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FTSE 100 little changed in early trading

Stock Markets Aug 09, 2022 09:10
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© Reuters. FTSE 100 little changed in early trading
 
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FTSE 100 makes lacklustre start

• Profits warning from Nvidia hurts US indices in late trading

• Legal & General beats expectations

Shares in London were little changed on Tuesday as trading got underway reflecting late falls in the US following a profits warning by US chipmaker, Nvidia.

At 9.00am the blue-chip index was trading up 1.11 points at 7,483.48 while the FTSE 250 slipped 6.83 points to 20,111.61.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown (LON:HRGV) questioned whether the market could be close to exiting bear territory: “The publication of strong jobs numbers on Friday in the US has helped raise hopes a recession could be avoided.”

“The Dow Jones industrial average, which has been trading since 1896, has been seen edging closer to exiting bear territory.”

“Across at the tech-heavy Nasdaq, which has been in its longest bear market since one that ended back in 2008, came within a whisper of ending the trading day in bull territory too.”

“The wider read across here is that a more spritely market suggests expectations for future earnings are more positive.”

“So while it doesn’t indicate recession has been wholly avoided, it does indicate that the corporate outlook, and therefore consumer resilience, is perhaps looking better than it was.”

Shares in Zotefoams surged 10% after strong half-year results with revenues up 23% year on year at £59mln and pre-tax profits up 42% to £5.7mln.

Analysts at Peel Hunt noted this reflected solid demand (volumes up 4%), successful pricing initiatives “while FX has provided a useful tailwind.”

The broker said with trading ahead and the outlook supported by positive end markets and helpful mix trends it was upgrading its top of the range full year 2022 adjusted pre-tax forecasts by 6% to £9.3mln.

Peel Hunt kept its buy rating with price target of 400p.

InterContinental Hotels Group fell back after its results and despite the hotelier announcing a $500mln share buyback programme.

Keith Bowman, Investment Analyst at interactive investor said: “The ongoing hit to trading at its China business remains a hinderance, labour shortages are a challenge, while business travel and group meetings and events may not return to their pre-Covid levels given the increased use of technology and video conferencing.”

He added: “On the upside, InterContinental offers both brand and geographical diversity, with options from luxury to essential, or value brands available.”

“New hotels continue to be opened, net debt is down 30% year-over-year, while the interim dividend payment has been restarted at 10% above its pre-Covid 2019 level.”

“On balance, and with trading still recovering, analyst consensus opinion currently points towards a cautious buy.”

8.25am: FTSE makes subdued start to the day

Trading in London got off to a subdued start on Tuesday with the FTSE 100 hovering around opening levels consolidating yesterday’s strong gains.

By 8.15am the blue-chip index was down 4.90 at 7,477.47 while the FTSE 250 moved higher, up 10.49 points at 20,128.93.

The lacklustre start reflected late falls in the US overnight after a profits warning from US chipmaker Nvidia and mixed performances in Asia.

Richard Hunter, head of markets at interactive investor, commented “Markets remained flat in the US, with investors unable to break away from the current impasse between economic strength and high inflation.”

“Asian markets were generally positive including China, which saw modest gains despite the recent escalation of tensions following the visit of Nancy Pelosi to Taiwan and the ongoing outbreaks of Covid-10 capping any immediate economic recovery.”

“The generally lethargic seasonal mood fed through to the FTSE100 in early exchanges, with the index largely flat but remaining ahead by 1.3% in the year to date.”

Legal & General Group PLC (LSE:LGEN) rose slightly in early trading (up 0.22%) after posting an increase of 8% in operating profits, comfortably beating expectations, while growing cash and capital generation by 22% and 14% respectively.

Hunter noted: “The measure of capital strength for the company, the Solvency II Coverage Ratio, increased to 212% from 182% and enabled a further increase to the dividend, leaving the shares on a projected yield of 6.9%.”

“With its undoubted capital strength and the virtuous circle which its four operating units create, all in growing markets, the market consensus of the shares as a buy remains firmly intact.” Hunter concluded.

Intercontinental Hotels Group PLC (LSE:LON:IHG) was little moved after launching a $500mln share buyback on Tuesday and reintroducing its dividend at a level 10% higher than when last paid as it reported half year results.

The group reported 53% growth in underlying revenue to $840mln and a 91% increase in operating profit to $377mln at half-year.

Keith Barr, Chief Executive Officer said: “Whilst the economic outlook faces uncertainties as central banks and governments take action to manage inflation, we remain confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth.”

7.30am: FTSE 100 seen slightly lower at the open

Shares in London are expected to give up some of yesterday’s strong gains following a weak finish in the US overnight after a profits warning from US chipmaker Nvidia and mixed performances in Asia.

Spread betting companies are calling the blue-chip index down by around 14 points at the start of trading.

In the US the Dow closed Monday up 29 points, less than 0.1%, at 32,833, the Nasdaq Composite slipped 13 points, 0.1%, to 12,644 and the S&P 500 ticked down 5 points, 0.1%, to 4,140.

Michael Hewson Chief Market Analyst at CMC Markets UK: “Having finished the end of last week lower after a strong US payrolls report, European markets managed to start the week strongly, after a better-than-expected performance in Chinese exports for July which prompted optimism over a pickup in global economic activity.”

“US markets took their cues from the same early optimism from European markets, as the S&P500 hit a three-month high.”

“This optimism quickly evaporated after US chipmaker Nvidia issued a profits warning in respect of its Q2 numbers which are due on August 24th.”

“This acted as a drag on the tech sector and ultimately resulted in the Nasdaq and S&P500 pulling back from their intraday highs and finishing slightly lower.”

“The main focus this week is very much on tomorrow’s US CPI report in the wake of Friday’s bumper payrolls report, which saw US 10-year yields push up to their highest levels in two weeks.”

“Consensus opinion appears to be leaning towards the current strength in equity markets, being a bear market rally with limited upside, while on the other side there are those who think we’ve managed to carve out a base.”

“While it’s tempting to buy into the narrative that we’ve seen the lows of the year, none of the price action thus far serves to support that conclusion.”

“Equity markets on both sides of the Atlantic are still very much in the downtrend from their January peaks, and Nvidia’s profit warning merely serves to underline the challenges facing, not only the tech sector, but the wider global economy.”

“That’s not to say we aren’t seeing companies beat expectations, we are, but it’s generally in areas where companies are able to pass on some price increases or are benefitting from seasonal trends.”

Life insurance group, Legal & General, reported strong growth in the six months to June with an 8% rise in operating profit to £1,160mln, and a similar 8% increase in earnings per share to 19.28p.

Profit after tax of £1,153mln compared to £1,065mln in the first half of 2021 and return on equity was 21.3% against 22.0% in the same period in 2021.

The group also raised the interim dividend by 5% to 5.44p.

Sir Nigel Wilson, Group Chief Executive said: “Our balance sheet is strong and highly resilient, with a solvency ratio of 212% and with 100% of cash flows received from our Direct Investments.”

“We are committed to providing financial security for our customers and colleagues in a tough economic climate and remain confident in our ability to grow profits sustainably and at attractive returns over the long-term."

7.00am: FTSE 100 expected to open after weak US finish

FTSE 100 set to make a weak start to trading on Tuesday giving up some of yesterday’s gains after US stocks fell back in late trading.

Spread betting companies are calling the lead index down by around 15 points.

Asian markets were mixed with the Nikkei 225 down 0.87% but the Hang Seng rose nearly 1%.

In the US the Dow closed Monday up 29 points, less than 0.1%, at 32,833, the Nasdaq Composite slipped 13 points, 0.1%, to 12,644 and the S&P 500 ticked down 5 points, 0.1%, to 4,140.

The benchmarks endured rocky trading after quickly giving up their opening gains.

“The question is if the rally is running out of breadth,” said Angelo Kourkafas, investment strategist at Edward Jones, as reported by CNBC. “There are certainly things that have improved after the past month that would justify, in our view, a move higher, which we have certainly seen. ... However, a lot has to go right to be able to say that the coast is clear.”

Read more on Proactive Investors UK

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FTSE 100 little changed in early trading
 

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Mahdi Abdullahi Osman
Mahdi Abdullahi Osman Aug 09, 2022 11:08
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it is provisional income
Mahdi Abdullahi Osman
Mahdi Abdullahi Osman Aug 09, 2022 11:07
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it is good wealth
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Mahdi Abdullahi Osman Aug 09, 2022 11:06
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it is good profit
 
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