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London open: Stocks edge up as investors mull BoJ shift; StanChart rallies
London stocks edged higher in early trade on Friday as investors mulled a policy shift from the Bank of Japan and results from the likes of NatWest, Standard Chartered and IAG.
At 0825 BST, the FTSE 100 was up 0.2% at 7,705.18.
Earlier, the BoJ maintained negative interest rates but said it would now allow “greater flexibility” in its target range for 10-year government bond yields.
The country’s strict yield curve control policy would now allow movements of around plus and minus 0.5% without “rigid limits,” the central bank said.
It also offered to buy 10-year bonds at 1% every business day through fixed-rate operations, expanding its tolerance by another 50 basis points. Yields for the bonds stood at 0.539%, their highest level since September 2014.
The BOJ said it will “conduct yield curve control with greater flexibility, regarding the upper and lower bounds the range as references, not as rigid limits, in its market operations”.
In UK equity markets, StanChart rallied to the top of the FTSE 100 as it lifted annual guidance and launched a $1bn share buyback after first-half profits rose 20% on the back of soaring interest rates.
Pharmaceuticals giant AstraZeneca gained sharply as its second-quarter results beat estimates.
NatWest edged up as it reported better-than-expected interim profits only days after it was rocked by the resignation of chief executive Alison Rose over the leaking of details of hard-right former political party leader Nigel Farage.
The bank posted pre-tax profit of £3.6bn, up from £2.6bn a year earlier and better than the £3.3bn estimated by analysts. It also announced a £500m share buyback.
British Airways and Iberia owner IAG flew higher as it posted a record first-half profit, hailing a strong performance across the group.
In the six months to 30 June, the company swung to an operating profit before exceptional items of €1.3bn from a loss of €466m in the same period a year earlier. IAG pointed to sustained strong demand across the network, and a particularly strong showing from the Spanish business.
On the downside, Vanquis Bank tumbled after interim results, while Darktrace dropped after Summit Partners sold 20.8m shares in the cyber security firm in a placing.
Property portal Rightmove was in the red even as it backed full-year expectations as it reported a jump in first-half profit as revenues saw their biggest increase in five years despite a challenging backdrop.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | +6.15% | +43.60 | 753.00 |
| 2 |  |
Astrazeneca Plc | +4.34% | +464.00 | 11,164.00 |
| 3 |  |
International Consolidated Airlines Group S.a. | +3.52% | +5.45 | 160.40 |
| 4 |  |
Intertek Group Plc | +1.99% | +85.00 | 4,356.00 |
| 5 |  |
Rolls-royce Holdings Plc | +1.95% | +3.70 | 193.30 |
| 6 |  |
Hsbc Holdings Plc | +1.85% | +11.90 | 654.20 |
| 7 |  |
Centrica Plc | +1.57% | +2.10 | 135.45 |
| 8 |  |
Unilever Plc | +1.17% | +49.00 | 4,229.50 |
| 9 |  |
British American Tobacco Plc | +1.00% | +26.50 | 2,667.50 |
| 10 |  |
Bae Systems Plc | +0.98% | +9.00 | 930.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | -2.31% | -52.00 | 2,196.00 |
| 2 | Rightmove Plc | -2.24% | -12.40 | 540.20 | |
| 3 |  |
Itv Plc | -1.88% | -1.36 | 71.08 |
| 4 |  |
Carnival Plc | -1.87% | -24.50 | 1,285.50 |
| 5 |  |
Kingfisher Plc | -1.82% | -4.60 | 247.70 |
| 6 |  |
Dcc Plc | -1.80% | -83.00 | 4,529.00 |
| 7 |  |
St. James’s Place Plc | -1.79% | -17.80 | 975.60 |
| 8 |  |
Antofagasta Plc | -1.63% | -27.00 | 1,626.50 |
| 9 |  |
Flutter Entertainment Plc | -1.63% | -250.00 | 15,090.00 |
| 10 |  |
Crh Plc | -1.51% | -70.00 | 4,580.00 |
US close: Stocks fall, Dow snaps historic winning streak
Wall Street stocks ended in negative territory on Thursday, snapping the Dow Jones Industrial Average‘s longest winning streak since 1987.
The index had recorded gains for 13 consecutive sessions, but the streak ended with a 0.67% drop, closing at 35,282.72.
Meanwhile, the S&P 500 declined 0.64% to settle at 4,537.41, while the tech-heavy Nasdaq Composite Index fell 0.55% to end the day at 14,050.11.
Thursday’s downturn comes despite an array of economic reports that exceeded expectations earlier in the day.
On the currency front, the dollar was last 0.05% stronger on sterling at 78.19p, while it advanced 0.03% to stand at 91.12 euro cents.
The greenback was also gaining against the yen, rising 0.13% to change hands at JPY 139.66.
“GDP came in much stronger than expected, as did initial jobless claims, representing the lowest figure since February,” noted Ryan Brandham at Validus Risk Management.
“These figures illustrate the resiliency of the US economy and labour market.
“The September FOMC is still relatively far away, but if the positive trend in data continues, the likelihood of another rate hike will increase.”
US economy outpaces second-quarter expectations, job market tightens
On the economic front, the American economy showed more vigorous growth than expected in the second quarter according to fresh data from the Department of Commerce.
On a seasonally-adjusted basis, the nation’s gross domestic product (GDP) posted a quarterly annualised expansion of 2.4%.
That outperformed the growth of 2.0% projected by economists surveyed by Dow Jones Newswires.
However, household consumption failed to meet expectations, showing an increase at a rate of 1.6%, slightly under the 1.8% forecasted by Bank of America.
On the employment front, the US job market showed signs of tightening over the previous week, defying expectations.
Data from the Department of Labor indicated that initial unemployment claims decreased by 7,000 for the week ended 22 July, landing at 221,000.
That outperformed the forecasted figure of 235,000 by economists.
Furthermore, the four-week moving average, designed to minimise data volatility, fell by 3,750 to reach 233,750.
Meanwhile, continuing claims saw a decrease of 59,000 to 1.69 million.
The US trade deficit in goods with the rest of the world contracted more than anticipated last month.
Seasonally-adjusted figures from the Department of Commerce showed a 4.4% month-on-month reduction in the goods trade deficit to $87.8bn, beating economist forecasts of a $91.5bn deficit.
While increased by 0.2% compared to May, reaching $162.5bn, imports decreased by 1.4% to $250.3bn.
Lastly, the nation saw a substantial increase in orders for durable goods – items intended to last for three years or more – last month, primarily fuelled by civilian jet orders.
Seasonally-adjusted durable goods orders leaped at a month-on-month pace of 4.7% to reach $302.5bn, far surpassing the predicted 1.5% rise.
Excluding the transportation sector, orders grew by 0.6%, in contrast with the forecasted stagnation.
Transportation orders, driven by a 69.4% rise in civilian aircraft and parts, climbed by 12.1% to $115.3bn.
Furthermore, capital goods orders, excluding defence and aircraft, increased by 0.2% to $74.1bn, defying the predicted 0.1% decline.
Meta Platforms soars as eBay, Southwest and Chipotle falter
In equity markets, Facebook parent Meta Platforms climbed 4.4% on the back of the social media giant’s impressive quarterly results, which beat Wall Street’s expectations.
On the downside, eBay shares plummeted 10.53% after a softer-than-expected earnings outlook was released overnight.
Southwest Airlines shares also faced turbulence, with the low-cost carrier’s stock dropping 8.94%.
The company disclosed that its earnings had not yet returned to pre-pandemic levels, causing investor confidence to wane.
Chipotle Mexican Grill didn’t fare well either, as shares of the fast-casual restaurant chain dropped by 9.81%.
The company, known for its popular burrito offerings, blamed the inflationary environment for impacting the pricing of its most popular menu items.
Friday newspaper round-up: UK property, shops, Ford
That buying a property – any property – in the UK is increasingly the preserve of the rich will come as no surprise to low-income households. But official data shows that the middle classes are increasingly squeezed, with only the cheapest 10% of houses now affordable (no more than five times a household’s income according to the Office for National Statistics) to middle-income England. – Guardian
The Charity Commission has closed a preliminary investigation into concerns about governance at a charity set up by the UK’s richest person, Sir Jim Ratcliffe, which helped fund a £16m luxury clubhouse for an exclusive French Alps club where he and his daughter have skied for years. The UK charity watchdog announced on Thursday that it had closed its “regulatory compliance case” into the Jim Ratcliffe Foundation after finding that “the charity’s activities further its purposes and that there is no further role for the regulator”. – Guardian
Women are 50pc more likely than men to lose their jobs in the artificial intelligence (AI) race, according to a new study that predicts millions more roles will be automated by 2030. McKinsey said around 12 million jobs will be replaced by AI in the US alone over the next seven years. The management consultancy said women will be more affected by companies replacing staff with chatbots because they are more likely to hold “lower-wage jobs”. – Telegraph
About 6,000 shops have closed across Britain over the past five years as vacancy rates reach “critical levels”, new data shows. Helen Dickinson, chief executive of the British Retail Consortium (BRC), said crippling business rates and the impact of the Covid lockdowns were a “key part of decisions to close stores and think twice about new openings”, while rising interest rates and inflationary pressures were also to blame. – The Times
Ford Motor Company upgraded its annual profit guidance last night after beating expectations on Wall Street as supply chain issues continue to ease. Earnings at the American automotive group more than doubled in the last quarter amid robust demand for its vehicles and strong pricing of trucks and vans. – The Times
