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London open: Stocks dip as investors wait on European inflation numbers
Stocks in London were trading slightly lower on Thursday morning as they waited on the latest inflation data from across the Channel.
As of 0932 BST, the FTSE 100 was drifting down by 0.15% to 7,489.14, alongside a 0.51% dip on the second-tier index to 18,328.06.
Financial markets’ attention was expected to be on a preliminary reading for German consumer prices in June due out at 1300 BST.
Ahead of that, it was reported that the annual rate of Spanish consumer prices fell below 2% in June – for the first time in two years.
That chimed with a drop in Italy’s cost of living rpeorted during the previous session.
As Michael Hewson, chief market analyst at CMC Markets UK put it: “There is the hope that upcoming data could prompt a softening of [central banks’] hawkish [messaging] starting today with the latest June inflation numbers from Germany.”
On home shores, the Bank of England said that Britons’ net borrowing slowed from £1.5bn in April to £1.1bn in May (consensus: £1.5bn).
In the background, the Riksbank went ahead and announced a 25 basis point hike in interest rates to 3.75%, as expected.
At 1000 BST the European Commission was due to release surveys on industrial and economic confidence for the euro area covering the month of June.
Stateside meanwhile, the key release of the session would be the Department of Labor’s weekly unemployment claims figures at 1330 BST.
Companies’ latest updates please
B&M European Value Retail reported a 13.5% rise in group first quarter revenue, in line with expectations, as consumers sought lower prices amid the cost of living crisis. Like-for-like sales in the UK were up 9.2% as both grocery and general merchandise categories performed “very well, driven by consistently strong and positive LFL transaction numbers”, the company said in a trading statement on Thursday.
UK insurer Direct Line said rectifying unfair motor claim payments over a five-year period to 2022 would not have a “material financial impact” on this year’s results. The company was on Wednesday ordered by Britain’s Financial Conduct Authority to carry out a review of total losses where vehicles had been written off after it admitted it had underpaid some car and van insurance customers.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +1.96% | +10.40 | 540.20 |
| 2 |  |
Tui Ag | +1.25% | +7.00 | 569.00 |
| 3 |  |
Barclays Plc | +1.12% | +1.66 | 150.00 |
| 4 |  |
Rightmove Plc | +0.97% | +5.00 | 521.00 |
| 5 |  |
Carnival Plc | +0.94% | +11.50 | 1,230.50 |
| 6 |  |
3i Group Plc | +0.90% | +17.00 | 1,898.50 |
| 7 |  |
Melrose Industries Plc | +0.78% | +3.90 | 503.80 |
| 8 |  |
Next Plc | +0.67% | +46.00 | 6,892.00 |
| 9 |  |
Informa Plc | +0.36% | +2.60 | 725.00 |
| 10 |  |
Standard Chartered Plc | +0.30% | +2.00 | 670.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Severn Trent Plc | -3.20% | -86.00 | 2,601.00 |
| 2 |  |
Direct Line Insurance Group Plc | -3.01% | -4.25 | 137.15 |
| 3 |  |
United Utilities Group Plc | -2.74% | -27.50 | 977.00 |
| 4 |  |
Rolls-royce Holdings Plc | -2.28% | -3.55 | 152.25 |
| 5 |  |
Persimmon Plc | -2.11% | -22.00 | 1,019.00 |
| 6 |  |
Burberry Group Plc | -1.92% | -41.00 | 2,097.00 |
| 7 |  |
Easyjet Plc | -1.83% | -8.90 | 477.70 |
| 8 |  |
Taylor Wimpey Plc | -1.69% | -1.75 | 101.60 |
| 9 |  |
Centrica Plc | -1.65% | -2.00 | 118.85 |
| 10 |  |
Barratt Developments Plc | -1.62% | -6.80 | 412.70 |
US close: Stocks mixed as Powell maintains hawkishness
Wall Street’s main stock gauges closed a turbulent session in a mixed state on Wednesday, as Federal Reserve chairman Jerome Powell reinforced the likelihood of two more interest rate increases this year.
At the close, the Dow Jones Industrial Average was down 0.22% at 33,852.66,, while the S&P 500 saw a marginal dip of 0.04% to 4,376.86.
In contrast, the technology-heavy Nasdaq Composite advanced 0.27% to finish the trading day at 13,591.75.
Meanwhile, the dollar was last down 0.04% on sterling at 79.11p, while it fell 0.01% against the common currency to trade at 91.62 euro cents.
The greenback also lost value on the yen, falling 0.09% to change hands at JPY 144.35.
“The Dow’s position as one of the poor performers this year has been restated this afternoon, as Powel reaffirmed his commitment to more rate hikes,” said IG chief market analyst Chris Beauchamp.
“The Fed chairman seems determined to restate the Fed’s hawkish attitude at every opportunity, but other central bankers today have been more circumspect, giving room for European indices to rally.”
Beauchamp added that Washington’s potential move to limit AI chip sales to China had not held back the Nasdaq.
“The recent pullback, barely deserving of that name, seems to have run its course – investor appetite for anything remotely connected to AI remains undimmed.
“In bull markets, it pays to follow the momentum, and once more that momentum is best found in the Nasdaq.”
US trade deficit shrinks; potential AI chip export restrictions loom
On the economic front, preliminary data from the Department of Commerce indicated a decrease in the US goods trade deficit, falling from $97.1bn in April to $91.1bn in May.
The reduction indicated a boost in exports or a decrease in imports, or a combination of the two, suggesting possible improvements in international trade balance.
A report meanwhile emerged that the US government could be considering imposing restrictions on the export of artificial intelligence (AI) chips to China.
The potential implications of the decision could escalate tensions in already-strained US-China trade relations, although it did little to dampen spirits among tech equities on Wednesday.
Mixed performance sees Spirit AeroSystems and General Mills decline
In equities, aerospace firm Spirit AeroSystems closed down 0.96% despite it reaching a preliminary agreement on a new wage deal with machinists.
A vote on the proposed agreement was set down for Thursday.
Spirit’s major client Boeing ended the day on a different note, however, with the aircraft manufacturing giant rising 0.62%.
Food producer General Mills dropped 5.17% after reporting quarterly sales that fell short of market expectations.
On a brighter note, biopharmaceutical play Roivant Sciences ended the day 11.27% firmer after it reported a narrower net loss for its fourth quarter to March 31.
The reported loss of $33.6m, or 20 cents per share, was a marked improvement from its loss of $270.1m, or 39 cents per share, recorded a year prior.
Thursday newspaper round-up: Brexit, UK water companies, National Grid
Brexit has not contributed to labour market shortages in the UK, according to Andrew Bailey, the Bank of England governor. Speaking at a panel with other major central bankers, Bailey said the UK’s inflationary problem was partly the result of workers choosing to leave the workforce after the pandemic and not returning. He said the bulk of this labour market shrinkage was caused by factors outside the UK’s exit from the European Union, which put a stop to the free movement of labour from the 27-country bloc. – The Times
Britain’s beleaguered water sector is creaking under the weight of a £65billion debt mountain that could rise even further due to inflation. The staggering combined debt pile built up by the UK’s 12 water companies means that huge swathes of cash are being spent on interest payments – money that could be spent cleaning up polluted rivers or fixing leaky pipes. And they face falling deeper into the red as a big chunk of the debt is linked to inflation, which has been rising sharply. – Daily Mail
National Grid has failed to secure emergency backup coal plants to help prevent blackouts this winter after Drax rejected requests to reopen parts of its north Yorkshire power station. The company responsible for keeping Britain’s lights on warned this month that the country was at risk of controlled power cuts this winter in a worst-case scenario if it was unable to import enough energy. – The Times
The crown estate has generated record profits of almost half a billion pounds from Britain’s offshore windfarms, as talks continue over how much of the windfall should be shared with King Charles. The royal property manager made £443m in profits in its last financial year, up by almost £130m from the year before, in large part thanks to payments made by renewable energy companies for the right to access the seabed. – Guardian
Ten major pension funds, which collectively manage around £300billion in assets and include schemes run on behalf of the Church of England and HSBC UK, said, in an letter to the Financial Conduct Authority (FCA), changing laws on listings would not lead to ‘healthy capital markets’ and would ‘exacerbate’ existing difficulties in attracting investment to the City. – Daily Mail
