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London open: Stocks nudge up after borrowing figures; Fed minutes eyed
London stocks nudged higher in early trade on Wednesday as investors mulled UK borrowing figures and looked ahead to the release of the latest Federal Reserve minutes.
At 0840 BST, the FTSE 100 was up 0.1% at 8,279.61.
Figures released earlier by the Office for National Statistics showed that government borrowing was higher than expected in July.
Borrowing came in at £3.1bn, up £1.8bn on July 2023 and £100m higher than the Office for Budget Responsibility was expecting. It was also above the £2.5bn expected by economists and marked the highest borrowing figure for July since 2021.
Cumulative borrowing in the first four months of the fiscal year was £51.4bn. This was £500m less than in the same period a year earlier, but £4.7bn more than the OBR had forecast in March.
Jessica Barnaby, deputy director for public sector finances at the ONS, said: “Revenue was up on last year, with income tax receipts in particular growing strongly.
“However, this was more than offset by a rise in central government spending where, despite a reduction in debt interest, the cost of public services and benefits continued to increase.”
Alex Kerr, UK economist at Capital Economics, said: “Overall, today’s release highlights the tight fiscal backdrop that the Chancellor faces ahead of her first Budget on 30th October. We still think that she will look to raise an additional £10bn a year via higher taxes in the Budget and increase borrowing by around £7bn a year.”
Looking ahead to the rest of the day, the Fed minutes are due after the close of UK markets at 1900 BST.
Richard Hunter, head of markets at Interactive Investor, said: “Investors will be looking for reassurance that the Fed is still on track and has not fallen behind the curve in cutting rates too late to avoid the economy entering recessionary territory.”
In equity markets, heavily-weighted miners were the top gainers on the FTSE 100, with Anglo American, Rio Tinto, Antofagasta and Glencore all up.
Public bus operator Mobico surged as it held annual guidance after a jump in adjusted interim operating profit driven by positive demand and cost cuts.
Profit for the six months to June 30 rose 23.8% to £71.2m while on a pre-tax basis the company narrowed losses to £1.5m from £52m a year earlier. No dividend was declared as the group, formerly known as National Express, continues to deleverage.
It still expects adjusted operating profit for 2024 to be within the range of £185m to £205m.
Elsewhere, Barratt and Redrow were in focus again as their merger came one step closer to regulatory approval after the Competition and Markets Authority said the allowances made by the companies may just be enough to get the green light.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Limited | +2.38% | +49.00 | 2,111.00 |
| 2 |  |
Rio Tinto Plc | +1.71% | +81.50 | 4,858.50 |
| 3 |  |
Jd Sports Fashion Plc | +1.58% | +1.95 | 125.15 |
| 4 |  |
Banco Santander S.a. | +1.55% | +5.50 | 361.00 |
| 5 |  |
Rentokil Initial Plc | +1.52% | +7.30 | 487.60 |
| 6 |  |
Diageo Plc | +1.47% | +36.00 | 2,477.50 |
| 7 |  |
Anglo American Plc | +1.40% | +31.50 | 2,275.50 |
| 8 |  |
Halma Plc | +1.22% | +31.00 | 2,580.00 |
| 9 |  |
Melrose Industries Plc | +1.17% | +5.80 | 503.40 |
| 10 |  |
Admiral Group Plc | +1.10% | +32.00 | 2,932.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Aib Group Plc | -1.89% | -8.50 | 441.50 |
| 2 |  |
Wheaton Precious Metals Corp. | -1.47% | -70.00 | 4,700.00 |
| 3 |  |
Bt Group Plc | -1.36% | -1.85 | 134.45 |
| 4 |  |
3i Group Plc | -0.93% | -30.00 | 3,187.00 |
| 5 |  |
Shell Plc | -0.79% | -21.50 | 2,711.50 |
| 6 |  |
Flutter Entertainment Plc | -0.66% | -105.00 | 15,800.00 |
| 7 |  |
Natwest Group Plc | -0.58% | -2.00 | 345.30 |
| 8 |  |
Vodafone Group Plc | -0.49% | -0.36 | 73.52 |
| 9 |  |
Standard Chartered Plc | -0.43% | -3.20 | 746.80 |
| 10 |  |
Carnival Plc | -0.42% | -4.50 | 1,070.50 |
US close: Stocks snap eight-day win streak as investors await Powell speech
US stocks inched lower on Tuesday, bringing Wall Street’s longest winning streak of 2024 to a close with investors taking profits after eight straight days of gains for the S&P 500 and Nasdaq.
The Dow and S&P 500 both finished the session down 0.2% while the Nasdaq slipped 0.3%.
After a stellar run over the past two weeks – which saw the S&P 500 surge 7.9% and the Nasdaq jump 10.4% on the back of improving economic data and rising rate-cut expectations – risk appetite was dampened ahead of two major events for financial markets in the coming days: the release of minutes from the Federal Reserve’s most recent policy meeting on Wednesday and the Jackson Hole symposium on Friday.
Jackson Hole, which will see central bankers from across the world gather to discuss policy matters, will feature a hotly anticipated speech from Fed chair Jerome Powell, with investors eagerly awaiting any hint at what how the Fed will alter interest rates over the rest of the year.
“Maybe it’s just a case of the market catching its breath, biding time as the anticipation builds for Fed chair Powell’s grand entrance at the Jackson Hole showdown later this week,” said Stephen Innes, managing partner at SPI Asset Management.
“After all, the markets have been on a tear, bouncing back from the early August chaos as fresh economic data fanned the flames of hope for a sooner – and perhaps deeper – rate cut from the Fed.”
The US Dollar Index, which tracks the price of the greenback against a basket of other currencies, was down a further 0.5% at 101.37, its lowest in seven months on anticipation of monetary easing. The move sent gold prices to new record highs, with spot gold touching a new peak of $2,531.60 earlier in the day.
Market movers
Gold miners were among the best performers of the day, tracking bullion higher, such as Barrick Gold, Newmont, Kinross, Harmony Gold Mining Company and Franco-Nevada.
Struggling aerospace giant Boeing dropped sharply after grounding its 777X test fleet – a model which is already years behind schedule – due to damage in one of the aircraft’s structures.
Johnson & Johnson inched higher after agreeing to buy V-Wave, a privately held company focused on developing treatment options for patients with heart failure, for up to $1.7bn.
Palo Alto Networks shares advanced after the cybersecurity company beat both profit and revenue expectations in its fourth quarter.
Home improvement retailer Lowe’s slipped after posting quarterly revenues that fell short of estimates and lowered its full-year profit guidance.
Meanwhile, Bank of America declined after a regulatory filing revealed that Berkshire Hathaway has sold off more shares, offloading 13.9m to take its holding down to 11.9%.
Wednesday newspaper round-up: Waitrose, McDonald’s, Crown Agents
Waitrose is planning to open 100 convenience stores over the next five years as part of a £1bn-plus investment in new outlets and shop refurbishments. The upmarket grocery chain is planning to unveil a revamped outlet in Finchley Road, north London, on Wednesday. This will kick off a new phase of expansion with its first new store in six years in Hampton Hill, west London, by the end of this year. – Guardian
Two former bosses of the collapsed department store chain BHS have been ordered to pay £110m to creditors in relation to breaching their corporate duties. The ruling against Dominic Chappell, the former chief executive of BHS whose Retail Acquisitions team bought the chain for £1 from Philip Green in 2015, and his former colleague Lennart Henningson comes eight years after the retailer collapsed into administration owing creditors, including its pension fund, more than £1bn. – Guardian
Union chiefs who have called three months of rail strikes on London North Eastern Railway (LNER) are lobbying to have Royal Mail train drivers they also represent hired on the East Coast main line. Train drivers’ union Aslef said LNER could make strides toward avoiding industrial action by hiring experienced crews, including those currently being let go by Royal Mail. – Telegraph
McDonald’s plans to create 24,000 jobs in the UK and the Republic of Ireland over the next four years as it opens more than 200 restaurants in a sign of faith in the high street. The expansion, its biggest since 2002, is part of a £1 billion investment by the chain and its franchisees, which already have 1,435 outlets in the UK employing 171,415 people. Four fifths of its restaurants are owned and operated by franchisees. – The Times
The 191-year-old Crown Agents survived existential crises, including the demise of the British empire and one of the biggest financial scandals of the 1970s, but cuts in government funding and the strains of a pension liability mean that it will not reach its 200th anniversary. The not-for-profit organisation, founded in 1833 to conduct financial transactions with British colonies, was placed into liquidation this month. Directors of Crown Agents, which had become an international development agency, filed a winding-up petition after concluding that they would not be able to attract the funding required to keep it trading. Its 150 staff have been made redundant. – The Times
