ADVFN Morning London Market Report: Tuesday 9 August 2022

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London open: Stocks muted after Wall Street tech selloff

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London stocks were little changed in early trade on Tuesday following a tech selloff on Wall Street.

At 0830 BST, the FTSE 100 was flat at 7,481.28.

On Monday, tech stocks in the US slid after Nvidia issued a profit warning.

Oanda market analyst Craig Erlam said: “We may have reached a point in which investors need to decide whether they truly buy into the recovery/no recession narrative or not. That is what appears to have fuelled the recovery we’ve seen in equity markets despite the fact that inflation hasn’t even started falling, central banks are still hiking aggressively and recession is on the horizon for many.

“It’s time to decide whether this is just a substantial bear market rally or a genuine view that the economic outlook is far less downbeat than many fear. If equity markets are going to push on from here, it must be based on the latter which I’m sure many would welcome but perhaps more through hope than expectation.”

He said the US inflation data on Wednesday could effectively set the mood for the rest of the summer. “That seems quite dramatic but if we fail to see a drop in the headline rate, considering the acceleration we’re expected to see in the core, it could really take the wind out of the sails of stock markets as it would be very difficult for the Fed to then hike by anything less than 75 basis points in September.”

In equity markets, asset manager Abrdn slumped after it posted a drop in first-half profit and revenue and struck a cautious note on the outlook. Adjusted pre-tax profit fell to £99m from £163m in the same period a year ago, while adjusted operating profit slid 28% to £115m and fee-based revenues were down 8% to £696m. Abrdn said this was driven by market movements.

On an IFRS basis, the company swung to a pre-tax loss of £320m from a profit of £113m.

Legal & General nudged lower even as the insurer reported a rise in interim operating profits, driven by higher interest rates and a strong annuity portfolio performance.

Workspace provider IWG tumbled despite saying that its first-half losses had narrowed amid strong demand for hybrid working.

InterContinental Hotels was also in the red even as it posted a jump in half-year profits and revenue and hailed increased demand for travel in most of its markets.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Hiscox Ltd +2.53% +22.80 922.80
2 Hargreaves Lansdown Plc +1.92% +18.20 967.60
3 Standard Chartered Plc +1.78% +10.80 618.00
4 Hsbc Holdings Plc +1.61% +8.80 554.30
5 Centrica Plc +1.33% +1.10 84.10
6 Land Securities Group Plc +1.27% +9.00 719.80
7 Bt Group Plc +1.01% +1.60 160.80
8 Aviva Plc +0.98% +4.00 414.10
9 Barclays Plc +0.89% +1.48 167.48
10 Bp Plc +0.86% +3.60 419.90

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Carnival Plc -1.56% -11.80 742.20
2 Scottish Mortgage Investment Trust Plc -1.50% -13.80 903.40
3 Flutter Entertainment Plc -1.42% -126.00 8,734.00
4 Micro Focus International Plc -1.35% -4.00 292.30
5 Intercontinental Hotels Group Plc -1.34% -67.00 4,949.00
6 Hikma Pharmaceuticals Plc -1.22% -19.50 1,585.00
7 Whitbread Plc -1.17% -31.00 2,627.00
8 Halma Plc -1.06% -24.00 2,239.00
9 Segro Plc -1.04% -11.00 1,051.00
10 Croda International Plc -1.00% -72.00 7,102.00

 

US close: Stocks mixed as traders look to inflation data

Wall Street stocks were mixed at the end of trading on Monday, ahead of a key inflation report scheduled for later in the week.

At the close, the Dow Jones Industrial Average was up 09% at 32,832.54, while the S&P 500 lost 0.12% to 4,140.06 and the Nasdaq Composite was off 0.1% at 12,644.46.

The Dow closed 29.07 points higher on Monday, extending the gains it recorded on Friday after an unexpectedly strong monthly jobs report somewhat alleviated recessionary concerns.

“The calendar of both macro events and earnings has eased off after the frenetic pace of the past few weeks, which tends to give a helping hand to stocks on their upward path,” said IG chief market analyst Chris Beauchamp.

“But US CPI this week could be the trigger for another drop, so late-comers to the rally need to be fairly nimble at this point.”

This week’s primary focus was set to be Wednesday’s consumer price index report, with the outcome likely to give market participants a clearer idea as to what the Federal Reserve’s move may be at its next policy meeting in September.

Investors were pricing in a higher likelihood of yet another 75 basis point rate hike next month – a third straight increase of the same amount.

Also in focus on Monday was news that the Senate had passed a $430.0bn climate bill, the Inflation Reduction Act, which had now moved on to the House where it was expected to be passed before the end of the week.

No major data points were scheduled for release on Monday, but in the corporate space, BioNTech shares slumped 7.54% after the drugmaker reported revenues and profits that both fell short of expectations.

Chipmaker Nvidia fell 6.3% after pre-announcing a second-quarter revenue of $6.7bn, and defence technology firm Palantir tumbled 14.24% after reporting a surprise loss for the second quarter.

On the upside, Energizer was ahead 3.63% after it posted third-quarter earnings that beat estimates on both the top and bottom lines.

Bed Bath & Beyond soared 13.83% after traders on Reddit’s ‘WallStreetBets’ subreddit bet on the retailer, while Pfizer eked out gains of 0.61% after revealing that it would acquire biopharmaceutical company Global Blood Therapeutics as part of a $5.4bn deal.

 

Tuesday newspaper round-up: Retailers, luxury rents, IBM

July could be the “lull before the storm” for retailers and consumers after the heatwave boosted sales of summer clothing, picnic treats and electric fans despite the intensifying cost of living crisis, experts have warned. Figures from the British Retail Consortium (BRC) revealed a 2.3% sales rise last month compared with a 6.4% rise the year before. The latest BRC-KPMG sales monitor found the sales growth was largely caused by inflation, which is at more than 9%, and masked a larger drop in the number of items sold. – Guardian

The super-rich are paying 13.5% more to rent luxurious central London properties than last summer, research has found, in the latest sign that overseas millionaires and billionaires are flocking back to the capital. The estate agent Savills calculated that over the year to June 2022 the average price of “prime central London” rentals rose by that figure, the highest annual increase in more than 20 years. – Guardian

Norway has drawn up plans to ration electricity exports in a move that has heightened fears of energy shortages in the UK and Europe this winter. The government in Oslo on Monday announced new rules limiting the sale of power to foreign countries as heatwaves threaten Norway’s hydroelectric power generation. – Telegraph

IBM has accused a Swiss tech start-up of using a British front company to steal and copy its trade secrets. LzLabs created a “shell company” called Winsopia in 2013 that existed solely for intellectual property infringement, IBM said in claims made in the High Court. – Telegraph

The lure of the new breed of fast-growing online news sites to traditional media players was reinforced yesterday when it emerged that Axios is being bought by Cox Enterprises in a $525 million deal. Launched five years ago by former executives of Politico, the influential politics website, Axios has built a reputation for scoops and its name went global after a clash with Donald Trump. – The Times

 

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