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London open: Covid vaccine hopes boost stocks; inflation data in focus

By Michele Maatouk

Date: Wednesday 15 Jul 2020

London open: Covid vaccine hopes boost stocks; inflation data in focus

(Sharecast News) - London stocks rose in early trade on Wednesday, with sentiment underpinned by hopes of a coronavirus vaccine as investors mulled the latest UK inflation data.

The FTSE 100 was up 0.7% at 6,225.66.

Spreadex analyst Connor Campbell said: "It's that time again. After the Dow Jones rose 557 points on Tuesday night, choosing to focus on bank earnings over covid-19 cases, the European markets got extra juiced up on the latest vaccine news.

"This week the spinning wheel landed on Moderna, which reported that its covid-19 vaccine had produced a 'robust' immune response in all of the 45 patients in its early stage human trial.

"Like with every vaccine update, the fact these are only baby steps when considering the time line of clearance, mass production and implementation didn't stop investors buying into the optimism."

Market participants were also digesting the latest figures from the Office for National Statistics, which showed inflation rose for the first time this year in June, although the pickup was caused mainly by volatile computer game prices and economists said the trend was still downwards.

The annual rate of consumer price inflation rose to 0.6% from 0.5% in May, exceeding economists' average forecast of 0.4%.

The main contributor to June's increase was computer games and consoles whose prices rose 1.8% compared with a fall of 4.7% a year earlier. The ONS said the increase could have been caused by a jump in demand during the Covid-19 lockdown, a shortage of consoles or which computer games were in the bestseller charts.

Clothing prices also rose from a year earlier as retailers discounted clothes earlier in the year but food prices fell.

"The inflation rate has increased for the first time this year, but remains low by historical standards," Jonathan Athow, the ONS's deputy national statistician for economic statistics, said. "Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise. Prices for computer games and consoles have risen, but food prices, particularly vegetables, have fallen."

In equity markets, aerospace and defence giant Rolls-Royce was the top gainer on the FTSE 100, closely followed by British Airways parent IAG.

Online electricals retailer AO World was the best performer on the FTSE 250, having slumped on Tuesday after its full-year results.

Homeware retailer Dunelm was also in the black despite warning that annual pre-tax profit was set to fall after stores were shut during the coronavirus lockdown, and reporting a decline in fourth-quarter sales.

On the downside, luxury fashion brand Burberry was the worst performer on the FTSE 100 after saying it expected first half sales to fall by up to 50% as the coronavirus pandemic continued to have a material impact.

The company said first quarter comparable sales plunged 45% to £257m with stores closed during global lockdowns, although the rate eased to -20% in June with growth in mainline China and Korea ahead of pre-Covid levels.

Dixons Carphone was under the cosh after it posted a slump in full-year profits, pinning the blame on weakness in the mobile division and store closures due to the coronavirus pandemic.

In the 53 weeks to 2 May, adjusted pre-tax profit fell to £166m from £339m in 2019. This was around £44m below the guidance that Dixons reiterated in January, which it said it was on track to achieve before the Covid-19 outbreak. However, it was ahead of consensus expectations of £151m.

Market Movers

FTSE 100 (UKX) 6,225.66 0.74%
FTSE 250 (MCX) 17,307.02 0.77%
techMARK (TASX) 3,726.31 1.27%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 269.60p 4.42%
International Consolidated Airlines Group SA (CDI) (IAG) 215.10p 3.86%
3i Group (III) 862.40p 3.75%
Intertek Group (ITRK) 5,462.00p 2.79%
GVC Holdings (GVC) 891.60p 2.72%
Melrose Industries (MRO) 119.55p 2.71%
Scottish Mortgage Inv Trust (SMT) 915.50p 2.52%
InterContinental Hotels Group (IHG) 3,869.00p 2.52%
Intermediate Capital Group (ICP) 1,329.00p 2.47%
Whitbread (WTB) 2,298.00p 2.32%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,478.50p -5.07%
Sainsbury (J) (SBRY) 195.15p -1.49%
Imperial Brands (IMB) 1,422.50p -1.39%
Morrison (Wm) Supermarkets (MRW) 184.95p -0.94%
Land Securities Group (LAND) 550.40p -0.94%
HSBC Holdings (HSBA) 380.60p -0.82%
Royal Bank of Scotland Group (RBS) 120.40p -0.70%
British Land Company (BLND) 375.00p -0.66%
British American Tobacco (BATS) 2,885.50p -0.59%
Evraz (EVR) 306.00p -0.58%

FTSE 250 - Risers

AO World (AO.) 150.00p 6.38%
Impax Environmental Markets (IEM) 343.00p 4.73%
William Hill (WMH) 118.35p 4.37%
TUI AG Reg Shs (DI) (TUI) 369.70p 3.76%
Grafton Group Units (GFTU) 692.50p 3.44%
Carnival (CCL) 979.20p 3.33%
easyJet (EZJ) 670.00p 3.08%
Wizz Air Holdings (WIZZ) 3,364.00p 2.81%
Travis Perkins (TPK) 1,164.50p 2.78%
Vesuvius (VSVS) 384.00p 2.67%

FTSE 250 - Fallers

Dixons Carphone (DC.) 82.80p -4.28%
Vivo Energy (VVO) 76.00p -2.56%
Sanne Group (SNN) 603.00p -2.11%
St. Modwen Properties (SMP) 360.00p -1.77%
Capital & Counties Properties (CAPC) 144.40p -1.77%
IP Group (IPO) 65.40p -1.21%
Safestore Holdings (SAFE) 738.00p -1.20%
Telecom Plus (TEP) 1,350.00p -1.17%
TBC Bank Group (TBCG) 870.00p -1.14%
XP Power Ltd. (DI) (XPP) 3,580.00p -1.10%

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