,199.00
2 Carnival Plc -2.13% -33.60 1,544.00
3 Rolls-royce Holdings Plc -1.77% -2.58 142.82
4 Tui Ag -1.71% -4.00 229.60
5 Intercontinental Hotels Group Plc -1.57% -80.00 5,022.00
6 International Consolidated Airlines Group S.a. -1.40% -2.36 166.80
7 Informa Plc -1.38% -7.40 530.20
8 Evraz Plc -1.36% -8.60 625.00
9 Spirax-sarco Engineering Plc -1.27% -215.00 16,780.00
10 Royal Dutch Shell Plc -1.26% -21.00 1,643.80

 

Europe open: Shares set new highs as Richemont sparkles

European shares touched record highs before heading to the flatline on Friday as investors maintained a cautious tone, but were still set for a week of gains despite inflationary worries.

The pan-European Stoxx 600 was up 0.06% in early deals, with regional markets mixed.

“This week’s events, particularly around inflation are fomenting increasing discussion as to whether central banks might have to shift their policy stance to reflect that the price rises currently being seen could only just be the beginning of what consumers are about to bear as we head towards 2022,” said CMC Markets analyst Michael Hewson.

“For months they have been assuring the markets that inflation is transitory, only for them to then have to shift their CPI forecasts higher with each passing meeting.”

“As we come to the end of the week it’s been a solid week for European stocks with the FTSE100 getting to within touching distance of the 7,400 level, and its third successive weekly gain. It’s also shaping up to be a positive week for the DAX although the progress has been glacial.”

In equity news, shares in Cartier owner Richemont surged 7.1% after the company beat profit estimates in the first half of the fiscal year and saying it is seeking investors for its loss-making Yoox business.

Sector peer LVMH jumped 1.5% after news that Louis Vuitton was planning to open its first duty-free store in China.

 

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.

 

Friday newspaper round-up: Graduates, the Tulip, Embark Technology

Graduates from poorer backgrounds earn half as much as their more privileged peers in their first job after university because they put themselves forward for fewer roles and lack the family connections and financial support to hunt for top jobs, a survey has shown. The survey of 5,000 graduates suggested that those whose parents held professional roles, including chief executives, doctors and teachers, earned an average of £23,457 in their first job after university, compared with just £11,595 among those whose parents held technical, manual or service jobs. After university, poorer graduates applied for an average of six jobs compared with nine for their wealthier peers, the figures showed. – Guardian

Controversial plans to build a 305-metre high tower in the City of London have been thrown out by the government. The surprise decision, announced by the Department for Levelling up, Housing and Communities, ends a long-running saga of contradictory decisions on the fate of the planned tourist attraction – designed by Foster + Partners and called the Tulip – at 20 Bury Street in London’s financial district. – Guardian

Striking workers at Clarks have been accused of shouting homophobic abuse at staff and attempting to damage cars as Britain lurches into a winter of discontent. Picketers scattered nails across the road to be run over by traffic outside Clarks’ factory in Somerset and a striker shouted “take that, gay boy” at a member of staff heading into the building, the 196-year-old shoemaker claimed amid an increasingly bitter dispute over pay. – Telegraph

Boris Johnson is facing calls from more than 40 cross-party MPs to table legislation to stop the use of UK property for economic crime, as a rise in ownership in offshore tax havens is said to have placed the country “at the heart of the world’s dirty money crisis”. Seventeen Tory backbenchers and peers are among those urging the prime minister to bring forward legislation to introduce a register of overseas entities that own UK property. Draft legislation has been ready since 2018. – The Times

An autonomous technology start-up went public in New York yesterday, bringing to the stock exchange one of the youngest chief executives of a listed American company. Embark Technology, which specialises in developing software and services for self-driving lorries, was valued at more than $5 billion in a so-called blank-cheque merger. – The Times

 

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