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London open: Stocks fall as BP shines, Diageo tumbles
London stocks fell in early trade on Tuesday as investors waded through a barrage of earnings from the likes of BP, Standard Chartered and Diageo, and looked ahead to rate announcements from the Federal Reserve and the Bank of England this week.
At 0845 BST, the FTSE 100 was down 0.5% at 8,252.64.
A survey out earlier from the British Retail Consortium and NielsenIQ showed that shop inflation was unchanged in July, but cost pressures were “lurking over the horizon” as commodity prices remained at risk from climate change and geopolitical tensions.
Shop price annual inflation was unchanged at 0.2%, below the three-month average rate of 0.3%, while annual growth remained at its lowest rate since October 2021.
Non-food remained in deflation at -0.9% in July, up from -1.0% in the preceding month, while food inflation slowed to 2.3% from 2.5% in June. A poor summer and weak demand saw clothing and footwear prices down for the seventh consecutive month while book prices also fell.
Fresh food inflation slowed further in July, to 1.4% from 1.5% in June. This is below the three-month average rate of 1.6%. Inflation is its lowest rate since November 2021.
“The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024. However this shows signs of reversing, suggesting renewed pressure on food prices in the future,” said BRC chief executive Helen Dickinson.
Sports gatherings for Wimbledon and the Euros benefited from discounted snacking items such as crisps and soft drinks, she added.
“With the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon.”
In equity markets, Diageo tumbled as the drinks maker reported a drop in full-year organic operating profit, citing a weaker performance in Latin America and the Caribbean (LAC).
Accounting software firm Sage was also in the red despite reiterating guidance and delivering in-line revenue growth for the first nine months of the year.
Croda fell as the chemicals company cut its full-year profit outlook, pointing to a weaker-than-expected performance in the life sciences segment, with continued destocking in crop protection and consumer health.
On the upside, Asia-focused bank Standard Chartered was a high riser as it unveiled its biggest-ever share buyback and lifted guidance as interim earnings beat estimates.
The company said it would buy back $1.5bn in shares starting immediately. Pre-tax profit for the first six months of the year rose 5% to $3.5bn, compared with average forecasts of $3.46bn.
StanChart said it now expects operating income to grow more than 7% at constant currency rates compared with a previous projection of between 5% and 7%.
BP gushed higher after saying it swung into the red on a reported basis in the second quarter due to $2.77bn of so-called “adjusting items”, but the energy giant beat market forecasts on an underlying basis and unveiled another $1.75bn share buyback programme.
Weir Group gained as the engineering firm reported a small rise in first-half adjusted profits and said that strong aftermarket demand had bolstered its project outlook, but said full-year revenues will likely miss forecasts.
Flutter Entertainment was boosted as Citi opened a ‘positive catalyst watch’ on the shares ahead of results on 13 August.
St James’s Place surged after announcing plans to cut costs by £100m a year by 2027, with anticipated cumulative net savings of nearly £500m through to 2030.
Greggs gained as the bakery chain lifted its interim dividend and reported a jump in profit and revenue as it benefited from an expanded food and drinks range.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
St. James’s Place Plc | +24.26% | +135.50 | 694.00 |
| 2 |  |
Standard Chartered Plc | +5.09% | +37.00 | 763.80 |
| 3 |  |
British Land Company Plc | +2.03% | +8.20 | 411.80 |
| 4 |  |
Hiscox Ltd | +1.61% | +20.00 | 1,266.00 |
| 5 |  |
Carnival Plc | +1.48% | +18.00 | 1,230.50 |
| 6 |  |
Bp Plc | +1.48% | +6.70 | 459.70 |
| 7 |  |
Burberry Group Plc | +1.47% | +10.80 | 746.40 |
| 8 |  |
Marks And Spencer Group Plc | +0.98% | +3.20 | 328.60 |
| 9 |  |
Admiral Group Plc | +0.97% | +26.00 | 2,697.00 |
| 10 |  |
Intertek Group Plc | +0.93% | +46.00 | 4,986.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Diageo Plc | -8.24% | -210.00 | 2,337.50 |
| 2 |  |
Ocado Group Plc | -6.08% | -26.30 | 406.30 |
| 3 |  |
Croda International Plc | -4.82% | -198.00 | 3,906.00 |
| 4 |  |
Glencore Plc | -2.97% | -12.70 | 414.75 |
| 5 |  |
Bhp Group Limited | -1.93% | -41.00 | 2,083.00 |
| 6 |  |
Lloyds Banking Group Plc | -1.87% | -1.14 | 59.96 |
| 7 |  |
Sage Group Plc | -1.79% | -19.50 | 1,067.00 |
| 8 |  |
Anglo American Plc | -1.65% | -38.50 | 2,301.00 |
| 9 |  |
Astrazeneca Plc | -1.62% | -200.00 | 12,164.00 |
| 10 |  |
Rio Tinto Plc | -1.45% | -72.50 | 4,917.00 |
US close: Stocks broadly flat as investors await tech earnings
US stocks started the new trading week in subdued fashion, with markets rangebound ahead of hotly anticipated earnings reports from the likes of Microsoft, Meta, Amazon and Apple over the next few days.
The Dow finished the day down 0.1%, while the S&P 500 and Nasdaq rose just 0.1%.
“After disappointment from Tesla and Alphabet, there’s a lot riding on big tech updates this week. Investors want stellar results and anything less will be a disappointment that will undoubtedly lead to further sell-offs,” said Danni Hewson, AJ Bell’s head of financial analysis.
An upcoming meeting at the Federal Reserve on Wednesday was also likely keeping investors cautious, though no change in policy is expected just yet.
“With two more inflation and payroll reports due before September, there is little chance the Fed commits to a cut in September this far out,” said Gennadiy Goldberg, head of US rates strategy at TD Securities.
“Powell and the statement would certainly hint that a cut is coming, but markets may view this as disappointing given investors are more than fully priced for September.”
McDonald’s outperforms
Shares in fast food giant McDonald’s were up nearly 4% by the close despite posting quarterly revenue and earnings that fell short of expectations, as the company reiterated its guidance for the full year.
Insurance group Enstar fell sharply despite agreeing to be bought by investment firm Sixth Street in a $5.1bn deal. Liberty Strategic Capital, JC Flowers & Co and other institutional investors have also agreed to participate in the deal, which will see Enstar shareholders receive $338 per share in cash.
Energy stocks were performing badly as the price of oil declined, with Exxon and Chevron both in the red. WTI crude was down 1.6% at $75.92 a barrel – its lowest level in nearly four weeks.
Occidental Petroleum was also lower as investors reacted to nearly $1bn of asset sales, including disposing of its Delaware Basin assets to Permian Resources for $818m.
Tuesday newspaper round-up: House prices, Ofgem, NatWest
House prices are expected to rise over the second half of the year across the UK, according to a forecast, with the market bolstered by more people selling their homes. Prices are likely to increase by 2% towards the end of 2024, Zoopla has predicted. The improved outlook for the housing market was the result of an increased number of homes for sale, the property portal said. The number of sales agreed in the four weeks to 21 July was 16% higher than the same period a year ago and the average estate agent had more homes for sale than at any point in the past six years. – Guardian
Ofgem is pushing ahead with plans to make it easier for British homeowners to reap the benefits of using electric car chargers and heat pumps at non-peak times, as the grid becomes more reliant on wind and solar power. The energy regulator for Great Britain has put forward proposals to encourage flexible electricity use in the home by creating a single register in which flexibility service providers (FSPs) can access more markets and better rates for owners of energy assets such as EV chargers and battery storage systems. – Guardian
Rishi Sunak’s decision to scale back HS2 cost the taxpayer more than £2bn, new documents have shown. In the latest annual report for the high-speed railway, bosses have revealed the fees associated with cancelling “phase two” of the project between Birmingham and Manchester. This includes a £1.1bn writedown for work already carried out on the northern leg, as well as an additional £1bn in accountancy charges. – Telegraph
A “Tell Sid”-style sale of NatWest shares to the public by the government has been scrapped amid fears that it would have cost taxpayers as much as £450 million. The plan to offload part of the state’s near-20 per cent stake in the FTSE 100 bank to individual investors had been floated by the last Conservative government in November. – The Times
BDO and Forvis Mazars have been warned that they risk being banned from signing off the accounts of some of their biggest clients if the quality of their audit work does not improve soon. The two accountancy firms, which are the fifth and sixth largest auditors in Britain respectively, have been scolded once again by the Financial Reporting Council for their work over the past year, which the regulator found to be “significantly below [its] expectations”. – The Times
