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London open: FTSE edges up but gains muted amid recession fears
London stocks edged higher in early trade on Wednesday but gains were unspectacular as recession fears weighed.
At 0830 BST, the FTSE 100 was up 0.2% at 7,646.57.
Richard Hunter, head of markets at Interactive Investor, said: “Markets are drifting as investor thoughts start to turn towards the scale of severity, as the likelihood of a recession later in the year in the US increases.
“Further evidence of a slowing economy came in the form of releases showing factory orders which dropped for a second month and, in particular, as job openings fell to the lowest level in almost two years. The resilience of the labour market to date has kept the Federal Reserve on high alert in its battle against inflation, and most recent data has tended to suggest that the interest rate hiking policy is now taking a measured effect on crimping growth.”
Hunter added that as traders begin to rein in any new positions ahead of the long Easter weekend, markets were finding little reason to make any progress.
On the macro front, investors were eyeing the S&P Global/CIPS UK services PMI for March, due at 0930 BST.
In equity markets, catering group Compass rose following well-received results from France’s Sodexo, which said earlier that it plans to spin off and list its Benefits and Rewards Services business next year.
Elsewhere, insurer Direct Line rallied after a double upgrade to ‘buy’ from ‘sell’ at Citi.
Engineering firm Wood Group racked up strong gains after it said late on Tuesday that it would “continue to engage with its shareholders” after private equity firm Apollo Global Management made a fifth and final takeover offer at £1.66bn.
On the downside, RS Group fell as it said it expects annual adjusted operating profit to be slightly ahead of estimates after a 1% rise in fourth-quarter like-for-like revenue despite weak electronics sales.
Hilton Foods was also weaker as it posted a drop in full-year profit and announced the appointment of a new chief executive.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Direct Line Insurance Group Plc | +5.96% | +8.55 | 152.00 |
| 2 |  |
United Utilities Group Plc | +2.69% | +28.00 | 1,069.50 |
| 3 |  |
Centrica Plc | +2.51% | +2.70 | 110.30 |
| 4 |  |
Carnival Plc | +2.26% | +15.60 | 706.00 |
| 5 |  |
Barclays Plc | +2.14% | +3.14 | 149.64 |
| 6 |  |
Admiral Group Plc | +2.07% | +43.00 | 2,121.00 |
| 7 |  |
Severn Trent Plc | +1.97% | +56.00 | 2,900.00 |
| 8 |  |
Compass Group Plc | +1.89% | +38.00 | 2,049.00 |
| 9 |  |
Astrazeneca Plc | +1.81% | +204.00 | 11,448.00 |
| 10 |  |
National Grid Plc | +1.59% | +17.50 | 1,120.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -2.61% | -15.00 | 559.60 |
| 2 |  |
Ashtead Group Plc | -2.51% | -116.00 | 4,514.00 |
| 3 |  |
Kingfisher Plc | -2.37% | -6.10 | 250.90 |
| 4 |  |
Auto Trader Group Plc | -2.07% | -12.80 | 606.80 |
| 5 |  |
Crh Plc | -2.06% | -83.00 | 3,938.00 |
| 6 |  |
Rightmove Plc | -1.99% | -11.20 | 551.00 |
| 7 |  |
Spirax-sarco Engineering Plc | -1.83% | -215.00 | 11,530.00 |
| 8 |  |
Halma Plc | -1.77% | -39.00 | 2,165.00 |
| 9 |  |
Hargreaves Lansdown Plc | -1.74% | -13.60 | 768.40 |
| 10 |  |
St. James’s Place Plc | -1.53% | -18.50 | 1,187.50 |
US close: Stocks lower as traders look to energy prices, JOLTs data
Wall Street stocks closed lower on Tuesday as market participants continued to zero in on moves in the energy market and digested labour market data from the Census Bureau.
At the close, the Dow Jones Industrial Average was down 0.59% at 33,402.38, while the S&P 500 slipped 0.58% to 4,100.60 and the Nasdaq Composite saw out the session 0.52% weaker at 12,126.33
The Dow closed 198.77 points lower on Tuesday, taking a bite out of gains recorded in the previous session as the blue-chip index kicked off the second quarter in much the same way it wrapped up the first.
Investors were still focussed on oil prices throughout the session, with West Texas Intermediate futures sitting at around $80.98 per barrel, while Brent Crude futures moved to $84.94 per barrel. Tuesday morning’s moves come after crude prices got a boost on Monday after OPEC+ announced it would slash output by 1.16m barrels of oil per day.
Comments from JP Morgan Chase chief executive Jamie Dimon also drew an amount of attention, with the bank’s head honcho warning that the US banking crisis was far from being over.
“The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon said. “Any crisis that damages Americans’ trust in their banks damages all banks – a fact that was known even before this crisis. While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd.”
On the macro front, US factory orders fell 0.7% in February, according to the Census Bureau, below January’s revised 2.1% decrease but ahead of market expectations for a 0.5% decline. The drop, which marked the second consecutive month of decline in factory orders, came as demand for transport equipment was down 2.8% month-on-month.
Elsewhere, the number of job openings in the US fell by 632,000 to 9.9m in February, according to the Bureau of Labor Statistics, the lowest level seen since May 2021 and short of market expectations for a print of 10.4m, potentially indicating that the labour market may have finally started to cool. Over the month, the largest decreases in job openings were in professional and business services, health care and social assistance, and transportation, warehousing, and utilities down 278,000, 150,000, and 145,000, respectively.
In the corporate space, pharmaceutical giant Johnson & Johnson rose almost 3% in extended trading after revealing it will pay $8.9bn over the next 25 years in order to settle allegations that its baby powder and other talc products caused cancer.
Wednesday newspaper round-up: Johnson & Johnson, Microsoft, Grant Thornton
Revenue officials are not paying enough attention to a new tax on big tech firms’ earnings in the UK and are therefore failing to scrutinise potential avoidance, parliament’s spending watchdog has warned. While the digital services tax brought in a surprise bumper income in its first year, MPs on the cross-party public accounts committee says this suggests HM Revenue and Customs officials had failed to properly understand its impact. – Guardian
Johnson & Johnson has agreed to pay $8.9bn to settle tens of thousands of lawsuits alleging that talc in its iconic Baby Powder and other products caused cancer, the company said. The amount dwarfs J&J’s original offer of $2bn. The agreement follows a January appeals court ruling invalidating J&J’s controversial “Texas two-step” bankruptcy maneuver, in which it sought to offload the talc liability on to a subsidiary that immediately filed for Chapter 11. – Guardian
A Bank of England policymaker has insisted that its Covid money-printing spree is not to blame for double-digit inflation amid the steepest price rises in 41 years. Silvana Tenreyro said that an £895bn bond-buying programme designed to prop up the economy during lockdown had been wholly misunderstood. – Telegraph
Microsoft has stressed its commitment to Britain after reportedly shelving plans to establish a new office in London, months after announcing proposals to lay off 10,000 staff across the world. The American technology group had been searching for a location in the capital to replace its current office leases in Reading, which are set to expire in 2026, according to the property website React News, which said it had abandoned this plan. – The Times
Partners at Grant Thornton took a pay cut last year, as Britain’s sixth largest accountancy firm chose to spend more money on other pay rises, promotions and hiring a record number of school-leavers. Revenue rose by 12 per cent to £610 million in 2022 from £543 million the year before, although that compared with growth of 15 per cent during an “exceptional” 2021. – The Times
