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London open: Stocks edge up as investors mull borrowing figures
London stocks edged up in early trade on Tuesday after a mostly firmer session on Wall Street, as investors digested the latest UK borrowing figures.
At 0825 BST, the FTSE 100 was up 0.2% at 7,271.83.
Data released earlier by the Office for National Statistics showed that public sector net borrowing rose less than expected in July, to £4.3bn. This was up by £3.4bn on July 2022, but below the Office for Budget Responsibility’s forecast of £6bn and consensus expectations of £5bn.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “July’s public finances figures continued the recent run of better-than-expected news on the fiscal position.
“But with interest rates still rising and a mild recession on its way, we continue to think the Chancellor will struggle to unveil a large package of permanent tax cuts in the Autumn Statement while still adhering to his fiscal rules.”
In equity markets, RS Group – formerly Electrocomponents – was the top gainer on the FTSE 100 after an upgrade to ‘outperform’ at BNPP Exane. Recruiter Hays also got a boost from the same upgrade.
Engineering and consultancy company Wood Group rallied after it posted better-than-expected adjusted interim earnings, driven by a strong order book, and said annual profit would be ahead of forecasts.
Revenue rose 16% to $3bn for the six months to June 30 with adjusted core earnings up 8.5% to $202m.
Looking forward, Wood said adjusted core earnings margin was expected to be flat in the nearer term at around 7%, partly reflecting investments being made in the business and the level of low margin pass-through revenue activity
“As such, adjusted EBITDA for full-year 2023 is expected to be ahead of our previous expectations and within our medium-term target of mid to high single digit growth,” the company said.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | +2.86% | +14.60 | 524.60 |
| 2 |  |
Glencore Plc | +1.94% | +8.15 | 428.15 |
| 3 |  |
Crh Plc | +1.79% | +79.00 | 4,495.00 |
| 4 |  |
Anglo American Plc | +1.78% | +35.00 | 2,005.00 |
| 5 |  |
Rio Tinto Plc | +1.47% | +68.00 | 4,685.50 |
| 6 |  |
Flutter Entertainment Plc | +1.46% | +195.00 | 13,560.00 |
| 7 |  |
Scottish Mortgage Investment Trust Plc | +1.34% | +8.60 | 651.60 |
| 8 |  |
Antofagasta Plc | +1.33% | +18.50 | 1,408.50 |
| 9 |  |
Kingfisher Plc | +1.32% | +3.00 | 229.60 |
| 10 |  |
Centrica Plc | +1.32% | +1.90 | 146.05 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Direct Line Insurance Group Plc | -0.77% | -1.20 | 155.10 |
| 2 |  |
Associated British Foods Plc | -0.72% | -14.00 | 1,941.00 |
| 3 |  |
Rentokil Initial Plc | -0.51% | -3.00 | 580.80 |
| 4 |  |
Hikma Pharmaceuticals Plc | -0.44% | -9.00 | 2,051.00 |
| 5 |  |
Unilever Plc | -0.34% | -13.50 | 3,955.50 |
| 6 |  |
Bhp Group Limited | -0.27% | -6.00 | 2,196.00 |
| 7 |  |
Phoenix Group Holdings Plc | -0.20% | -1.00 | 506.20 |
| 8 |  |
Ocado Group Plc | -0.14% | -1.00 | 733.40 |
| 9 |  |
Coca-cola Hbc Ag | -0.13% | -3.00 | 2,264.00 |
| 10 |  |
Spirax-sarco Engineering Plc | -0.08% | -8.00 | 9,804.00 |
US close: Stocks mixed as investors turn to Jackson Hole
Stocks on Wall Street closed in a mixed fashion on Monday, rebounding somewhat after hitting two-month lows in the prior week.
By the close, the Dow Jones Industrial Average had shed a modest 0.11% to end the session at 34,463.69, while the broader S&P 500 index saw an uptick of 0.69% to 4,399.77.
Leading the way among the primary indices, the tech-heavy Nasdaq Composite jumped 1.56% to settle at 13,497.59.
On the currency front, the dollar was last down 0.01% against sterling at 78.38p, while it edged down 0.02% on the common currency to trade at 91.76 euro cents.
The greenback also dipped slightly against the yen, by 0.03% to change hands at JPY 146.18.
“European stock indices wiped out most of their early Monday morning gains as US investors turn towards Fed chair Jerome Powell’s Friday speech at the Jackson Hole symposium, and await second quarter earnings by Zoom and Nvidia,” said IG senior market analyst Axel Rudolph earlier.
“The People’s Bank of China’s underwhelming 10-basis point interest rate cut of its one-year loan prime rate to 3.45% did little to investor confidence, with US long-dated yields rising to levels last seen in 2008 and the greenback sticking to its upward trajectory.”
People’s Bank of China announces moderate rate cut, focus shifts to Fed conference
On the economic front, the People’s Bank of China (PBoC) earlier rolled out a modest rate cut, opting for a 10 basis points reduction to set the one-year loan prime rate at 3.45%.
That fell short of the broader market prediction of a 15 basis points cut.
Adding to the surprises, the five-year loan prime rate – a significant influence on mortgage prices – remained static at 4.20%.
That stagnation is particularly noteworthy given that financial analysts were banking on a 15 basis point reduction there as well, especially in the wake of the medium-term loan rate decrease just a week prior.
“The underwhelming LPR announcement strengthens our view that the PBoC is unlikely to embrace the much larger rate cuts that would be required to revive credit demand,” said analysts at Capital Economics.
“Hopes for a stimulus-led turnaround in economic activity largely depend on the prospect of greater fiscal support.”
On American shores meanwhile, anticipation was building around the upcoming Federal Reserve’s annual Jackson Hole conference, set to span from Thursday to Saturday.
The finance world was all ears after last week’s FOMC meeting minutes instigated a surge in 10-year Treasury yields, pushing them to their highest levels in 15 years.
Palo Alto Networks soars while AMC and Nikola face declines
In equities, cybersecurity company Palo Alto Networks surged 14.84% after it surpassed expectations with its quarterly earnings report released after Friday’s closing bell.
On the downside, AMC Entertainment Holdings faced a sharp decline of 23.72% ahead of its contentious stock conversion strategy.
Under the plan, AMC was set to transition its preferred equity units into common stock, alongside a reverse 10-for-one stock split.
Similarly, electric truck maker Nikola Corporation dropped 22.96% as it unveiled updates to its voluntary battery-related recall covering more than 200 vehicles.
Adding to the pressure, Nikola divulged plans to issue $325m in senior convertible bonds through a direct offering.
Tuesday newspaper round-up: Working tenants, Arm, Home Reit
Millions of Britons did not switch on their heating during cold snaps last winter in an attempt to save on their energy bills as the cost of gas and electricity soared. Almost nine in 10 households tried to cut back on their energy usage last winter, while almost half of all British households, or 13m homes, said they did not turn on their heating when it got cold, according to a survey of 4,000 people by the consumer group Which?. – Guardian
A third of working tenants in England do not have enough savings to pay rent if they lose their job, putting them at risk of losing their home, according to research by the housing charity Shelter. Record rents and the rising cost of other household bills are putting tenants’ finances under pressure and mean many are unable to set money aside for emergencies. – Guardian
Britain’s post-Brexit immigration system has helped make the country even more attractive to foreign workers than the European Union, according to job site Indeed. Interest in British job postings from international candidates has soared since the post-Brexit immigration overhaul in 2021, Indeed said. Views of UK job listings on Indeed’s website from people outside of Britain have risen by 142pc since early 2021 and are now far higher than at any point since at least 2017. – Telegraph
Arm, the British chip innovator, has confirmed its intention to float on New York’s Nasdaq exchange, setting the stage for what is likely to be the biggest stock market listing this year. The Cambridge-based company did not reveal the number of shares it was selling or the pricing of its offering in its filing yesterday with the US Securities and Exchange Commission. Last week, however, Softbank bought a 25 per cent stake in Arm that valued it at $64 billion, returning money to its Vision Fund and potentially setting a floor for the valuation. Analysts at Redburn said the expectation for the deal was in the $37 billion to $44 billion range, while the total range could be anything between $19 billion and $76 billion. – The Times
The board of Home Reit and its new advisers have been given permission by investors to redraw its investment strategy to get the business back on track. The property group, which billed itself as a “landlord for the homeless”, had asked its shareholders to accept a number of changes at a general meeting yesterday. – The Times
