ADVFN Morning London Market Report: Wednesday 29 June 2022

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London open: Stocks fall after US losses; B&M bucks trend


London stocks fell in early trade on Wednesday, taking their cue from a weak session on Wall Street following the release of disappointing US data.

At 0905 BST, the 100 was down 0.4% at 7,293.15.

Richard Hunter, head of markets at Interactive Investor, said: “Attempts at sustaining recent rallies were short-lived, with investors unable to avoid the pervasive fear of a global slowdown.

“After a strong opening the major indices were unable to hold on to the gains, with a disappointing [US] consumer confidence reading taking the wind out of investors’ sails. The reading of 98.7 was below estimates of 100 and down from 103.2 in May, with the immediate outlook for the next six months also dipping. At the same time, inflation expectations remain elevated for the next year.

“With the consumer being central to US economic growth, the recent raft of pessimistic readings has led to some concerns that sentiment could become self-fulfilling as consumers hunker down in the face of higher prices, especially fuel and food. The Federal Reserve will of course be aware of the deteriorating sentiment, but for the moment is showing no signs of abandoning its primary objective of battling inflation head-on.

“The debilitating effect of the consumer confidence reading resumed the main markets’ decline and, in the year to date, the Dow Jones remains down by 15% and the S&P 500 by 20%. The Nasdaq is on course for its worst quarterly performance since 2008 and is currently down by 28%.”

In equity markets, greeting cards and gifts retailer Moonpig was weaker after it posted a drop in full -year adjusted pre-tax profit and revenue.

Cruise operator Carnival tumbled after Morgan Stanley slashed its price target on the shares and reiterated its ‘underweight’ rating.

British Land and Land Securities both slid after rating downgrades at Bank of America Merrill Lynch.

Drinks maker Diageo was knocked lower by a downgrade to ‘sell’ from ‘hold’ at Deutsche Bank, while Anglo American was off after a downgrade to ‘hold’ from ‘buy’ by the same outfit.

On the upside, Severn Trent and United Utilities were higher, recovering some ground after being hit on Tuesday by a research note from JPMorgan.

Variety goods retailer B&M European Value Retail was also in the black even as it said that UK first-quarter like-for-like revenue fell 9.1% as “exceptionally high sales” last year during Covid lockdowns distorted comparatives.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Standard Chartered Plc +1.58% +9.80 630.40
2 Bp Plc +1.57% +6.25 403.30
3 Shell Plc +1.22% +26.50 2,203.50
4 Severn Trent Plc +1.09% +30.00 2,772.00
5 United Utilities Group Plc +0.83% +8.50 1,034.00
6 National Grid Plc +0.65% +7.00 1,077.00
7 Bhp Group Limited +0.59% +14.00 2,402.00
8 Hsbc Holdings Plc +0.40% +2.20 548.00
9 Flutter Entertainment Plc +0.14% +12.00 8,518.00
10 Bt Group Plc +0.13% +0.25 192.55


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Carnival Plc -12.30% -96.00 684.80
2 British Land Company Plc -7.35% -37.30 469.90
3 Pearson Plc -6.06% -47.80 740.80
4 Ocado Group Plc -5.98% -51.60 811.80
5 Tui Ag -5.25% -7.75 139.90
6 Land Securities Group Plc -4.83% -35.60 701.00
7 Micro Focus International Plc -4.11% -12.50 291.80
8 Easyjet Plc -4.03% -16.60 395.10
9 Diageo Plc -3.93% -144.50 3,535.50
10 Informa Plc -3.24% -17.80 531.80


US close: Stocks record heavy losses as consumer confidence falls to 16-month low

Wall Street stocks closed sharply lower on Tuesday as market participants digested news that consumer confidence had hit a 16-month low

At the close, the Dow Jones Industrial Average was down 1.56% at 30,946.99, while the S&P 500 was 2.01% weaker at 3,821.55 and the Nasdaq Composite saw out the session 2.98% softer at 11,181.54.

The Dow closed 491.27 points lower on Tuesday, extending losses recorded in the previous session.

Consumer confidence data from the Conference Board was in focus on Tuesday, decreasing to 98.7 in June, following a decline to 103.2 in May to stand at its lowest level since February 2021. The present situation index, based on consumers’ assessment of current business and labor market conditions, declined marginally to 147.1 from 147.4 in May, while the expectations index, based on consumers’ short-term outlook for income, business, and labour market conditions, decreased sharply to 66.4 from 73.7 to its lowest level since March 2013.

Elsewhere on the macro front, an advance reading of America’s goods trade balance narrowed to -$104.31bn in May from an upwardly revised print of -$106.7bn in April, according to the Census Bureau, the lowest trade deficit so far in 2022, while the Federal Housing Finance Agency‘s US house price index increased to 392.86 points in April, up from 386.82 points in March.

In the corporate space, the owner of UK chemist chain Boots has decided to abandon its sale as it hasn’t been able to attract an adequate offer. Following a review that began in January, Walgreens Boots Alliance said it has decided to keep its Boots and No7 Beauty Company businesses under existing ownership.

US banks were also in focus after several big names raised their dividends as a result of successfully clearing this year’s Federal Reserve stress tests, including Bank of AmericaMorgan Stanley, and Goldman Sachs. However, both JPMorgan and Citigroup cautioned that increasingly tight capital requirements had forced them to keep their dividends as they were.

No major earnings were released on Tuesday.


Wednesday newspaper round-up: Climate crisis deal, fuel duty cut, EY

EU countries clinched deals on proposed laws to combat the climate crisis in the early hours of Wednesday, backing a 2035 phase-out of new fossil-fuel car sales and a multibillion-euro fund to shield poorer citizens from the costs of carbon dioxide emissions. After more than 16 hours of negotiations, environment ministers from the 27 member states agreed their joint positions on five laws, part of a broader package of measures to slash planet-heating emissions this decade. – Guardian

Rishi Sunak has promised to consider another cut to fuel duty amid claims that prices at forecourts are “pump fiction” as they fail to reflect wholesale costs. The chancellor said on Tuesday that he would examine whether to reduce the levy further after cutting it by 5p a litre in March. Sunak is under pressure to help motorists paying record prices at the pump while the cost of other household goods has also jumped. – Guardian

Electric cars face being fitted with tracking devices under proposals for a pay-per-mile road taxation system put forward by the Government’s own climate advisers. The Climate Change Committee (CCC) says the Government needs to find ways to cover the “significant hole” in the public finances left by the loss of fuel duty and other taxes when petrol and diesel cars are replaced by electric models. – Telegraph

EY is to pay a record $100 million fine to the US financial regulator after it found that the Big Four accountancy firm’s audit staff had cheated in ethics exams by sharing answers. The US Securities and Exchange Commission also said the EY had hindered its investigation by telling inspectors that there had been no cheating, despite the issue having previously been raised with bosses. – The Times

Kwasi Kwarteng, the business secretary, says there is a “strong argument” for supporting the steel industry amid expectations that the government will extend import tariffs despite the risk of breaking international law. Yesterday he told the business, energy and industrial strategy committee that “free trade is all very well but if everyone else is supporting a strategic industry, I think there is a strong argument for us in this country to do so”. – The Times


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