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London open: Stocks rise amid avalanche of corporate news; Fed eyed
London stocks edged higher in early trade on Wednesday as investors waded through an avalanche of corporate news and looked ahead to the latest policy announcement from the US Federal Reserve.
At 0850 BST, the FTSE 100 was up 0.5% at 7,340.06.
As far as the Fed is concerned, CMC Markets analyst Michael Hewson said: “It’s certain that the Federal Reserve will be hiking rates again today by another 75bps, with the only question being what comes next, and whether we see 50bps or another 75bps in September. Two weeks ago, there was some speculation that we might see a 100bps move today, however that seems much less likely now.
“An aggressive 100bps is by no means off the table, but it has become less probable after two of the most hawkish Fed members, Christopher Waller, and St. Louis Fed President James Bullard pushed back, saying that 75bps remained their favoured option, which prompted a modest retreat in the US dollar, which hit a 20 year earlier this month.”
In equity markets, the corporate updates were never-ending.
Consumer goods giant Reckitt Benckiser rallied as it lifted its full-year sales outlook following a “strong” first half. The company said second-quarter like-for-like revenue grew 11.9% at constant currency as it hiked prices by 9.7%.
it now expects LFL net revenue growth of 5% to 8%, up from previous guidance that it would be at the upper end of a range of 1% to 4%. It also expects growth in adjusted operating margins.
Lloyds Bank was in the black as it lifted annual guidance after a rise in net income for the half year due to rising interest rates, and despite a fall in pre-tax profits.
Corrugated packaging company Smurfit Kappa was up after it reported an increase in first-half profit and revenue despite increasing input costs and supply chain issues. Peers Mondi and DS Smith also gained.
GlaxoSmithKline advanced after lifting its full-year outlook and posting a jump in second-quarter sales. The pharmaceuticals group now expects 2022 sales growth of between 6% and 8%, up from previous guidance of 5% to 7%, while adjusted operating growth is seen at between 13% and 15%, up from previous guidance of 12% to 14%. The guidance excludes any contribution from Covid-19 solutions
Wizz Air flew higher despite saying that first-quarter operating losses widened as it was hit by higher fuel costs.
On the downside, Rio Tinto fell after the miner posted a drop in first-half profit and cut its dividend.
Student accommodation provider Unite Group was also down even as it reported a jump in interim profits and said reservations are now ahead of pre-pandemic levels.
Provident Financial was weaker even as the subprime lender said it swung to an interim profit following the wind down of its consumer credit division.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smurfit Kappa Group Plc | +5.85% | +158.00 | 2,860.00 |
| 2 |  |
Easyjet Plc | +4.47% | +16.70 | 390.00 |
| 3 |  |
Lloyds Banking Group Plc | +4.28% | +1.87 | 45.40 |
| 4 |  |
Mondi Plc | +3.85% | +54.50 | 1,471.00 |
| 5 |  |
Smith (ds) Plc | +3.68% | +9.80 | 276.00 |
| 6 |  |
Ocado Group Plc | +3.04% | +22.40 | 758.40 |
| 7 |  |
Crh Plc | +2.96% | +87.00 | 3,022.00 |
| 8 |  |
Flutter Entertainment Plc | +2.72% | +212.00 | 7,994.00 |
| 9 |  |
International Consolidated Airlines Group S.a. | +2.49% | +2.82 | 115.98 |
| 10 |  |
Burberry Group Plc | +2.32% | +39.00 | 1,722.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | -3.67% | -177.00 | 4,646.50 |
| 2 |  |
United Utilities Group Plc | -1.82% | -19.50 | 1,054.00 |
| 3 |  |
Severn Trent Plc | -1.55% | -45.00 | 2,864.00 |
| 4 |  |
Vodafone Group Plc | -1.50% | -1.84 | 120.52 |
| 5 |  |
Land Securities Group Plc | -1.32% | -9.60 | 720.20 |
| 6 |  |
British Land Company Plc | -1.12% | -5.40 | 476.50 |
| 7 |  |
Segro Plc | -1.05% | -11.00 | 1,039.50 |
| 8 |  |
National Grid Plc | -0.93% | -10.50 | 1,112.50 |
| 9 |  |
Bt Group Plc | -0.88% | -1.55 | 175.25 |
| 10 |  |
Hsbc Holdings Plc | -0.55% | -2.90 | 521.60 |
US close: Equities slide amid slew of earnings reports
Wall Street stocks closed weaker on Tuesday, as market participants thumbed over a hefty slab of corporate earnings.
At the close, the Dow Jones Industrial Average was down 0.71% at 31,761.54, as the S&P 500 lost 1.15% to 3,921.05 and the Nasdaq Composite was off 1.87% at 11,562.57.
The Dow closed 228.5 points lower on Tuesday, reversing gains recorded in the previous session.
“US markets faced a key session today, opening lower as the Fed meeting gets underway, as we look forward to the latest quarterly numbers from tech giants Microsoft and Alphabet after the bell,” said CMC Markets chief market analyst Michael Hewson.
“On the data front US consumer confidence in July came in at 95.7, falling from 98.4 in June, while new home sales fell again, by -8.1%, while the May numbers were revised lower to 6.3%”
Indeed on the economic front, the Conference Board‘s consumer confidence index fell to 95.7 in July, down 2.7 points from June, with the present situation index falling from 147.2 to 141.3 and the expectations index slipping from 65.8 to 65.3.
“The decrease was driven primarily by a decline in the Present Situation Index – a sign growth has slowed at the start of the third quarter,” said Lynn Franco, senior director of economic indicators at the Conference Board.
“The expectations index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist.
“Concerns about inflation – rising gas and food prices, in particular – continued to weigh on consumers.”
Elsewhere, new home sales shrank 8.1% month-on-month in June to hit a seasonally adjusted annual rate of 590,000 in June, according to the Census Bureau, well below market expectations for a print of 660,000.
On another note, the Federal Housing Finance Agency‘s house price index increased to 398.1 points in May, up from April’s downwardly revised print of 392.7 points.
Finally, the Richmond Fed’s manufacturing index improved from a reading -9 to 0 in June.
Earnings were the session’s primary focus again, with industrial giant 3M up 4.94% after posting second-quarter earnings and revenue that beat expectations on the Street, while also cutting full-year sales growth and adjusted earnings forecasts and revealing it was looking to spin off its healthcare business.
Coca-Cola added 1.64% after it lifted its full-year revenue guidance and posted a 12% rise in second-quarter revenues to $11.3bn, while Kimberly-Clark gained 0.41% after reporting second quarter profits that beat estimates and boosted sales and inflation forecasts.
General Electric jumped 4.61% after it posted higher quarterly earnings thanks to a recovery in the aviation industry, and McDonald’s was 2.68% higher after delivering a 3% year-on-year contraction in second quarter revenues as a result of its exit from Russia and a weakened euro.
On the downside, discount retail giant Walmart tumbled 7.6% after issuing its second profit warning since May overnight, with the group saying profits were set to fall as much as 13% in 2022 as the rising cost of food and fuel continues to impact customer spending.
Defence contractor Raytheon Technologies slid 4.58% after it delivered second-quarter earnings that were better than expected, despite revenues coming in slightly short of estimates, and UPS lost 3.4% after it published earnings that topped views despite recession fears and lower shipping volumes.
General Motors was down 3.42% after its second quarter earnings missed estimates, as ongoing supply chain woes impacted profitability.
Alphabet, Microsoft, Chubb and Chipotle were meanwhile set to publish their latest quarterly numbers after the closing bell.
Wednesday newspaper round-up: Train strikes, Randox, Google, Credit Suisse
The railways will again grind to a halt on Wednesday as workers strike over pay, job security and working conditions. The latest talks to avert the action failed last week, a month since three days of industrial action in June. The strikes involve more than 40,000 workers at Network Rail, 14 train companies, and members of the Rail, Maritime and Transport union (RMT). – Guardian
Ministers and government officials played “fast and loose” when awarding £777m in Covid contracts to a healthcare firm that employed the Conservative MP Owen Paterson as a lobbyist, the head of parliament’s spending watchdog has said. In a damning report, the House of Commons public accounts committee (PAC) concluded that the government made a series of failures, making it impossible to know if the contracts had been awarded properly to Randox. – Guardian
Google has suffered its slowest quarterly sales growth in two years, in the latest sign of a global downturn for tech. Alphabet, the search engine giant’s parent company, posted a 12pc rise in quarterly revenue to $69.7bn (£57.96). The performance, while better than rivals, was its weakest growth in two years and profits fell 13.6pc to $16bn. – Telegraph
Credit Suisse is set to lose its second chief executive in three years as the bank continues to lurch from crisis to crisis. The Swiss bank is set to announce the departure of its chief executive Thomas Gottstein after two and a half years in the role, the Wall Street Journal reported. His expected departure comes as the historic European bank struggles to restore its reputation after a string of recent scandals. – Telegraph
Average pay for partners at Macfarlanes has risen by more than 19 per cent over the past year to an average of nearly £2.5 million. The law firm, renowned for advising extremely wealthy individuals, said that its revenue for 2020-21 had risen by 16.4 per cent to £303.7 million. That translated to a profit of £164.2 million, a rise of 15.4 per cent over the previous year. – The Times
