ADVFN Morning London Market Report: Thursday 8 December 2022

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London open: Stocks edge down as recession fears dent sentiment


London stocks edged lower in early trade on Thursday as recession fears continued to weigh on sentiment.

At 0845 GMT, the FTSE 100 was down 0.3% at 7,469.93.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The risk-off sentiment more widely on stock markets this week remains hard to kick into touch as concerns about recession stay front and centre. The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.

“On Wall Street indices retreated for the fifth session in a row amid expectations that the Federal Reserve will have to keep hiking interest rates for longer, causing the economy to shrink.”

In equity markets, Sports Direct and House of Fraser owner Frasers Group slumped as it posted a jump in interim profits but warned over a challenging backdrop.

British American Tobacco lost ground despite saying it was on course to meet full-year guidance, after strong growth in vaping products.

On the upside, Asia-focused Prudential was the top riser on the FTSE 100 as investors welcomed the easing of Covid restrictions in China.

Infrastructure group Balfour Beatty rallied after saying that annual profit was set to be ahead of expectations due to positive net interest income and lower tax charges.

Packaging company DS Smith also gained as it lifted its full-year outlook, hailing an “excellent” performance in the first half.

In broker note action, Travis Perkins was knocked lower by a downgrade to ‘underweight’ at JPMorgan, while LSE was hit by a downgrade to ‘neutral’ at UBS. But BA and Iberia owner IAG and Wizz Air flew higher after an upgrade to ‘buy’ at Bank of America Merrill Lynch.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Rio Tinto Plc +2.01% +113.00 5,729.00
2 Fresnillo Plc +1.71% +14.80 881.00
3 Antofagasta Plc +1.63% +23.00 1,436.00
4 Prudential Plc +1.56% +16.50 1,071.50
5 International Consolidated Airlines Group S.a. +1.36% +1.80 134.58
6 Bhp Group Limited +1.17% +30.00 2,587.50
7 Bp Plc +1.14% +5.30 469.30
8 Informa Plc +1.14% +7.00 623.60
9 Tui Ag +1.07% +1.50 142.20
10 Ferguson Plc +0.99% +100.00 10,220.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 British American Tobacco Plc -2.86% -97.50 3,313.00
2 Vodafone Group Plc -2.69% -2.36 85.30
3 Bt Group Plc -1.88% -2.20 114.70
4 Imperial Brands Plc -1.81% -38.00 2,065.00
5 British Land Company Plc -1.60% -6.40 393.70
6 Ocado Group Plc -1.46% -10.00 675.80
7 Rightmove Plc -1.44% -8.00 547.00
8 Croda International Plc -1.43% -98.00 6,736.00
9 Hikma Pharmaceuticals Plc -1.40% -21.50 1,517.50
10 Rentokil Initial Plc -1.34% -7.20 531.80


US close: Stocks mostly weaker amid ongoing economic jitters

Wall Street stocks were mostly weaker at the closing bell on Wednesday, as market participants started losing faith in the Federal Reserve’s ability to engineer a soft landing.

At the close, the Dow Jones Industrial Average was up 0.005% at 33,597.92, as the S&P 500 slipped 0.19% to 3,933.92 and the Nasdaq Composite was off 0.51% at 10,958.55.

The Dow closed just 1.58 points higher on Wednesday, barely touching the losses it recorded on Tuesday after the Commerce Department revealed that the US trade deficit had widened in November.

“Equity markets have provided a welcome break from the incessant selling pressure that has dominated the week, although today’s mixed session has still seen the Nasdaq and DAX in the red,” said IG senior market analyst Joshua Mahony.

“With the recent losses attributed to last Friday’s earnings rise, this coming Friday provides yet another inflation indicator in the form of the PPI factory pricing figure.

“Nonetheless, with China starting to moderate their Covid restrictions, there is a hope that the economic suffering in the West will be counteracted by a Asia-led rebound in growth.”

Concerns about the state of the US economy remained in focus on Wednesday, with investors trying to determine whether or not an economic downturn was on the horizon.

News that China’s dollar-denominated exports fell 8.7% year-on-year in November was also drawing attention, with the drop being a markedly bigger one than the 3.5% decline expected by economists.

On the economic front, mortgage applications declined 1.9% in the week ending 2 December, according to the Mortgage Bankers Association of America.

Last week’s fall, which followed a 0.8% drop in the previous week, came as applications to purchase a home dropped 3% and refinance applications increased 4.7%.

Consumer credit data for October was meanwhile released late in the session, with growth in the value of Americans spending on credit accelerating, but by less than expected.

According to the Federal Reserve, consumer credit rose $27.08bn in October – less than the $28.3bn economists had pencilled in, but still more than the revised $25.82bn print for September.

In equities, DIY retailer Lowe’s was up 2.47% after it reaffirmed its full-year guidance, and announced a $15bn share buyback.

Campbell Soup jumped 6.02% as the food giant beat expectations in its latest set of figures, and hiked its forecast for the rest of the financial year.

On the downside, used car retail chain Carvana plummeted 42.92% after a group of creditors, headed by Apollo Global Management and Pacific Investment Management, reached a deal with the company over credit and debt restructuring discussions.


Thursday newspaper round-up: Energy support, hospitality industry, Bulb

Britain’s biggest business group has urged ministers to quickly decide which industries will receive energy support from next spring as hundreds of companies brace for their bills to more than double. The Confederation of British Industry called on the government to urgently set out details of how it plans to extend the energy bill relief scheme for firms with large bills beyond March 2023. The scheme, which discounts the wholesale cost of energy for all companies, charities and public sector organisations, was introduced in October to replicate the support offered to households in cushioning the shock from rapidly rising energy bills. – Guardian

Brussels is launching a fresh raid on the City’s lucrative clearing houses as it attempts to force banks to shift business to the European Union. The European Commission has unveiled legislation that will give the EU a share of London’s derivatives trading, which handles trillions of euros a year. – Telegraph

For Sophie Bathgate, the grim consequences of more Christmas rail strikes are all too predictable. Ever since the RMT announced fresh industrial action this week, customers have been on the phone to the London restaurateur cancelling their festive bookings. Many promise they will rebook when things have calmed down. But that’s little comfort for Bathgate, whose business is facing a bleak festive period for the third year in a row. – Telegraph

The secured creditor of Bulb’s parent company has done a deal to secure the energy group’s technology platform as taxpayers face losses of £6.5 billion from its collapse. Sequoia Economic Infrastructure Income Fund, listed in London, has carved out Bulb’s technology assets from the remnants of its parent company, Simple Energy, after backing its founders with a £55 million loan. – The Times

Investors pulled a net £1.02 billion from UK-focused funds in November, making it the second worst month on record, according to a study. They are shunning the UK because of fears that the recession may last longer than elsewhere, according to the fund flows data provider Calastone. – The Times



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