ADVFN Morning London Market Report: Monday 1 August 2022

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London open: Pearson and HSBC pace gains on FTSE 100

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London shares were modestly higher in early trading with the buying seen across July having carried over into the start of the month.

Some analysts in the City credited “solid” company earnings and a weaker US dollar, as a function of lowered expectations for interest rate hikes by the Federal Reserve, for the continued buying appetite – although there was underlying cautious.

On that note, Neil Wilson, chief market analyst at Markets.com, was telling clients: “Solid earnings, easing around inflation worries and some repricing around the Fed, plus a weaker dollar, has enabled a strong bear market rally.

“The S&P 500 can probably still hit 4,200, but I wouldn’t give it too much beyond that, even though the market could be happy to ride this bear market rally narrative for the summer. No one cares if it’s a technical recession or not.

“The market is way too complacent still because the Fed is not done yet.”

Against that backdrop, as of 0936 BST, the FTSE 100 was ahead by 0.50% or 36.38 points to to 7,460.01, alongside a 0.3% advance for the pound to 1.2207.

US European and US markets recorded their best monthly performance in July since November 2020.

Key Chinese factory sector surveys released overnight had underlined the near-term challenges that the global economy was facing.

Survey compiler Caixin reported a decline in its China Purchasing Managers’ Index for manufacturing covering the month of July from a reading of 51.7 for June to 50.4 (consensus: 51.5), mirroring a drop seen in the ‘official’ PMI that was released at the weekend.

“This marks the start of the H2 weakness we expected, as the data normalises after waves of disruption tied to the Omicron wave and related restrictions,” said Craig Botham, China+ economist at Pantheon Macroeconomics.

For its part, S&P Global revised its UK manufacturing PMI for July from 52.2 to 52.1 (consensus: 52.2), which was down from 52.8 in June.

Still on the economic calendar for later, the US ISM Institute’s own manufacturing PMI was set for release at 1500 BST.

Pearson and HSBC please investors

Publishing company Pearson said on Monday that it had delivered a “strong financial performance” in the six months ended 30 June, leading the group to reiterate guidance for the full year. Pearson said underlying sales had grown 6% to £1.78bn during the first half of the year, while adjusted operating profits surged £33.0m to £160.0m, principally driven by an “encouraging” trading performance, FX benefits and property savings.

HSBC reported a fall in first-half profits on Monday but pledged to resume quarterly dividends next year as its annual outlook remained positive. The banking giant posted a pre-tax profit of $9.17bn, down more than 15% year-on-year, despite reporting a modest 2% uptick in interim revenues to $12.8bn.

Food producer Cranswick said on Monday that revenues had grown 7.6% year-on-year in the 13 weeks ended 25 June. Cranswick said like-for-like revenues were 5.8% higher, with strong growth in its core UK market partly offset by expected lower export revenue. Far East export sales were lower than in the same quarter a year earlier due to market prices falling from elevated levels experienced over the previous two years.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Hsbc Holdings Plc +5.84% +30.00 543.70
2 Pearson Plc +5.60% +42.40 799.00
3 Centrica Plc +2.51% +2.20 89.90
4 Bae Systems Plc +2.23% +17.20 787.20
5 Barclays Plc +1.78% +2.80 159.98
6 Direct Line Insurance Group Plc +1.50% +3.10 209.10
7 Standard Chartered Plc +1.35% +7.60 571.80
8 Taylor Wimpey Plc +1.30% +1.65 128.75
9 Mondi Plc +1.26% +19.50 1,569.00
10 Legal & General Group Plc +1.23% +3.20 264.20

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Intertek Group Plc -2.38% -104.00 4,272.00
2 Croda International Plc -1.15% -86.00 7,396.00
3 Fresnillo Plc -0.98% -7.20 730.20
4 Smith & Nephew Plc -0.95% -10.00 1,037.50
5 Rentokil Initial Plc -0.92% -5.00 536.20
6 Astrazeneca Plc -0.90% -98.00 10,746.00
7 Segro Plc -0.87% -9.50 1,085.50
8 Gsk Plc -0.85% -14.60 1,713.00
9 International Consolidated Airlines Group S.a. -0.81% -0.96 117.78
10 Dcc Plc -0.75% -40.00 5,310.00

 

Monday newspaper round-up: BT Group, Business rates, Small business

Thousands of BT and Openreach workers will go on strike again on Monday in a dispute over pay. Members of the Communication Workers Union (CWU), including call centre workers and engineers, will hold a 24-hour strike, after similar action on Friday. The union will mount picket lines outside company offices across the UK and is asking people to bring food, which it will deliver to local food banks. – Guardian

One of Britain’s biggest shopkeepers has joined the call for Tory leadership candidates to prioritise a shake-up of ‘outdated’ business rates. Iceland boss Richard Walker urged the next prime minister to promise a ‘root and branch’ reform of the tax. He said the levy is penalising bricks and mortar retailers and, without a fundamental change, the High Street will ‘continue to decline’. – Daily Mail

Half of smaller suppliers are still being paid late by their clients, triggering calls for the government to increase efforts to clamp down on the practice. As two key initiatives to address the problem stall, figures from the Federation of Small Businesses show that between April and June half of the 1,300 small business owners and sole traders surveyed for its quarterly research reported being paid late, while one in five said the issue was getting worse. – The Times

BP is to invest up to £50 million in a new global battery research and development centre in Britain. Planned to open by the end of 2024, the facilities will be located at the headquarters for its Castrol business in Pangbourne, Berkshire. They will help to advance the development of leading fluid technologies and engineering for hybrid and fully battery electric vehicles, with the aim of bringing the industry closer to the tipping point for mainstream electric vehicle adoption. – The Times

Waitrose is removing best-before dates from nearly 500 fresh food products in an effort to reduce food waste. From September, the staff-owned supermarket chain will scrap the dates on packaged fruit and vegetables, including lettuce, cucumber and peppers, to encourage consumers to use their own judgment about when food has gone off. The move is expected to cut food waste by preventing people from throwing away products that are still edible, the retailer says. – Guardian

 

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