ADVFN Morning London Market Report: Tuesday 16 August 2022

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London open: Stocks rise as investors digest UK jobs data

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London stocks rose in early trade on Tuesday following a late bounce on Wall Street, as investors mulled the latest UK jobs data.

At 0835 BST, the FTSE 100 was up 0.4% at 7,542.15.

Figures released earlier by the Office for National Statistics showed that average total pay including bonuses rose 5.1% between April and June, with regular pay excluding bonuses up 4.7%. However, adjusted for inflation, total pay fell 2.5% and regular pay was down by a record 3%.

Meanwhile, job vacancies in the three months to the end of July fell for the first time in two years, dropping by 19,800 to 1.27m. Vacancies remain at historically high levels, but this marked the first quarterly fall since the three months to August 2020.

The unemployment rate held steady in the three months to June at 3.8%.

Darren Morgan, director of economic statistics at the ONS, said: “The number of people in work grew in the second quarter of 2022, whilst the headline rates of unemployment and of people neither working nor looking for a job were little changed.

“Meanwhile, the total number of hours worked each week appears to have stabilised very slightly below pre-pandemic levels.

“Redundancies are still at very low levels. However, although the number of job vacancies remains historically very high, it fell for the first time since the summer of 2020.

“The real value of pay continues to fall. Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001.”

In equity markets, Australian mining giant BHP rallied as it posted a large rise in annual profits on the back of soaring coal prices and said it would return almost $9bn to shareholders.

Cybersecurity firm Darktrace jumped to the top of the FTSE 250 after it said late on Monday that it was in early takeover talks with private equity firm Thoma Bravo.

Pipe maker Genuit slumped after it reported a fall in interim profits but maintained full-year guidance as revenues rose during the period due to a strong UK housing market.

Software company Sage nudged lower after saying it had bought Lockstep, a provider of cloud native technology that automates accounting workflows between companies, for an undisclosed sum.

Outside the FTSE 350, Ted Baker racked up strong gains after agreeing to be bought by Reebok owner Authentic Brands Group in a £211m deal.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Bhp Group Limited +4.20% +94.00 2,331.50
2 Glencore Plc +3.16% +14.70 479.20
3 Gsk Plc +2.59% +36.40 1,442.40
4 Anglo American Plc +2.50% +72.50 2,973.50
5 Centrica Plc +2.30% +1.86 82.82
6 Rolls-royce Holdings Plc +2.12% +1.82 87.57
7 Rio Tinto Plc +1.74% +82.50 4,818.00
8 Bt Group Plc +1.71% +2.70 160.30
9 Standard Chartered Plc +1.61% +9.60 607.20
10 Antofagasta Plc +1.59% +18.00 1,148.50

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Halma Plc -2.00% -46.00 2,252.00
2 Spirax-sarco Engineering Plc -2.00% -230.00 11,275.00
3 Rightmove Plc -1.71% -11.20 643.80
4 Croda International Plc -1.46% -108.00 7,278.00
5 Experian Plc -1.36% -40.00 2,899.00
6 Auto Trader Group Plc -1.32% -8.80 656.00
7 Bunzl Plc -1.30% -41.00 3,109.00
8 Hargreaves Lansdown Plc -1.22% -12.00 971.00
9 Ferguson Plc -1.21% -125.00 10,225.00
10 Berkeley Group Holdings (the) Plc -1.17% -48.00 4,068.00

 

US close: Stocks turn positive by the closing bell

Wall Street stocks managed a positive close on Monday, despite falling earlier after some disappointing data out of China.

At the close, the Dow Jones Industrial Average was up 0.45% at 33,912.44, as the S&P 500 added 0.4% to 4,297.14 and the Nasdaq Composite was ahead 0.62% to 13,128.05.

The Dow closed 151.39 points higher on Monday, adding to the gains it recorded in the previous session on Friday.

“Fears the US economy might be heading for an actual recession have resurfaced because of the brutal New York Fed manufacturing index report,” said Equiti Capital market analyst David Madden.

“Overall, it paints a picture of a sector that fell off a cliff edge.

“US stocks lost ground in early trading, but they have since moved into positive territory.”

The week’s focus was set to be on retailers, with earnings from the likes of Home DepotWalmart, and Target all scheduled for release later in the week, and July retail sales data set for publication on Wednesday.

Headlines out of China were also drawing an amount of investor attention earlier, with the country’s central bank unexpectedly cutting a major interest rate in an attempt to bolster an economy that had struggled to grow amid repeated Covid-19 lockdowns and a property downturn.

The People’s Bank of China trimmed its medium-term lending rate by 10 basis points to 2.75%, while official data also showed consumer and factory activity was weaker than forecast as the pace of the country’s economic recovery continued to be sluggish.

On the macro front, the Federal Reserve Bank of New York’s regional manufacturing index missed economists’ forecasts by a wide margin as gauges for new orders and shipments cratered.

The headline index fell from a reading of 11.1 for July to -31.3, well and truly missing expectations for a reading of 5.0.

At the same time, the sub-index linked to new orders fell from 6.2 to -29.6 and that for shipments from 25.3 to -24.1.

Elsewhere, the National Association of Housebuilders‘ housing market index fell for an eighth straight month to 49 in August – its lowest reading since May 2020 and well and truly short of expectations for a print of 55.

In equities, Bed Bath & Beyond rocketed 23.55% as the ‘meme stock’ retailer became the focus of the /r/WallStreetBets subreddit once again.

The stock’s volume was over eight times its 65-day average on Monday, with 127 million shares traded.

Elsewhere, Walt Disney advanced 2.21% after Third Point’s Dan Loeb said he had “repurchased a significant stake”, having sold down a large holding in a very public move earlier in the year.

 

Tuesday newspaper round-up: Heathrow, Thungela Resources, Ted Baker

Water company bosses should be stripped of their multimillion-pound bonuses until they fix leaks and build reservoirs, politicians and campaigners have said as the country is gripped by drought. With parts of England the driest they have been since records began – after five months of below-average rainfall – some homes have run out of water, rivers have turned dry and farmers are facing crop failures. Many are outraged at the companies for failing to invest in reservoirs, fix leaks and stop sewage pollution from their pipes. – Guardian

Heathrow airport has extended its 100,000 passenger a day cap for another six weeks as the aviation sector continues to struggle to meet increased demand for travel amid staffing shortages. The capacity limit was initially meant to last until 11 September, but that date was pushed back on Monday to 29 October, overlapping with the autumn half-term break for most schools. – Guardian

A mining business dubbed “worthless” just 14 months ago has seen profits jump almost 3,000pc thanks to a scramble for coal provoked by Russia’s war on Ukraine. Thungela Resources, which mines coal for power stations in South Africa, posted profits of 9.6bn ZAR (£485m) for the first half of 2022, compared to 351mZAR (£17m) last year. – Telegraph

One of Silicon Valley’s biggest venture capital firms has thrown its weight behind a new property venture set up by the controversial co-founder of WeWork. Adam Neumann, who was ousted as chief executive of the shared office space provider in 2019, has shifted his focus from commercial to residential real estate to establish Flow, a business that is expected to be launched next year. – The Times

Ted Baker, the London-listed fashion retailer, is close to agreeing a reduced takeover bid worth about £200 million from the American company behind Reebok. Authentic Brands is said to have withdrawn a higher proposal, worth about 160p a share, in June amid worries about the state of the British high street and falling consumer confidence. Sky News, which first reported the news, said that it had came back with a 110p-a-share proposal, with a deal possibly announced to the stock market as early as today. – The Times

 

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