Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
London open: Stocks steady amid raft of earnings, ahead of Fed
London stocks were steady in early trade on Wednesday as investors waded through a raft of earnings and looked ahead to the latest policy announcement from the Federal Reserve.
At 0835 BST, the FTSE 100 was flat at 7,688.60.
The Fed is widely hike to raise rates by 25 basis points later.
Stephen Innes, managing partner at SPI Asset Management, said: “That’s in line with market pricing, which sees an almost 100 % chance of a hike. That would take the upper bound target range for the federal funds rate up to 5.25%-5.50%, marking its highest level since 2001. But since a hike today is almost entirely priced in, the bigger question for markets will be if the statement and the press conference signal that the September meeting is live.
“But even if July’s 25bps is the last hike in this cycle, it’s unlikely Powell will be putting down the welcome mat for markets to start thinking about rate cuts with growth still holding up and core inflation above target. Currently, the market is pricing in rate cuts just over three months forward, so the more significant risk post-FOMC is if the FOMC guidance forces these cuts to be pushed out well into 2024.”
In equity markets, Lloyds was on the back foot despite posting massive interim profits and raising its net interest margin guidance while hard-pressed savers were still looking for a decent return on their deposits.
CMC Markets analyst Michael Hewson said: “Despite this more positive outlook the shares have slipped back after profits fell short of expectations.
“This miss on profits appears to be down to an increase in provisions for non-performing loans, which came in at £419m, and a fall in Q2 NIM to 3.14% down from 3.22% in Q1.”
NatWest was under the cosh as it announced that Alison Rose has stepped down as chief executive in a high-profile row about former UKIP leader Nigel Farage.
Reckitt Benckiser – the maker of Dettol, Lysol and Nurofen, among other things – was in the red even as it posted a jump in first-half like-for-like net revenue, driven by solid performances across its portfolios.
Rio Tinto fell as the miner reported a slide in half-year profits after global commodity prices fell sharply. Miners in general were weak, with Glencore and Antofagasta also lower.
On the upside, engine maker Rolls-Royce surged as it lifted its full-year guidance after a strong first half, while British American Tobacco also rose on the back of results.
Aston Martin rallied as the luxury car maker said interim losses narrowed and maintained annual guidance as strong demand boosted revenue.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rolls-royce Holdings Plc | +18.60% | +28.40 | 181.05 |
| 2 |  |
Ocado Group Plc | +4.11% | +31.60 | 801.00 |
| 3 |  |
British American Tobacco Plc | +1.84% | +48.50 | 2,682.50 |
| 4 |  |
International Consolidated Airlines Group S.a. | +1.78% | +2.65 | 151.70 |
| 5 |  |
Easyjet Plc | +1.48% | +6.60 | 452.60 |
| 6 |  |
Itv Plc | +1.17% | +0.80 | 68.94 |
| 7 |  |
Associated British Foods Plc | +0.88% | +18.00 | 2,056.00 |
| 8 |  |
Marks And Spencer Group Plc | +0.84% | +1.70 | 203.80 |
| 9 |  |
Tui Ag | +0.77% | +4.50 | 589.50 |
| 10 |  |
Gsk Plc | +0.76% | +10.60 | 1,403.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Lloyds Banking Group Plc | -2.10% | -0.97 | 45.13 |
| 2 |  |
Rio Tinto Plc | -1.97% | -106.00 | 5,288.00 |
| 3 |  |
Glencore Plc | -1.93% | -9.30 | 472.75 |
| 4 |  |
Anglo American Plc | -1.74% | -43.50 | 2,462.50 |
| 5 |  |
Barclays Plc | -1.64% | -2.68 | 160.84 |
| 6 |  |
Bhp Group Limited | -1.59% | -39.50 | 2,451.50 |
| 7 |  |
Direct Line Insurance Group Plc | -1.34% | -2.10 | 154.65 |
| 8 |  |
Diageo Plc | -1.30% | -45.00 | 3,412.00 |
| 9 |  |
Burberry Group Plc | -1.28% | -28.00 | 2,151.00 |
| 10 |  |
Antofagasta Plc | -1.27% | -21.00 | 1,636.00 |
US close: Stocks firmer as investors look to Fed decision
Wall Street enjoyed a positive close on Tuesday, buoyed by investor anticipation for the Federal Reserve’s two-day policy meeting and a strong earnings season.
At the close, the Dow Jones Industrial Average made modest gains of 0.08%, closing at 35,438.07 points, while the broader S&P 500 index rose 0.28% to settle at 4,567.46.
The tech-heavy Nasdaq Composite led the pack, climbing 0.61% to end the day at 14,144.56.
In currency markets, the dollar was last up 0.06% on sterling to trade at 77.55p, while it climbed 0.03% to 90.48 euro cents.
The greenback also saw a slight increase of 0.02% against the yen, changing hands at JPY 140.93.
“Hopes that the Chinese government’s stimulus measures will help drive domestic demand may be lending some support whilst those softer than expected PMI readings from yesterday are also serving up ammunition for policy doves at the Federal Reserve,” said Joshua Mahony at Scope Markets earlier.
“Whilst a rate hike is still expected tomorrow, again numbers like this increase the prospect of the Fed’s policy tightening cycle coming to an end.”
US house prices surge amid rising consumer confidence
On the economic front, US house prices demonstrated an upward trend in May, according to fresh survey results.
S&P Case Shiller‘s National Home Price Index revealed that, after seasonal adjustments, prices across the country saw a 0.7% uptick from the prior month.
Additionally, prices in the country’s 10 and 20 largest cities showed marked increases of 1.1% and 1.0% respectively.
However, on a year-to-year basis, there was a slight decrease in the home price index (HPI) of 0.5%, a marginal decline from the 0.1% dip recorded in April.
The annual rate of decline for the 10 most populous cities in the U.S. fell to -1.0% from -1.1%, while the same rate for homes in the top 20 cities stood steady at -1.7%, matching the previous month’s rate.
Chicago, Cleveland, and New York emerged as the cities with the most significant annual price gains, at 4.6%, 3.9%, and 3.5%, respectively.
Elsewhere, US consumer confidence took a notable leap in July, breaking from the static range observed over the majority of the past year, according to another survey.
The Conference Board‘s Consumer Confidence Index reported a jump from a June reading of 110.1 to 117.0 in July, surpassing economists’ expectations of 112.0.
The survey emphasised an upswing in the expectations sub-index, which rose from 80.0 to 88.3.
There was also a lesser but notable increase in a sub-index tracking the present situation, which rose from 155.3 to 160.0.
Mixed performance among Wall Street equities
In equities, shares of Goldman Sachs Group fell 1.18% as the global investment bank found itself under scrutiny, after Citigroup reduced its rating on the firm’s stock to ‘neutral’.
RTX Corporation, the engine manufacturer previously known as Raytheon, experienced a significant dip of 10.22% in its share price.
The company revealed that its powdered metal used in manufacturing certain jet engine parts for Airbus’s A320neo might diminish the components’ service life.
That triggered a significant sell-off, with RTX’s shares plunging up to 15% at one point during the session – a potential record drop for the company since the 9/11 terror attacks.
General Motors‘ shares also experienced a decline, dropping by 3.51% despite beating analysts’ estimates in the latest earnings report.
The carmaker’s stock suffered primarily due to a hefty recall charge of $792m, overshadowing the otherwise positive earnings report.
On the upside, General Electric soared 6.27% on the back of an upbeat earnings report that surpassed expectations, along with the company’s decision to raise its financial outlook.
Wednesday newspaper round-up: Tax reliefs, hiring prospects, JPMorgan
Almost £200bn of tax reliefs handed to businesses and individuals each year should come under greater government scrutiny to prevent fraud and abuse, according to an all-party group of MPs. The Treasury committee said in a report published on Wednesday that “a systematic review” into more than 1,000 tax reliefs was needed after MPs found HM Revenue and Customs did not have the resources to monitor how tax breaks and deductions were used. – Guardian
Taxpayers face a bill for an extra £50bn to cover losses on the Bank of England’s money printing, after stubborn inflation triggered frenzied bets on higher interest rates. The Bank’s latest estimate of losses it will suffer over the next decade on government bonds amassed during the pandemic and financial crisis has ballooned by around £50bn to £270bn in just three months. – Telegraph
Car industry executives have attacked mixed signals from ministers over the planned 2030 ban on petrol cars, over fears they will undermine investment in electric vehicles. Rishi Sunak this week appeared ready to change course, emphasising the need for a “proportionate and pragmatic” approach to net zero in response to questions. Then on Tuesday, Michael Gove said the ban, made law by Boris Johnson in 2020, was “immovable”. – Telegraph
Employers are feeling more confident about their hiring prospects and the state of the economy, in further signs that the labour market is still resisting the pressure of rising interest rates. A closely watched survey of employers in the public and private sector, carried out by the Recruitment and Employment Confederation (REC), found that sentiment improved between April and June, even as borrowing costs surged and inflation persisted at high levels. – The Times
JPMorgan Chase allegedly repaid Jes Staley, its former executive, for the cost of journeys he took to meet the paedophile Jeffrey Epstein, according to claims made in court filings in the United States. Staley, a former top executive at JPMorgan who later ran Barclays, is accused of witnessing and taking part in Epstein’s sex trafficking crimes.- The Times
