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CATEGORY: MARKET REPORT - OPENING

London open: Stocks steady as Persimmon rallies, Rolls-Royce slumps

Thu 09 Jul 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks were steady in early trade on Thursday following weakness in the previous session, with gains in the housebuilding sector helping to offset heavy falls from the likes of Rolls-Royce and National Grid.
At 0840 BST, the FTSE 100 was flat at 6,154.16.

Oanda analyst Craig Erlam said: "There's no doubt that the bounceback has stalled but, encouragingly, we're not yet in reverse despite the growing concerns about Covid second waves. Naturally, the sheer amount of monetary and fiscal stimulus and the promise of more if needed, is giving investors reason to stay strong, despite the economic outlook being far from as promising as what the markets would suggest.

"Rishi Sunak added to the stimulus efforts on Wednesday, offering new incentives to support the hospitality and housing sectors, as well as employment more generally as businesses ponder redundancies and the furlough scheme winds down. The measures were bold and added to the UK's Covid bill but thankfully comes at a time when borrowing costs are very low and the central bank is a keen buyer."

Erlam said investors appear to be in a holding period ahead of earnings season, with much of the economic news at the moment being broadly priced in. "Whether earnings season proves to be much of a catalyst is another thing, with the doom and gloom of Q2 priced in at this stage, it may all hang on the optimism/pessimism heading into the end of the year."

In equity markets, Persimmon was the standout gainer on the top-flight index after it reported a drop in half-year revenues and completions due to the coronavirus pandemic but said demand since its reopening has been "positive", with weekly average net private sales reservations of 278 new homes being around 30% higher than the same period a year ago.

Other housebuilders followed suit, with Barratt Developments, Taylor Wimpey and Berkeley all higher.

On the FTSE 250, Vistry rallied after saying improving demand as the coronavirus lockdown eased would help to restore gross margin in the second half of the year.

Elsewhere, building materials distributor Grafton was on the rise as it posted a decline in six-month revenue due to the impact of the pandemic but said trading in June was more resilient than expected.

On the downside, Rolls-Royce slid after it said its free cash outflow was 3bn in the first half of 2020 as widebody engine flying hours halved because of the "historic shock" to civil aviation caused by the Covid-19 crisis. The engine maker said it expected performance to improve in the second half and that annual free cash outflow would be about 4bn. It warned that the civil aviation industry would take several years to recover but said its defence business was resilient.

SSE and National Grid were also under the cosh after energy regulator Ofgem said network operators should invest 25bn from 2021 to 2026 to deliver emissions-free energy. It also proposed cutting the returns companies can make to reduce household bills. Both SSE and National Grid said they were "disappointed" with the plans.



Market Movers

FTSE 100 (UKX) 6,154.16 -0.03%
FTSE 250 (MCX) 17,258.26 0.42%
techMARK (TASX) 3,700.68 0.25%

FTSE 100 - Risers

Persimmon (PSN) 2,551.00p 4.85%
Next (NXT) 4,839.00p 3.55%
Barratt Developments (BDEV) 540.00p 3.45%
Taylor Wimpey (TW.) 145.95p 3.18%
3i Group (III) 847.40p 3.17%
GVC Holdings (GVC) 834.00p 2.99%
Berkeley Group Holdings (The) (BKG) 4,350.00p 2.62%
JD Sports Fashion (JD.) 674.60p 2.59%
Auto Trader Group (AUTO) 528.00p 2.05%
Hargreaves Lansdown (HL.) 1,634.00p 1.84%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 275.70p -4.20%
National Grid (NG.) 874.40p -2.76%
SSE (SSE) 1,305.00p -2.68%
British American Tobacco (BATS) 2,976.50p -2.36%
HSBC Holdings (HSBA) 377.15p -1.69%
Compass Group (CPG) 1,107.00p -1.60%
United Utilities Group (UU.) 877.00p -1.11%
International Consolidated Airlines Group SA (CDI) (IAG) 210.40p -0.80%
Coca-Cola HBC AG (CDI) (CCH) 2,023.00p -0.78%
Informa (INF) 443.40p -0.76%

FTSE 250 - Risers

Carnival (CCL) 976.80p 4.34%
C&C Group (CCR) 236.50p 3.28%
BlackRock Smaller Companies Trust (BRSC) 1,330.00p 3.10%
Allianz Technology Trust (ATT) 2,420.00p 2.98%
Mitchells & Butlers (MAB) 160.60p 2.95%
Grafton Group Units (GFTU) 658.50p 2.89%
Hochschild Mining (HOC) 196.50p 2.72%
Crest Nicholson Holdings (CRST) 213.60p 2.69%
Virgin Money UK (VMUK) 93.66p 2.67%
Marks & Spencer Group (MKS) 97.52p 2.65%

FTSE 250 - Fallers

Future (FUTR) 1,196.00p -2.45%
Hammerson (HMSO) 83.80p -2.15%
Primary Health Properties (PHP) 150.00p -1.96%
Drax Group (DRX) 253.20p -1.71%
TalkTalk Telecom Group (TALK) 80.65p -1.65%
Ultra Electronics Holdings (ULE) 1,983.00p -1.34%
Telecom Plus (TEP) 1,406.00p -1.26%
Safestore Holdings (SAFE) 766.00p -1.16%
Micro Focus International (MCRO) 359.90p -1.10%
Workspace Group (WKP) 620.50p -1.04%
 
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04 Aug London open: Stocks edge lower with BP, Diageo earnings in focus
03 Aug London open: HSBC results, lockdown speculation weighs on Footsie
31 Jul London open: Stocks rise after solid US tech results; IAG slides
30 Jul London open: Stocks fall amid earnings deluge
29 Jul London open: Stocks steady ahead of Fed announcement; Next surges



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