ADVFN Morning London Market Report: Tuesday 23 August 2022

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London open: Stocks fall amid inflation, energy concerns

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London stocks fell in early trade on Tuesday as concerns about an energy crisis in Europe and ongoing worries about inflation continued to weigh on sentiment.

At 0840 BST, the FTSE 100 was down 0.5% at 7,498.36.

Lukman Otunuga, senior research analyst at FXTM, said: “There is a strong sense of unease across financial markets as investors grapple with inflation concerns, jitters over tightening US monetary policy, and recession fears.

“This will be a big week for markets thanks to the annual Jackson Hole Economic Symposium where central bankers and financial heavyweights congregate to discuss major economic issues. Investors hope to use this major event to gain fresh insight into the Fed’s thoughts on inflation, economic growth, and monetary policy.

“All eyes will be on Federal Reserve Chair Jerome Powell’s speech on Friday which is the main risk event and potential market shaker. What Powell reveals during the speech or chooses to hold back could set the tone for global markets in the weeks ahead.”

On the macroeconomic front, the S&P Global/CIPS manufacturing and services PMIs for August are due at 0930 BST.

In equity markets, Wood Group tumbled after it posted a decline in first-half operating profit as revenue dipped.

In the six months to 30 June, operating profit before exceptional items fell 8.9% to $41m, with revenue down 0.4% to $2.6bn. The consulting division saw revenues rise 2% thanks to increased demand for the company’s energy solutions, while the operations segment saw revenues grow 18%, supported by an improved market for oil and gas.

However, as expected, revenue in the projects arm fell 15% as Wood Group continues to see the impact from its move away from large-scale projects and as customer investment has yet to fully pick up.

Elsewhere, BT Group gained after it said the UK government won’t be taking any action over French billionaire and Altice owner Patrick Drahi’s stake in the telecoms group.

Drahi increased his stake in BT in November 2021 to 18% from 12.1% through Altice, making him the biggest shareholder. This prompted the UK government to review the investment on the grounds of national security.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Tui Ag +2.87% +3.70 132.75
2 Anglo American Plc +2.51% +71.50 2,925.50
3 Bt Group Plc +1.79% +2.80 159.10
4 Mondi Plc +1.46% +22.50 1,559.00
5 Prudential Plc +1.42% +13.40 954.60
6 Itv Plc +1.42% +0.92 65.76
7 Shell Plc +1.23% +27.50 2,271.50
8 Easyjet Plc +1.21% +4.40 368.90
9 Glencore Plc +1.14% +5.60 497.80
10 Micro Focus International Plc +1.11% +3.00 272.10

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Ocado Group Plc -3.26% -27.40 813.60
2 Relx Plc -2.62% -64.00 2,376.00
3 Informa Plc -2.54% -14.40 553.20
4 Sage Group Plc -2.44% -18.00 718.80
5 Halma Plc -2.38% -53.00 2,173.00
6 Smiths Group Plc -2.33% -36.50 1,530.50
7 Bunzl Plc -2.28% -71.00 3,042.00
8 Croda International Plc -2.04% -144.00 6,932.00
9 Intertek Group Plc -1.90% -80.00 4,137.00
10 National Grid Plc -1.81% -21.50 1,163.50

 

US close: Dow offloads 600 points in worst day since June

US stocks closed in negative territory on Monday, with the Dow tumbling more than 600 points, as investors looked towards the Fed’s symposium at Jackson Hole on Thursday as European gas futures spiked.

At the close, the Dow Jones Industrial Average was down 1.91% at 33,063.61, as the S&P 500 lost 2.14% to 4,137.99 and the Nasdaq Composite was 2.55% weaker at 12,381.57.

The Dow had lost 643.13 points by the end of trading on what was Wall Street’s worst day since June.

“US markets have taken their lead from European markets … as natural gas prices surge on both sides of the Atlantic,” said CMC Markets chief market analyst Michael Hewson.

“The meme stock bubble is also imploding again with cinema chain AMC Entertainment shares down heavily as its new APE preferred shares start trading, and sector peer Cineworld confirms it’s looking at a possible Chapter 11 bankruptcy.”

There was little in the way of economic news stateside on Monday, with the sole data point being the Chicago Fed national activity index, which came in at a positive 0.27 for July.

That compared to -0.25 in June, which was itself revised from an initial reading of -0.19.

In equities, Signify Health rocketed 32.08% following reports that Amazon was among the bidders for the company.

The Wall Street Journal cited “people familiar with the matter” as saying that Amazon was joining the likes of CVS Health and UnitedHealth Group in an auction for the home-health service provider.

Sources told the WSJ that Signify was for sale in an auction that could value it at more than $8bn.

On the downside, cruise operators fared poorly, with Carnival down 4.86%, Norwegian Cruise Line off 4.78%, and Caribbean Group 4.72% weaker.

Other players in the travel sector were also on the back foot, with Delta Air Lines down 2.62% and United Airlines off 3.04%, while hotel operators Marriott International and Hilton Worldwide lost 2.14% and 2.88%, respectively.

 

Tuesday newspaper round-up: British Airways, Sony, Bulb

British Airways has announced another round of cancellations, axing 10,000 flights to and from Heathrow until the end of March next year as it adapts to the persistent staff shortages that have hit aviation. The carrier’s decision to shrink its short-haul timetable by 8% comes after the London airport extended the summer’s 100,000 daily cap on passenger numbers by another six weeks until the end of October and asked airlines to sell fewer flights. – Guardian

Sony has been overcharging PlayStation gamers for six years, a new legal claim alleges, and could be forced to pay almost £5bn in damages if the claim succeeds. According to Alex Neill, the consumer champion who has filed the case with the UK’s competition appeal tribunal, Sony has been abusing its dominance in the British market to impose unfair terms and conditions on the PlayStation Store, where it sells digital games, downloadable content and subscriptions. – Guardian

Europe’s population will halve this century as soaring house prices combined with the fallout from Covid lockdowns force couples to have fewer children. The continent could be home to fewer than 350m people by the end of the 21st century, according to economist James Pomeroy at HSBC, down from more than 700m today. – Telegraph

One of the UK’s most promising science-based start-ups has threatened to leave the country over what its boss called political “paralysis” and a lack of clarity in national industrial strategy. Paragraf, a leader in efforts to commercialise graphene for electronic devices, is likely to move its base to the United States because the UK government “just doesn’t know what it’s doing”, according to Simon Thomas, its co-founder and chief executive. – The Times

The taxpayer bill for running Bulb could hit £3 billion by the spring because of the government’s “crazy” decision not to buy energy in advance for the failed supplier. A fresh surge in wholesale energy prices means that government-backed administrators running Bulb will have to buy gas and electricity at far higher costs than they are allowed to charge customers under the energy price cap. – The Times

 

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