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Blowout US tech results boost FTSE after tough July

31 July 2020

Strong results from Amazon, Apple and Facebook overnight buoy UK stock market after yesterday’s dire US and German economic figures. Tech-heavy Scottish Mortgage Trust among the leaders.

Strong results overnight from US tech giants Amazon, Apple and Facebook buoyed the UK stock market after yesterday’s dire US and German economic figures.

The FTSE 100 gained 25 points, or 0.43%, to 6,015, recouping some of yesterday’s 2.3% fall, with tech-heavy Scottish Mortgage Trust among the leaders on the blue-chip index.

With gold surging back towards $2,000, precious metals miners advanced. Fresnillo (FRES) jumped 5.8% to £12.78 and Polymetal International (POLY) gained 2.4% to £19.21.

Gold made solid gains to $1,976 an ounce, as the US dollar slipped to a two-year low, on course for its largest monthly decline in a decade after hard numbers were put on the American economy’s record quarterly contraction and the US’s daily coronavirus case count shows no sign of abating.

On the FTSE, JD Sports (JD) was another big riser, up 3.1% to 629p, while Aveva gained 2.7% to £42.06, as the software provider was caught in the groundswell of buoyant earnings for US tech companies in the face of the pandemic.

Scottish Mortgage (SMT ), the £12.8bn global investment trust, rose 2.1% to £8.83 after large holding Amazon (AMZN.O) reported record quarterly profits, double the same period last year.

IAG (IAG) dived 6.7% to 169p, as the British Airways parent announced a €2.75bn rights issue, while unveiling losses in the first half of the year of more than €4bn.

ITV (ITV) was the next weakest performer, down 3.1% to 57.2p.

The UK’s FTSE 250 ‘mid-cap’ index gained 83 points, 0.5%, to 17,100. Pets at Home (PETS) surged 13% to 291p, as it posted a better-than-expected sales drop in the first quarter, while precious metals miner Hochschild Mining (HOC) also gained on gold’s rise, jumping 6.3% to 276p.

Wizz Air (WIZZ) slumped 3% to £32.06, with weak sentiment on travel also weighing on PPHE Hotel Group (PPH), down 2.7% to £10.70.

In small caps, Ted Baker (TED) plummeted 7% to 72.1p, after an RBC analyst took an axe to their target price, cutting it from 140p to 70p. 

‘July has been a second bad month in a row for investors in UK stocks with the FTSE 100 index now trading at lows last seen in late-May. The market has most certainly lost momentum and is slowly drifting down as many companies continue to struggle from the pandemic,’ said Russ Mould, investment director at AJ Bell, who observed out the index was now down 2.4% on the month and 7.1% below its 5 June high following the March crash.

‘As ever during this pandemic, the reasons behind Friday’s gains feel quite arbitrary, almost counterintuitive,’ said Spreadex analyst Connor Campbell, who put the positive tone of trading down to Amazon et al’s blockbuster earnings.

‘Clearly investors aren’t feeling completely comfortable, however, as evidence by gold’s latest shunt higher. The safe haven commodity is now achingly close to hitting $2,000 per ounce for the first time, reflecting the market’s underlying anxiety despite Friday’s surface level green hue,’ he added. 

Investment company news brought to you by Citywire Financial Publishers Limited.

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