Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
London open: FTSE in the red amid growth woes; ECB in focus
London stocks fell in early trade on Thursday as worries about a slowdown in economic growth and rising inflation dented sentiment, with all eyes on the latest policy announcement from the European Central Bank.
At 0855 BST, the FTSE 100 was down 0.5% at 7,555.22.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The downbeat assessment of the prospects of the UK economy and warnings of trouble ahead for global growth are set to see a layer of pessimism descend on the London market. Warnings from the OECD that the world is paying a hefty price for Russia’s invasion of Ukraine are crystallising concerns that the months ahead are set to be very difficult to navigate for many companies and consumers.
“Worries are ratcheting up about 1970s style stagflation settling in amid the spiral higher of prices and sharply deteriorating economic prospects.
“Overall there is a ‘wait and see’ mood pervading financial markets, as investors brace for a jolt of tightening from the European Central Bank, ending the long easy-money era. This is a complex game of trying to rein in escalating inflation, while not suffocating growth and the opening gambit is set to be ceasing the mass bond buying scheme, The Asset Purchase programme later this month.
“All eyes will be on what moves are flagged next, with the start of interest rate hikes expected in July, but just how fast and how high the ECB will go in trying to keep a lid on surging prices isn’t clear. The Bank has signalled it would prefer to follow a gradual approach of a series of 0.25% rises, but with central banks in Australia and India already employing tougher tactics this week, the likelihood of a harder line emerging from the ECB is growing fast.”
Adding to the downbeat mood was a report from the British Chambers of Commerce which suggested that UK economic growth will “grind to a halt” this year before falling briefly into contractionary territory. The BCC cut its 2022 growth forecast to 3.5% from 3.6% and said inflation could hit 10% in the final quarter of the year.
In equity markets, Sainsbury’s, Primark owner AB Foods, WPP, Ferrexpo and Johnson Matthey were all weaker as they traded without entitlement to the dividend.
Online trading platform CMC Markets slid as it reported a drop in full-year pre-tax profit, – although this was broadly in line with expectations – and slashed its dividend, as it said it was targeting 30% growth in net operating income over the next three years.
On the upside, GKN owner Melrose was a high riser again, having rallied on Wednesday as it announced the launch of a £500m share buyback programme.
British American Tobacco was up as it backed its full-year guidance and said its “transformation” was continuing at pace.
Mitie surged as the detention centre and building facilities operator reinstated its dividend and unveiled a £50m share buyback as it swung to a full-year profit, boosted by new contract wins.
Tate & Lyle gained as the food and beverage ingredients provider said it had seen “strong top-line growth” in the year ended 31 March, with both revenue and profits growing on an adjusted basis.
In deal news, private hospital operator Mediclinic rose after saying it had rejected a 463p a share takeover offer from a consortium comprising of shareholder Remgro and MSC Mediterranean Shipping Company.
Bus and train operator FirstGroup was a touch lower after it formally rejected a £1.2bn takeover approach from US private equity firm I Squared, saying it “significantly undervalues” the firm and a conditional cash component did not provide shareholders with enough certainty.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +4.03% | +6.35 | 164.05 |
| 2 |  |
Micro Focus International Plc | +1.15% | +4.40 | 388.40 |
| 3 |  |
Bp Plc | +0.81% | +3.65 | 455.05 |
| 4 |  |
Vodafone Group Plc | +0.76% | +0.94 | 125.42 |
| 5 |  |
Shell Plc | +0.59% | +14.50 | 2,454.50 |
| 6 |  |
International Consolidated Airlines Group S.a. | +0.48% | +0.60 | 124.74 |
| 7 |  |
Lloyds Banking Group Plc | +0.46% | +0.21 | 46.15 |
| 8 |  |
Flutter Entertainment Plc | +0.44% | +40.00 | 9,172.00 |
| 9 |  |
Whitbread Plc | +0.40% | +11.00 | 2,759.00 |
| 10 |  |
Rolls-royce Holdings Plc | +0.37% | +0.34 | 92.73 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sainsbury (j) Plc | -6.12% | -13.60 | 208.80 |
| 2 |  |
Kingfisher Plc | -3.99% | -10.20 | 245.70 |
| 3 |  |
Marks And Spencer Group Plc | -3.47% | -5.15 | 143.10 |
| 4 |  |
Ocado Group Plc | -3.40% | -32.40 | 920.20 |
| 5 |  |
Johnson Matthey Plc | -3.15% | -67.00 | 2,059.00 |
| 6 |  |
Wpp Plc | -2.54% | -23.20 | 889.60 |
| 7 |  |
Segro Plc | -2.48% | -26.50 | 1,042.00 |
| 8 |  |
Hikma Pharmaceuticals Plc | -2.34% | -38.50 | 1,608.00 |
| 9 |  |
Tesco Plc | -2.08% | -5.40 | 254.30 |
| 10 |  |
Associated British Foods Plc | -2.08% | -35.50 | 1,672.50 |
US close: Dow Jones reverses previous session’s gains
Wall Street stocks closed lower on Wednesday after two straight positive sessions for major indices.
At the close, the Dow Jones Industrial Average was down 0.81% at 32,910.90, while the S&P 500 was 1.08% weaker at 4,115.77, and the Nasdaq Composite saw out the session just 0.73% softer at 12,086.27.
The Dow closed 269.24 points lower on Wednesday, reversing gains recorded in the previous session.
Despite investors shrugging off signs of an economic slowdown ahead of Friday’s consumer price index reading in the previous session, stocks headed south on Wednesday as market participants digested updates from major companies and hints that economic growth may finally be slowing.
Elsewhere, the benchmark 10-year Treasury note was in focus, with the yield moving above 3% again to 3.022%, while US benchmark West Texas Intermediate drew an amount of investor attention, with crude oil pushing well above $120 a barrel.
On the macro front, US mortgage applications fell in the week ended 3 June, according to the Mortgage Bankers Association, with housing prices remaining elevated and inventories remaining low.
The MBA’s market composite index sank 6.5% to hit the lowest level in 22 years amid heightened interest rates, with applications to refinance a home dropping 5.6% and those to purchase a single-family home dropping 7.1%.
Elsewhere, wholesale inventories increased 2.2% month-on-month to $861.8bn in April, slightly ahead of initial estimates of 2.1% and after a 2.7% rise in the previous month for a 21st straight month of gains.
According to the Census Bureau, durable goods stock was up 2% and nondurable goods stock was 2.4% higher. On an annual basis, wholesale inventories jumped 24% in April, also above an earlier reading of 23.8%.
In the corporate space, Campbell Soup beat earnings and revenue estimates with its latest set of quarterly results before the session.
Thursday newspaper round-up: Gambling, Amazon, John Lewis
More than 420,000 British gamblers lose at least £2,000 a year, according to a major report that warns losses on the most addictive products are “strongly skewed” towards deprived areas. The report lays bare the punishing losses incurred by the heaviest gamblers and raises “concern” at the low level of intervention by gambling companies to prevent them suffering harm. – Guardian
Amazon shoppers in Britain can now add high-fashion purchases, such as a four-figure Peter Dundas evening gown or a Christopher Kane slingback heel, to their digital shopping baskets. The world’s largest online retailer has launched its Luxury Stores at Amazon division in the UK, France, Germany, Italy and Spain, having opened a US version in 2020. – Guardian
A low-profile fund manager who made an investment return of more than 10,000pc is stepping down after 39 years. Simon Knott, who has managed the Rights & Issues investment trust since 1984, will step down as its investment manager on September 1. He will remain as a non-executive director. – Telegraph
John Lewis is targeting suburban locations and commuter towns in the South East as it pushes ahead with plans to build 10,000 rental homes despite warnings that the property market is cooling. The John Lewis Partnership, which also owns Waitrose, said it will build accommodation over supermarkets in Bromley and West Ealing in Greater London, as well as replacing a vacant John Lewis warehouse in Mill Lane, Reading. – Telegraph
Top Gun: Maverick has become the UK’s top-grossing film at the box office less than two weeks after opening, displacing Doctor Strange in the Multiverse of Madness. Takings of the film, in which Tom Cruise reprises the role of the US Navy aviator Pete “Maverick” Mitchell he played in 1986, reached £41.3 million on Monday, just £388,000 ahead of Doctor Strange. – The Times
