ADVFN Morning London Market Report: Thursday 8 September 2022

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London open: Stocks edge up as investors await energy bill plan

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London stocks edged up in early trade on Thursday, taking their cue from an upbeat session on Wall Street, as investors awaited news of a UK energy package and the latest policy announcement from the European Central Bank.

At 0825 BST, the FTSE 100 was up 0.3% at 7,262.65.

New prime minister Liz Truss is expected to announce an emergency energy package later in the day to protect consumers and businesses from surging bills. According to reports, the plan could involve freezing the utility price cap at £2,500 until 2024.

Richard Hunter, head of markets at Interactive Investor, said: “In the UK, the announcement of government measures to cap energy bill rises is expected imminently. While any such measures are likely to be welcomed warmly by consumers, with sectors such as retail and housebuilders showing some strength in anticipation of a potential easing of the cost-of-living crisis, the effect has been negative on sterling.

“An estimated cost to the government which is likely to exceed £100bn has raised some concerns within the debt market, given that the trade deficit is already standing at record levels. The additional headwinds of declining consumer confidence, persistent inflation and an almost inevitable recession add to an increasingly dour outlook for the UK in the short and perhaps even medium term.”

In equity markets, turnaround specialist Melrose Industries rallied as it said it plans to demerge its GKN Automotive and GKN Powder Metallurgy businesses and list the new holding company.

Genus and Energean were also high risers after well-received results.

On the downside, Darktrace tanked after tech investment firm Thoma Bravo said it will not be making an offer for the cybersecurity firm. Darktrace said in a statement that the two parties had been unable to reach an agreement on the terms of an offer.

Elsewhere, Primark owner Associated British Foods slid as it warned that adjusted operating profit and earnings per share for the next financial year will be lower than this financial year.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Tui Ag +2.08% +2.70 132.40
2 Persimmon Plc +1.63% +24.00 1,494.00
3 Carnival Plc +1.58% +11.60 744.60
4 Antofagasta Plc +1.40% +15.50 1,120.50
5 International Consolidated Airlines Group S.a. +1.37% +1.50 111.18
6 Dcc Plc +1.35% +65.00 4,867.00
7 Rolls-royce Holdings Plc +1.34% +1.03 77.78
8 Ocado Group Plc +1.31% +9.60 743.40
9 Whitbread Plc +1.21% +31.00 2,583.00
10 Standard Chartered Plc +1.14% +6.60 583.40

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Associated British Foods Plc -7.25% -105.50 1,349.50
2 Marks And Spencer Group Plc -3.65% -4.45 117.55
3 Next Plc -3.37% -204.00 5,844.00
4 Auto Trader Group Plc -2.33% -15.00 629.20
5 Itv Plc -1.84% -1.18 63.12
6 Hikma Pharmaceuticals Plc -1.83% -23.50 1,258.50
7 Melrose Industries Plc -1.38% -1.90 135.75
8 Croda International Plc -1.13% -76.00 6,650.00
9 Rightmove Plc -1.13% -7.00 612.80
10 Tesco Plc -1.08% -2.70 246.60

 

US close: Stocks finish higher despite hawkish Fed

Wall Street stocks finished in the green on Wednesday, with the Nasdaq breaking its seven-day losing streak, even amid a whirlwind of hawkish Fedspeak.

At the close, the Dow Jones Industrial Average was up 1.4% at 31,581.28, as the S&P 500 added 1.83% to 3,979.87 and the Nasdaq Composite was ahead 2.14% at 11,791.90.

The Dow closed 435.98 points higher on Wednesday, reversing the losses it recorded on Tuesday after the three-day Labor Day breather.

In focus was the Beige Book survey from the Federal Reserve, which showed the US economy expanding slightly through August, although it suggested a “generally weak” outlook for the year ahead.

The central bank’s vice-chair Lael Brainard also spoke during the day, telling a Clearing House and Bank Policy Institute conference that the Fed would raise and maintain higher interest rates in a bid to reassure markets that inflation would fall back to target.

“We are in this for as long as it takes to get inflation down,” Brainard said.

On the macro front, mortgage applications decreased 0.8% in the week ended 2 September, according to the Mortgage Bankers Association of America.

The refinance index slipped 1% from the previous week and 83% when compared to the same week a year earlier, while the seasonally adjusted purchase index decreased 1% week-on-week.

Elsewhere, data from the Bureau of Economic Analysis revealed the US trade balance narrowed by $10.2bn in July to a nine-month low of $70.7bn, with exports up 0.2% to a fresh record high of $259.3bn and imports slipping 2.9% to $329.9bn.

In equities, Globalstar slipped 1.44% even after it confirmed it would be the satellite operator for the new emergency location and communication service being debuted on Apple’s next generation of iPhones.

Apple itself was ahead 0.93% on the back of the iPhone 14, as well as a new model of AirPods Pro and three new Apple Watch products.

Elsewhere, big-box retailer Target jumped 4.41% after it said it would end its executive retirement policy, allowing 63-year-old chief executive Brian Cornell the chance to remain at the helm for another three years.

 

Thursday newspaper round-up: Telecoms, TikTok, loo rolls

The UK advertising watchdog has launched an investigation into whether telecoms companies are misleading consumers about inflation-busting bill increases when promoting deals in their marketing campaigns. Telecoms companies make billions of pounds annually by instituting price rises to mobile and broadband bills midway through contract periods – increases that will add to the biggest squeeze on the cost of living facing households in generations. – Guardian

Big oil and gas companies are spending tens of millions publicising their environmental work, while only about a 10th of their investment goes into low-carbon development, a report claims. A comprehensive study of public communications from five oil and gas firms by InfluenceMap, a climate finance thinktank, found that 60% of the publicity made at least one claim highlighting the companies’ positive climate actions. But on average, the five companies devoted only 12% of capital expenditure to low-carbon activities – and this included some gas projects. – Guardian

TikTok is a “tool of espionage” for the Chinese communist party that should be outlawed by the West, the chief executive of German publishing giant Axel Springer has claimed. Mathias Dopfner says his business has resisted working with TikTok because he fears sensitive personal data will be shared with the government in Beijing. – Telegraph

The price of lavatory paper has jumped 15pc in a year despite rolls being shortened by up to 8pc, making for some of the sharpest inflation in a weekly shop. The figure is an average of increases across supermarkets revealed by analysis for The Telegraph by Trolley.co.uk, a shopping comparison website. The figures are based on a survey of different brands and package sizes. – Telegraph

If you want to travel by train from London to Manchester in the next few weeks — good luck. A visit to the website of Avanti West Coast, the train company that runs intercity express services from Euston to Birmingham, Manchester and Glasgow, does not inspire confidence. It has cut the number of trains to the main destinations on the line from three an hour to one and warns that services are still subject to last-minute cancellation. Ticket sales from next Wednesday to Sunday have been suspended entirely because of looming industrial action. – The Times

 

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