London close: Stocks finish firmer ahead of Jackson Hole

by | Aug 25, 2021

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London stocks managed a positive finish on Wednesday, with all eyes on Federal Reserve chair Jerome Powell’s speech at the Jackson Hole symposium.
The FTSE 100 ended the session up 0.34% at 7,150.12, and the FTSE 250 was ahead 0.42% at 23,986.37.

Sterling was in a mixed state, last trading 0.03% stronger on the dollar at $1.3733, while weakening 0.02% against the euro to €1.1676.

“Hesitation prevails across stock markets this afternoon, with a stronger US durable goods order failing to provide much direction,” said IG chief market analyst Chris Beauchamp.

“In one sense, the rise in orders provides a positive narrative for the US economy, and hence for US stocks, but inevitably the data has been fed into pre-Jackson Hole movements, with some no doubt expecting the continued strength of the US economy to lead to a more hawkish view at this week’s vital symposium.

“But it is too easy in these quiet August days to ascribe a narrative to movements that are broadly about window-dressing and position-trimming, rather than any attempt to guess the tone and direction of Powell’s speech this week.”

Wednesday did see a “welcome move higher” for the FTSE 100, Beauchamp added, which struggled on Tuesday and looked left out of the general stock market rebound.

“The index could be one beneficiary of Jackson Hole, since the symposium may revive the market’s love of the reflation trade that powered the FTSE 100 higher from November onwards.

“The right mix of warm words about the economic recovery and a cautious commitment to tapering might prove just the ticket for the index to push on past its recent highs.”

Across the pond, orders in the US for goods made to last more than three years dipped last month, dragged down by a decline in demand for civilian aircraft.

According to the Department of Commerce, total durable goods orders slipped in July at a seasonally-adjusted month-on-month pace of 0.1% to reach $257.2bn, compared to expectations for a contraction of 0.3%.

That was on top of a downward revision in June’s rate of change of one tenth of a percentage point to 0.8%.

Excluding transportation, orders grew by 0.7% when compared to June, with the often volatile category of orders for civilian aircraft and parts plummeting by 48.9%.

On home shores, broadcaster ITV and engineering firm Weir looked set for a demotion from the FTSE 100 in the next reshuffle, while takeover targets Morrisons and Meggitt are in line for a promotion.

Shares in both Morrisons and Meggitt had surged lately due to M&A interest, with the former having agreed last week to be taken over by US private equity firm Clayton Dubilier & Rice in a £7bn deal.

Meanwhile, aerospace and defence group Meggitt has agreed to be bought out by US rival Parker Hannifin for £6.3bn, before receiving an unsolicited takeover approach from US aerospace manufacturer TransDigm at 900p a share in cash.

“The impending FTSE 100 reshuffle is shaping up to be an unusual situation, with two companies currently in the driving seat for inclusion in the index likely to be short-lived promotions,” said Richard Hunter, head of markets at Interactive Investor.

“William Morrison Supermarkets and Meggitt have both seen their share prices soar due to takeover situations and at current prices would both be promoted.

“Morrisons have been the subject of a bidding war which has seen its price rise by 62% over the last three months, with private equity firm Clayton, Dubilier & Rice in pole position to win the race for Morrisons and therefore see the shares delisted.”

In equity markets on Wednesday, leisure stocks were among the winners, with Cineworld up 1.93% and Restaurant Group ahead 3.16%.

Rank Group rallied 4.29% after the bingo hall and casino operator said UK tax authorities have decided not to appeal against a tribunal ruling over value added tax on slot machines.

The company said the first-tier tribunal had agreed a 60-day extension to allow Revenue and Customs (HMRC) and Rank to agree the exact size of the claim, with the gambling firm still expecting to receive around £80m.

Elsewhere, building materials group Grafton rose 3.82% after it reported record profits and reinstated its dividend following a strong performance from its Woodies business in Ireland.

Market Movers

FTSE 100 (UKX) 7,150.12 0.34%
FTSE 250 (MCX) 23,986.37 0.42%
techMARK (TASX) 4,833.08 0.43%

FTSE 100 – Risers

Flutter Entertainment (CDI) (FLTR) 14,435.00p 3.51%
Standard Chartered (STAN) 461.90p 3.10%
Weir Group (WEIR) 1,697.00p 2.98%
Ocado Group (OCDO) 2,049.00p 2.86%
Melrose Industries (MRO) 171.65p 2.57%
Entain (ENT) 1,915.00p 2.32%
HSBC Holdings (HSBA) 398.80p 2.15%
Evraz (EVR) 589.20p 1.94%
Intermediate Capital Group (ICP) 2,192.00p 1.91%
JD Sports Fashion (JD.) 1,023.50p 1.84%

FTSE 100 – Fallers

Rolls-Royce Holdings (RR.) 116.48p -1.52%
Severn Trent (SVT) 2,799.00p -1.48%
Croda International (CRDA) 9,140.00p -1.42%
United Utilities Group (UU.) 1,060.00p -1.40%
National Grid (NG.) 950.50p -1.36%
Coca-Cola HBC AG (CDI) (CCH) 2,612.00p -1.13%
Fresnillo (FRES) 836.00p -1.11%
Admiral Group (ADM) 3,638.00p -1.06%
Unilever (ULVR) 4,040.00p -1.04%
London Stock Exchange Group (LSEG) 8,054.00p -1.03%

FTSE 250 – Risers

Wood Group (John) (WG.) 250.00p 7.25%
Marks & Spencer Group (MKS) 179.45p 5.13%
Reach (RCH) 412.00p 4.83%
Rank Group (RNK) 180.00p 4.29%
Virgin Money UK (VMUK) 211.40p 4.18%
Moonpig Group (MOON) 401.00p 4.16%
Syncona Limited NPV (SYNC) 211.00p 3.94%
Grafton Group Ut (CDI) (GFTU) 1,359.00p 3.82%
Playtech (PTEC) 417.00p 3.37%
Hill & Smith Holdings (HILS) 1,874.00p 3.19%

FTSE 250 – Fallers

Capita (CPI) 47.29p -5.02%
Tyman (TYMN) 400.00p -2.46%
PureTech Health (PRTC) 330.00p -2.37%
Petropavlovsk (POG) 20.26p -2.31%
Chemring Group (CHG) 330.00p -2.08%
CLS Holdings (CLI) 241.00p -2.03%
TI Fluid Systems (TIFS) 303.50p -1.94%
Ultra Electronics Holdings (ULE) 3,226.00p -1.77%
Hochschild Mining (HOC) 152.20p -1.74%
Network International Holdings (NETW) 371.00p -1.59%

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