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London open: Stocks nudge lower ahead of services PMI
London stocks were a touch lower in early trade on Tuesday, having failed to hold on to opening gains, as investors eyed the latest reading on the UK services sector.
At 0850 BST, the FTSE 100 was down 0.1% at 7,225.17.
Market participants were mulling news that US President Biden could be rolling back some of the tariffs imposed on China during the Trump era.
Naeem Aslam, chief market analyst at Ava Trade, said: “Higher inflation has created a significant threat to the US economy, and there are higher chances of the US economy falling into a recession. Investors believe that if President Biden rolls back some of the Trump administration tariffs on China, it will positively impact inflation, meaning we could see inflation numbers falling but not significantly.”
Investors were also looking ahead to the release of the S&P Global/CIPS UK services purchasing managers’ index for June due at 0930 BST.
In equity markets, supermarket chain Sainsbury’s gained even as it said first-quarter underlying sales fell 4% as consumers started to cut back on discretionary spending amid the cost-of-living crisis.
Richard Hunter, head of markets at Interactive Investor, said: “Despite something of a relief bounce in opening exchanges, the share price has reflected the company’s current travails, having dropped by 23% over the last year, as compared to a marginal gain of 1% for the wider FTSE 100.
“Competition in the sector remains intense, ranging from a resurgent Tesco to the price discounters Aldi and Lidl. The market consensus of the shares as a hold suggests that the jury is currently out on Sainsbury’s immediate prospects, with Tesco (strong buy) being the clearly preferred play.”
Dechra Pharmaceuticals rallied after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, which said “current levels provide an attractive entry point for what we see as a defensive business with good organic growth and history of solid execution”.
Moneysupermarket was also in the black after an upgrade to ‘buy’ at Liberum.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Croda International Plc | +2.62% | +172.00 | 6,748.00 |
| 2 |  |
Segro Plc | +1.28% | +12.20 | 962.80 |
| 3 |  |
Sainsbury (j) Plc | +1.20% | +2.50 | 210.90 |
| 4 |  |
Spirax-sarco Engineering Plc | +0.74% | +75.00 | 10,205.00 |
| 5 |  |
Carnival Plc | +0.57% | +3.60 | 629.80 |
| 6 |  |
Ocado Group Plc | +0.54% | +4.20 | 789.00 |
| 7 |  |
Sage Group Plc | +0.44% | +2.80 | 636.00 |
| 8 |  |
Halma Plc | +0.40% | +8.00 | 2,013.00 |
| 9 |  |
3i Group Plc | +0.32% | +3.50 | 1,088.50 |
| 10 |  |
Ashtead Group Plc | +0.32% | +11.00 | 3,485.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wpp Plc | -4.92% | -39.60 | 765.60 |
| 2 |  |
Antofagasta Plc | -4.02% | -44.50 | 1,062.50 |
| 3 |  |
Anglo American Plc | -3.82% | -108.50 | 2,731.50 |
| 4 |  |
Itv Plc | -3.61% | -2.36 | 63.04 |
| 5 |  |
Standard Chartered Plc | -3.59% | -22.40 | 601.20 |
| 6 |  |
Prudential Plc | -3.35% | -34.10 | 984.40 |
| 7 |  |
Tui Ag | -3.21% | -4.25 | 128.20 |
| 8 |  |
Rolls-royce Holdings Plc | -3.10% | -2.68 | 83.86 |
| 9 |  |
Glencore Plc | -2.81% | -12.20 | 422.55 |
| 10 |  |
Burberry Group Plc | -2.56% | -42.00 | 1,596.50 |
US close: Stocks move higher in first session of Q3
Wall Street stocks closed higher on Friday ahead of the Independence Day holiday as major indices looked to put a horrific first half behind them.
At the close, the Dow Jones Industrial Average was up 1.05% at 31,097.26, while the S&P 500 was 1.06% firmer at 3,825.33 and the Nasdaq Composite saw out the session 0.90% stringer at 11,127.85.
The Dow closed 321.83 points higher on Friday after the blue-chip index wrapped up the previous session in the same state it spent much of the last two quarters – in the red.
Friday’s primary focus will be the Institute for Supply Management’s manufacturing purchasing managers index, which fell to 53 in June, down from 56.1 in May and pointing to the slowest growth in factory activity in two years. Economists were expecting a print of 54.9. New orders contract from 55.1 in May to 49.2 in June, while employment also further declined from 49.6% to 47.3.
The ISM’s report also showed that business sentiment remained optimistic regarding demand, but companies cautioned that continued supply chain and pricing issues were still very much their primary concerns going forward.
Elsewhere on the macro front, the S&P Global manufacturing PMI was revised slightly higher to 52.7 in June, up from a preliminary reading of 52.4, but still pointed to the slowest growth in factory activity since July 2020. New orders fell, primarily due to inflationary pressures, weak client confidence in the outlook, and supply-chain disruptions.
Finally, construction spending in the United States decreased 0.10% month-on-month in May to hit $1.77trn, according to the Census Bureau, as spending on private construction was virtually unchanged and public construction spending slipped 1.6% to $343.8bn.
In terms of company news, Micron and Kohl’s both issued disappointing guidance, while General Motors warned that Q2 manufacturing issues could drag net income for the quarter to between $1.6bn and $1.9bn – well and truly short of the $2.5bn expected on the Street.
No major corporate earnings were slated for release on Friday.
Tuesday newspaper round-up: Customer service complaints, floating windfarms, Halifax
Customer service complaints have hit their highest level on record and are costing British businesses more than £9bn a month in lost staff time, research has found. As firms struggle to cope with global supply issues and a staffing crisis, the Institute of Customer Service found more consumers were experiencing service issues than at any point since its customer satisfaction index began in 2008. – Guardian
Floating windfarms could be built off the coasts of Cornwall and Pembrokeshire after the Queen’s property manager identified a clutch of sites in the Celtic Sea that could host them. The crown estate, which generates money for the Treasury and the royal family, has published five “areas of search” that will be narrowed into development plots to host wind power generation. – Guardian
Boris Johnson must give approval for a pioneering Rolls-Royce mini nuclear reactor project in the next six months or risk delaying a project vital to his green energy revolution, the company has warned. Rolls will be unable to meet a target of deploying its first reactor by 2029 unless ministers place an order before the end of the year according to Tom Samson, the project’s chief executive. The company’s small modular reactors (SMRs) are expected to play a key part in the Prime Minister’s plans for an energy revolution. – Telegraph
A furore about the use of pronouns on staff badges at Halifax has failed to result in a customer exodus, The Times has learnt. Halifax became embroiled in a row last week after it said on social media that customers who disagreed with its policy of allowing employees to display their chosen pronouns were free to close their accounts. – The Times
More than one in three UK company directors disqualified over a two-month period had abused the government’s coronavirus loan or job support schemes, according to an analysis of official data. The Insolvency Service banned 37 directors in April and May for fraudulent claims. The disqualifications represented almost 35 per cent of the directors struck off and compares with 140 directors who were banned for abuse of Covid schemes in the year to the end of March: 17 per cent of the total. – The Times
