Market report

Haleon debuts | Johnson Matthey gigafactory | Deliveroo up


10pm: Wall Street reverses

Wall Street closed weaker as a busy week of earnings kicked off with updates from some of the nation’s biggest banks.

Bank of America eked out a gain of 0.03% after posting slightly worse-than-expected second-quarter profits and revenues in what it termed a “weakened capital markets environment”.

Goldman Sachs warned overnight it may slow hiring and cut expenses after reporting a 48% slump in quarterly profit. However, this beat analysts’ estimates and its shares rose 2.5%.

At the close, the Dow Jones Industrial Average was down 0.69%, as the S&P 500 lost 0.84% and the Nasdaq Composite shed 0.81%.

5pm: Haleon falters on debut

The consumer healthcare business of GSK – Haleon – became the largest London listing in more than a decade yesterday, but shares in the new company slipped on their debut.

Shares began trading at 330p, giving Haleon a market valuation of £30.5 billion – towards the bottom of a range of between £30bn to £35bn that had been forecast by City analysts.

After rising to 337.5p, the shares closed down 21.5p, or 6.6%, at 308.5p.

Including debt, Haleon had an enterprise value of about £40.5bn which was below the enterprise value of £50bn that Unilever’s rejected cash-and-shares offer placed on the business in December.

Haleon, which did not issue new shares as part of the listing, is among the top 20 companies in the FTSE 100 share index and is the world’s largest standalone consumer healthcare company.

The FTSE 100 closed 64.53 point higher at 7,223.24 as a strong opening on Wall Street helped to support trading during the afternoon session.

Traders were buoyed by suggestions from US Federal Reserve officials that they would dial back their rate rise plans.

Bank of England policymaker Michael Saunders warned that rates may have to rise to 2% or higher in the next year to rein in rocketing inflation but it failed to knock buying traders off their stride.

Deliveroo shares moved higher despite cutting its annual sales outlook (see below). The delivery firm saw recovered from an early dip to close 5.9p higher at 91p.

Shares in Direct Line fell by 22.75p to 193.65p after it became the latest insurer to warn over profitability as soaring prices of car parts, repairs and motors pushes up the cost of claims.

The biggest risers in the FTSE 100 were Antofagasta, up 44.6p at 1,037p, M&G, up 8.65p at 205p and Burberry up 57p at 1,643.5p.

Among the losers were GSK, down 329.4p at 1,389.8p, Admiral, down 144p at 1,738p and Aviva, down 5.8p at 390.8p.

The price of oil was boosted by easing economic fears and the meeting between President Joe Biden and Saudi Crown Prince Mohammed bin Salman, which saw no commitment to increased oil output.

Brent crude increased by 4.49% to $105.7 US dollars per barrel when the London markets closed.

The German Dax increased 0.74% by the end of the session while the French Cac improved by 0.93%.

7am: Johnson Matthey gigafactory

Johnson Matthey hydrogen fuel cell

Johnson Matthey is building an £80 million gigafactory at its site at Royston in Hertfordshire to scale up the manufacture of hydrogen fuel cell components.

Earlier this year, JM announced a refreshed strategy with an ambition to be the “market leader in performance components for fuel cells and electrolysers”, targeting more than £200 million sales in hydrogen technologies by end of 2024/25.

These site is expected to be in operation by the first half of 2024.

Liam Condon, chief executive of Johnson Matthey said: “The fuel cell market has now reached a pivotal moment with the increasing urgency to decarbonise transportation and today marks the next step of the journey to a low-carbon future in the UK.”

Business Secretary Kwasi Kwarteng: “This investment, backed by Government, is a major vote of confidence from Johnson Matthey in the UK. Their new facility will not only add to our growing electric vehicle supply chain, but it will also help secure hundreds of highly skilled jobs.

“We are working hard to ensure the UK reaps the benefits of the green industrial revolution, and today’s announcement reaffirms UK’s reputation as one of the best locations in the world for high quality auto manufacturing.”

7am: Deliveroo cuts growth forecast

The meals delivery company Deliveroo has halved its sales guidance for 2022, adopting a “more cautious economic outlook” as consumer spending slows.

The company said it was hit in Q2 by the impact of “increased consumer headwinds” amid rising inflation and a cost-of-living crisis.  

It now expects to generate gross transaction value growth of 4% to 12% this year, compared to an earlier guidance of 15% to 25%.

It is maintaining its adjusted EBITDA margin guidance and said it balance sheet remains strong.

Management said it is confident in the company’s ability to adapt financially to a rapidly changing macroeconomic environment.

Half year results will be released on 10 August.

Global markets

London was expected to make a positive start to the trading week following a more upbeat session on Asia’s main markets and Wall Street’s uplift on Friday.

Potential gas rationing in Germany and political turmoil in Italy could muddy the waters but a slightly weaker US dollar is helping to support sentiment and commodity prices are rebounding from recent lows.

Royal Mail and Ocado are among the those reporting this week and there will be an update on the state of the British economy with data on wages and inflation.

Brent crude was trading 0.63% higher at $101.80.

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