ADVFN Morning London Market Report: Friday 16 December 2022

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London open: Stocks fall after retail sales, consumer confidence data


London stocks fell in early trade on Friday as investors mulled disappointing retail sales data and an uninspiring consumer confidence survey.

At 0835 GMT, the FTSE 100 was down 0.3% at 7,403.60.

Figures out earlier from the Office for National Statistics showed that retail sales unexpectedly fell last month.

Sales declined by 0.4% in November following a 0.9% increase in October, missing expectations for a 0.3% jump. Sales in October had bounced back from the impact of the additional Bank Holiday in September for the Queen’s funeral.

Excluding fuel, retail sales were down 0.3% on the month in November.

ONS director of economic statistics Darren Morgan said that sales during Black Friday had failed “to provide their usual lift in this sector”.

“However, department stores and households good shops did report increased sales, with these retailers telling us a longer period of Black Friday discounting helped boost sales,” he said.

“Food and alcohol sales were also up, with consumers stocking up early to try to spread the cost of Christmas festivities.”

The figures showed that online sales fell 2.8% in November, continuing a downward trend seen since early 2021, as the wider economy reopened and people were able to shop in stores again. Still, they are 18.2% higher than their pre-Covid February 2020 levels.

Separately, a survey showed that consumer confidence remains at historic lows as the poor economic climate continues to weigh heavily

The latest GfK consumer confidence index was -42, up two points on November but still only seven points off September’s record low of -49.

Joe Staton, client strategy director at GfK, said: “December marks the eighth month in a row in which the index has bumped along at -40 or worse, the first time this has happened since our records began nearly 50 years ago.”

Within the overall score, the index for expectations for personal finances was unchanged on November, at -29, while the gauge for the outlook for the economy over the next 12 months pushed five points higher to -53.

The major purchases index also strengthened slightly, by four points to -34.

However, Staton argued: “Despite the latest GDP figures showing slight growth in October, the warning is of a tough road ahead and that the UK is not out of the recessionary woods.

“Real wages are falling as inflation continues to bite hard, further straining the discretionary budget of many households as we enter the last few shopping days before Christmas. The outlook for our personal financial situation over the next 12 months – perhaps the key metric as we enter the new year – is stuck at -29.”

In equity markets, miniature wargames manufacturer Games Workshop surged after saying it had reached an agreement in principle with Amazon Content Services for Amazon to develop its intellectual property into film and television productions.

In a brief statement, Games Workshop said its intended that rights will initially be granted to develop the Warhammer 40,000 universe. The agreement will also see the company grant Amazon associated merchandising rights.

Building materials company CRH ticked higher after saying it has established a new venture capital unit that “will support the development of new technologies and innovative solutions to meet the increasingly complex needs of customers and evolving trends in construction”.

Elsewhere, BT Group was in focus as it said it was combining its global and enterprise units into a single unit to be called BT Business, in a move designed to save £100m a year to the end of 2025.

RS Group – formerly Electrocomponents – fell after it announced that Lindsley Ruth was stepping down as chief executive with immediate effect for personal reasons.

In broker note action, National Express was under the cosh after a downgrade to ‘hold’ at Liberum, while Wood Group and Bunzl were knocked lower by downgrades at Barclays.

Bodycote fell after a downgrade to ‘hold’ at Numis, but Helios Towers gained ground after an initiation at ‘overweight’ by Morgan Stanley.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Standard Chartered Plc +1.32% +8.00 612.60
2 Sainsbury (j) Plc +0.87% +1.90 220.20
3 Unilever Plc +0.80% +33.00 4,170.00
4 Crh Plc +0.68% +21.50 3,198.50
5 Smurfit Kappa Group Plc +0.40% +12.00 3,048.00
6 Tesco Plc +0.36% +0.80 224.30
7 Shell Plc +0.28% +6.50 2,296.00
8 Hsbc Holdings Plc +0.14% +0.70 493.35
9 Rio Tinto Plc +0.12% +7.00 5,664.00
10 Imperial Brands Plc +0.10% +2.00 2,043.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Itv Plc -3.79% -2.82 71.66
2 Hargreaves Lansdown Plc -2.95% -26.00 854.20
3 Bunzl Plc -2.86% -84.00 2,857.00
4 Fresnillo Plc -2.60% -22.20 831.00
5 Segro Plc -2.16% -17.20 777.80
6 Croda International Plc -1.98% -136.00 6,748.00
7 Halma Plc -1.92% -41.00 2,099.00
8 Direct Line Insurance Group Plc -1.90% -4.20 216.50
9 Land Securities Group Plc -1.85% -11.80 627.60
10 Dcc Plc -1.79% -76.00 4,174.00


US close: Stocks sharply lower as Fed’s rate decision remains in focus

Wall Street stocks closed sharply lower on Thursday as market participants continued to process the Federal Reserve’s latest policy update.

At the close, the Dow Jones Industrial Average was down 2.25% at 33,202.22, while the S&P 500 lost 2.49% to 3,895.75 and the Nasdaq Composite saw out the session 3.23% weaker at 10,810.53.

The Dow closed 764.13 points lower on Thursday, extending losses recorded in the previous session after the Federal Reserve Bank raised its base interest rate by 50 basis points and chairman Jerome Powell struck a hawkish tone. The central bank stated it will continue to hike rates through 2023 and also projected a higher-than-expected terminal rate of 5.1%, even though the current targeted range for rates of 4.25% to 4.5% is already the highest its been in 15 years.

Thursday’s primary focus was news that Americans had unexpectedly reined in their spending in November. According to the Department of Commerce retail sales volumes fell at a month-on-month pace of 0.6% in seasonally adjusted terms to reach $689.4bn. Economists had pencilled-in a flat reading following the 1.3% jump observed in October. Sharp declines were seen in multiple categories, including in sales of motor vehicles, of furniture and building materials, department stores and at non-store retailers.

On another note, US first-time unemployment claims fell by 20,000 in the week ended 10 December, dropping to 211,000 – the lowest level since the end of September and well below market expectations of 230,000. According to the Labor Department, jobless claims fell by 39,095 to 248,881 on a seasonally unadjusted basis, while the four-week moving average, which aims to strip out week-to-week volatility, fell by 3,000 to 227,250. Continuing claims, on the other hand, edged up by 1,000 to 1.67m in the week ended 3 December.

Elsewhere, factory activity in the US mid-Atlantic region continued to shrink at the end of 2022, albeit at a slower clip, the results of a closely followed survey revealed. The Federal Reserve Bank of Philadelphia‘s manufacturing sector index rebounded from a reading of -19.4 for October to -13.8 in November. Economists had forecast a reading of -10.0.

Still on data, industrial production growth in the US fell short of forecasts last month due to the drag from factory and mining activity. According to the Department of Commerce, in seasonally adjusted terms, total industrial production slipped at a month-on-month pace of 0.2% in November. That compared to economists’ forecasts for a rise of 0.2%.

Finally, business inventories rose 0.3% in October, according to the Census Bureau, following a downwardly revised increase of 0.02% in September but slightly shy of estimates for a reading of 0.04%.

In the corporate space, Elon Musk offloaded 22.0m shares in electric carmaker Tesla, bringing the total value of stock sold by the group’s chief executive over the past year to almost $40.0bn, while Adobe shares rose after the software posted an earnings beat and maintained its full-year guidance.


Friday newspaper round-up: Twitter, Harbour Energy, Unilever

Tax dodging and non-compliance during the pandemic cost the government £9bn, Whitehall’s spending watchdog has found. The loss to the public purse came as HM Revenue & Customs (HMRC) moved thousands of tax compliance staff to Covid support schemes, reducing its capacity to investigate people and businesses not paying the right amount, according to the National Audit Office. – Guardian

A number of prominent journalists who have reported on Twitter and its new chief executive, Elon Musk, appear to have been suspended or banned from the platform. In a series of evening tweets, Musk wrote that sharing his real-time location on Twitter was forbidden, and accused journalists who he alleged had been sharing information about his location of posting “assassination coordinates”. – Guardian

Britain’s largest North Sea oil producer is refusing to bid for new UK oil and gas wells and reviewing its investments in response to the Government’s tax raid on the sector. Harbour Energy said it had decided not to bid for new blocks in the ongoing North Sea licensing round, the first since 2019, after the Government imposed a windfall tax on oil and gas producers earlier in the year. – Telegraph

Unilever has settled its lawsuit with Ben & Jerry’s, bringing to an end an 18-month dispute over ice cream sales in occupied Palestinian territories. In a brief statement posted online, the consumer goods giant said it was “pleased to announce that the litigation with Ben & Jerry’s Independent Board has been resolved”. – Telegraph

The biggest changes to personal taxation in a quarter of a century are to be postponed for a further two years because the computer systems are not ready, triggering concerns that the government is set for another costly public sector IT disaster. The Treasury is to postpone its programme to digitise the tax system — which would have forced 4.2 million self-employed workers and small businesses to file tax returns multiple times a year — from April 2024 until 2026. – The Times


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