ADVFN Morning London Market Report: Friday 9 September 2022

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London open: FTSE rises as investors mull China inflation data


London stocks rose in early trade on Friday following upbeat US and Asian sessions, as investors mulled the latest Chinese inflation data.

At 0850 BST, the FTSE 100 was up 1% at 7,337.24.

Although markets remained open after the death of Queen Elizabeth II on Thursday, it is expected that the day of her funeral – likely to be 19 September – will be a public holiday, so markets will be closed.

On the macro front, figures released earlier by the National Bureau of Statistics showed that inflation in China slowed in August amid weak demand.

Consumer price inflation declined to 2.5% on the year from 2.7% in July, coming in below consensus expectations of 2.8%. This was driven by a moderation in food price inflation, which dropped to 6.1% from 6.3%.

Meanwhile, producer price inflation fell to 2.3% in August from 4.2% a month earlier, versus consensus expectations of 3.1%. It marked the slowed pace since February 2021.

Core CPI, which excludes food and energy prices, came in at 0.8%, in line with July.

Capital Economics said: “Consumer price inflation fell in August and remains below the People’s Bank of China’s preferred ceiling of 3%, leaving room for the Bank to ease policy further.

“Meanwhile, producer price inflation declined to its lowest in 18 months. We expect both inflation measures to continue falling over the rest of the year.”

In equity markets, heavily-weighted miners were the top performers on the FTSE 100 as copper prices rallied, with Anglo AmericanAntofagastaGlencore and Rio Tinto all higher.

Online fashion retailer Asos edged up as it said total sales and adjusted pre-tax profits for the year to the end of August are set to be in line with market expectations, and that sales in August had been weaker than expected.

IT services firm Computacenter was in the red as it posted a drop in interim profits.

Primark owner AB Foods was also on the back foot after a downgrade to ‘equalweight’ from ‘overweight’ at Barclays.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Anglo American Plc +6.67% +186.50 2,981.00
2 Glencore Plc +5.75% +27.10 498.25
3 Bhp Group Limited +5.55% +121.00 2,303.00
4 Rio Tinto Plc +5.43% +256.50 4,982.00
5 Antofagasta Plc +5.26% +60.50 1,211.50
6 Fresnillo Plc +4.52% +32.00 739.60
7 Standard Chartered Plc +4.12% +24.40 617.20
8 Centrica Plc +3.87% +3.20 85.98
9 Dcc Plc +3.78% +181.00 4,971.00
10 Smurfit Kappa Group Plc +3.22% +91.00 2,919.00


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Melrose Industries Plc -0.72% -0.90 123.90
2 Ocado Group Plc -0.35% -2.60 748.60
3 Rentokil Initial Plc -0.18% -1.00 544.60
4 Coca-cola Hbc Ag -0.18% -3.50 1,950.00
5 Associated British Foods Plc -0.11% -1.50 1,343.50
6 Just Eat Plc -0.00% -0.00 861.00
7 Shell Plc -0.00% -0.00 1,894.60
8 Nmc Health Plc -0.00% -0.00 938.40
9 Standard Life Aberdeen Plc +0.00% +0.00 274.10
10 Royal Bank Of Scotland Group Plc +0.00% +0.00 120.90


US close: Stocks higher after Fed chair Powell comments

Wall Street stocks finished above the waterline on Thursday, having dipped earlier following comments from Fed chairman Jerome Powell.

At the close, the Dow Jones Industrial Average was up 0.61% at 31,774.52, as the S&P 500 added 0.66% to 4,006.18 and the Nasdaq Composite was ahead 0.6% at 11,862.13.

The Dow closed 193.24 points higher on Thursday, adding to the solid gains it recorded in Wednesday’s trading.

Both the New York Stock Exchange and the Nasdaq held a minute’s silence at 1500 EDT to honour the life of Queen Elizabeth II.

The UK’s monarch for the last 70 years died at Balmoral in Scotland on Thursday afternoon, after Buckingham Palace announced serious concerns for her health.

Thursday’s primary focus stateside was comments from Fed chairman Jerome Powell,, with the central bank head saying policymakers would have to “keep at it” until inflation came down.

In remarks at the Cato Institute in Washington DC, Powell said that it was key to understand if the world was shifting to structurally higher inflation and also said fiscal policy was not on a sustainable path and needed to be fixed “sooner rather than later”.

Market participants also looked across the pond, with the European Central Bank lifted interest rates by an unprecedented 75 basis points as it looks to tackle surging inflation.

The ECB lifted its key interest rate to 1.25%, as widely expected, and the deposit rate to 0.75% from zero.

It also said it now expects inflation to average 8.1% this year, 5.5% in 2023, and 2.3% in 2024.

In the year to August, eurozone inflation rose to a record high of 9.1% from 8.9% a month earlier, with energy prices up a whopping 38.3% year over year.

On the macro front, Americans filed new jobless claims at a decelerated pace in the week ended 3 September, according to the Department of Labor.

Initial unemployment claims fell by 6,000 last week, falling to 222,000 from a downwardly revised print of 228,000 in the previous week and well below consensus expectations for a reading of 240,000.

In the corporate space, Apple was down 0.96% after the tech behemoth announced a slate of new products including its new flagship iPhone late on Wednesday.

On the upside, GameStop was ahead 7.45% after it announced a tie-up with digital asset marketplace FTX.


Friday newspaper round-up: Southern Water, Cazoo, EY

Southern Water is threatening to use debt collection agencies against customers involved in a payment boycott in protest against continuing raw sewage discharges. The water company, which was given the lowest one star rating for performance by the Environment Agency, has informed boycotters that it will be using bailiffs if they continue to hold back bill payments. – Guardian

Online car retailer Cazoo has announced it will abandon its business in Europe and cut 750 jobs in the latest sign of retreat by a business that had hoped to transform its sector. The company will make redundant all of its employees in France, Germany, Italy and Spain as it closes the operations, leaving it operating in only the UK as it tries to preserve cash. – Guardian

Bosses at EY have agreed to push ahead with a split of its audit and consulting arms in the biggest shake-up of a Big Four accounting giant in decades. The firm said on Thursday that it will ballot its partners on a plan to separate the 312,000-strong business into “two distinct, multidisciplinary organisations” following a strategic review. – Telegraph

Hospitality bosses are warning that one in five businesses in the sector will not survive the current crisis and that hundreds of thousands of people will be left without jobs unless government support is received. Nearly 300 chief executives have signed an open letter asking the new chancellor, Kwasi Kwarteng, for “a plan that cuts business costs, stimulates demand and tackles inflation”. – The Times

The government’s information watchdog has taken legal action against the Department for International Trade for “persistent failures” to uphold transparency law. The Information Commissioner’s Office has taken the rare step of issuing a formal enforcement notice to the department for failing to properly respond to transparency requests. If the department fails to meet this notice, it will be in contempt of court. – The Times


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