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London open: Stocks fall as Shell, BP gush lower
London stocks fell in early trade on Tuesday, with energy issues in the red as oil prices declined.
At 0915 BST, the FTSE 100 was down 0.4% at 8,322.10.
Richard Hunter, head of markets at Interactive Investor, said: “The absence of any obvious catalysts also led to a tepid opening in the UK, with the main indices struggling for direction after a buoyant few trading sessions. There was some fairly lacklustre early buying interest in the mining stocks, although a drifting oil price overnight weighed slightly on the oil majors BP and Shell.
“Although largely overtaken by subsequent events, the release of the Federal Reserve minutes tomorrow will nonetheless garner investor attention. Of more topical significance, however, will be Chair Powell’s comments at the Jackson Hole Symposium on Friday, where clues will be sought on the very latest Fed thinking.
“The current consensus is that an interest rate cut in September is now all but nailed on, with some debate over the size of the reduction. A move of 0.25% has regained its position as being most likely, with thoughts of a cut of 0.5% now subsiding given the most recent data, although the release of non-farm payroll numbers in early September will be pivotal, as proved to be the case earlier this month.”
In equity markets, BT Group slumped following a Telegraph report that Sky is poised to strike a deal to launch its broadband services on CityFibre’s network from next year. BT currently hosts all of Sky’s roughly 5.7m broadband customers on its Openreach network.
BP and Shell gushed lower as oil prices neared their lowest levels this year amid hopes of a ceasefire in Gaza.
Wood Group lost ground as it said it swung to an operating loss in the first half as revenue fell, but the engineering firm backed its outlook for this year and the next.
In the six months to the end of June, the company swung to a statutory operating loss of $899m from a profit of $23m in the same period a year earlier, with revenue down 4.8% to $2.8bn.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | +1.54% | +5.50 | 363.50 |
| 2 |  |
Intercontinental Hotels Group Plc | +1.15% | +86.00 | 7,574.00 |
| 3 |  |
South32 Limited | +0.91% | +1.40 | 155.80 |
| 4 |  |
International Consolidated Airlines Group S.a. | +0.90% | +1.55 | 173.70 |
| 5 |  |
Flutter Entertainment Plc | +0.78% | +125.00 | 16,085.00 |
| 6 |  |
Pershing Square Holdings Ltd | +0.77% | +28.00 | 3,658.00 |
| 7 |  |
Smurfit Westrock Plc | +0.69% | +23.00 | 3,334.00 |
| 8 |  |
3i Group Plc | +0.69% | +22.00 | 3,213.00 |
| 9 |  |
Ferguson Enterprises Inc. | +0.63% | +100.00 | 15,950.00 |
| 10 |  |
Experian Plc | +0.58% | +21.00 | 3,617.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bt Group Plc | -6.08% | -8.85 | 136.75 |
| 2 |  |
Segro Plc | -2.23% | -20.00 | 876.00 |
| 3 |  |
Shell Plc | -2.17% | -61.00 | 2,752.00 |
| 4 |  |
Vodafone Group Plc | -1.88% | -1.42 | 74.08 |
| 5 |  |
Bp Plc | -1.84% | -8.15 | 433.90 |
| 6 |  |
Woodside Energy Group Ltd | -1.61% | -22.00 | 1,342.00 |
| 7 |  |
Centrica Plc | -1.23% | -1.60 | 128.20 |
| 8 |  |
Hsbc Holdings Plc | -0.99% | -6.60 | 657.00 |
| 9 |  |
Lloyds Banking Group Plc | -0.98% | -0.58 | 58.64 |
| 10 |  |
Imperial Brands Plc | -0.83% | -18.00 | 2,155.00 |
US close: Stocks extend gains as rate-cut expectations rise
US stocks delivered another day of gains on Monday, helped by dovish comments from a prominent Federal Reserve policymaker, as the S&P 500 and Nasdaq extended their winning streaks into the eight straight session.
The S&P 500 finished 1% higher at 5,608.25, sitting just 1% shy of its all-time closing high of 5,667.20 set last month. The index has now gained 7.6% since 7 August.
The Nasdaq jumped 1.4% to 17,876.77, while the Dow rose for the fifth consecutive day, gaining 0.6% to 40,896.53.
This week’s primary focus will be Federal Reserve chairman Jerome Powell’s speech at the central bank’s symposium in Jackson Hole, Wyoming on Friday, with market participants hoping to gain more insight into the Fed’s position on future rate cuts. Minutes from the Fed’s most recent policy meeting will also be out on Wednesday.
“The start of the week kicked off on a positive footing for stock index bulls with mostly further advances being made in low volume and volatility ahead of Wednesday’s FOMC minutes and the end of week Jackson Hole symposium,” said Axel Rudolph, senior technical analyst at IG.
The US dollar dropped to a seven-month low ahead of Powell’s comments later this week, with the Dollar Index slipping 0.1% to 101.20.
“Rate cut expectations of at least 25 basis points at the Fed’s September meeting and 94 basis points before year-end continue to put pressure on the US dollar,” Rudolph said.
Nevertheless, Minneapolis Fed president Neel Kashkari was helping equity market sentiment on Monday after saying that it was now time for the central bank to begin discussing potentially cutting US benchmark interest rates at its September meeting.
Kashkari told The Wall Street Journal: “The balance of risks has shifted, so the debate about potentially cutting rates in September is an appropriate one to have.”
He stated the Federal Reserve had made good progress on taming inflation but noted the labour market was showing “concerning signs”. Kashkari also stated that he did not see any reason to lower interest rates in increments of larger than a quarter percentage point due to layoffs remaining low and unemployment claims seemingly not suggesting a notable deterioration.
Market movers
Shares of The Estée Lauder Companies were falling as the cosmetics giant announced the retirement of its CEO after 16 years and gave a cautious outlook for the coming financial year. The news came as the company unveiled its results for the past financial year, in which net sales were down 2% at $15.6bn and diluted earnings per share dropped 61% to $1.08.
Chipmaker AMD jumped 5% on the back of an announcement to take over server maker ZT Systems for $4.9bn.
Sector peer Nvidia was also in demand, rising 4% ahead of its second-quarter earnings next week, with investors cheered by a positive research report from Goldman Sachs. The bank reiterated a ‘buy’ rating on the stock, citing its price-to-earnings ratio of 42 – well below its historical average.
HP dropped nearly 4% after analysts at Morgan Stanley cut their position on the stock from ‘overweight’ to ‘equal weight’, while McDonald’s saw a 3% boost after Evercore ISI lifted its target price on the shares from $300 to $320 and reiterated an ‘outperform’ rating.
Tuesday newspaper round-up: Missing yacht, City Airport, energy bills
Morgan Stanley International chairman Jonathan Bloomer is among those missing after a yacht carrying UK tech entrepreneur Mike Lynch sank off the coast of Sicily during a violent storm, an Italian official has said. Salvatore Cocina, head of the civil protection agency in Sicily, said Bloomer and Chris Morvillo, a lawyer at Clifford Chance, were among the six people missing. Lynch and his 18-year-old daughter, Hannah, were also unaccounted for as of late Monday. – Guardian
Ministers have approved London City airport’s application to expand, in a decision that has disappointed climate campaigners. The airport submitted a proposal to increase capacity from 6.5 million to 9 million passengers a year by putting on more weekend and early morning flights. Local campaigners and Newham council opposed the move, arguing the air and noise pollution would affect people living nearby and that it could potentially increase carbon emissions. – Guardian
A Labour MP whose constituency borders the proposed Sizewell C nuclear power station has been criticised for accepting a £2,000 donation from the developer behind the project. Jack Abbott, the newly appointed MP for Ipswich, is facing scrutiny over the decision to take cash from the French energy giant EDF earlier this month. – Telegraph
Energy bills for most households in Britain are expected to rise by an average of £146 to £1,714 a year from October 1, as wholesale gas prices rebound amid mounting global political turmoil. Ofgem is set to lift the price cap by 9 per cent, from £1,568 for the present quarter, when it updates the ceiling on Friday, according to Cornwall Insight, an industry forecaster. – The Times
