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London open: Stocks gain as investors eye Powell speech
London stocks rose in early trade on Thursday, taking their cue from a positive session on Wall Street, as investors eyed a speech by Federal Reserve chair Jerome Powell.
At 0925 BST, the FTSE 100 was up 0.3% at 8,305.44.
Powell is due to make a speech in Jackson Hole, Wyoming, on Friday, at the Fed’s annual conference of central bankers.
Philip Marey, senior US strategist at Rabobank said Powell is likely to signal a 25 basis points rate cut for September.
Marey said that with a full round of data between Jackson Hole and the September FOMC meeting, “it would be premature” for Powell to signal the exact size of a rate cut.
“However, he could indicate whether the baseline is 25 or 50 basis points. By expressing confidence in market stability and by indicating that the Fed is not behind the curve, he could indicate that 25 bps is the baseline scenario for September, rather than the 50 bps that some in the market want.”
In equity markets, sports apparel and footwear retailer JD Sports Fashion jumped to the top of the FTSE 100 after saying it saw a return to like-for-like growth in its second quarter, with its store rollout programme in North America and Europe providing a boost while the UK market remains subdued.
LFL sales were 2.4% higher than last year in the three months to 3 August, following a 0.7% year-on-year decline in the first quarter. The company maintained its profit guidance for the full year but said it “continues to be cautious on our outlook”.
Serco nudged up after it was awarded a $320m contract by the US Army Corps of Engineers to modernise the backup electrical plant at the US Space Force’s Pituffik Space Base in Greenland.
On the downside, Hays slumped after the recruiter posted a decline in full-year profit as it highlighted “a clear slowdown” in challenging markets.
In the year to the end of June, pre-tax profit slid 92% to £14.7m, while operating profit was down 46% to £105.1m. Net fees fell 12% to £1.1.bn.
Legal & General, Mondi, Schroders, Land Securities, Imperial Brands, Convatec, Just Group, Hammerson and Investec all fell as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Jd Sports Fashion Plc | +6.13% | +7.85 | 136.00 |
| 2 |  |
Flutter Entertainment Plc | +1.60% | +255.00 | 16,165.00 |
| 3 |  |
United Utilities Group Plc | +1.46% | +14.20 | 987.40 |
| 4 |  |
Unilever Plc | +1.42% | +67.00 | 4,800.00 |
| 5 |  |
Tesco Plc | +1.29% | +4.40 | 344.20 |
| 6 |  |
Prudential Plc | +1.24% | +8.20 | 671.00 |
| 7 |  |
Standard Chartered Plc | +1.24% | +9.20 | 753.80 |
| 8 |  |
Centrica Plc | +1.19% | +1.50 | 127.90 |
| 9 |  |
Associated British Foods Plc | +1.11% | +27.00 | 2,470.00 |
| 10 |  |
Marks And Spencer Group Plc | +1.10% | +3.60 | 331.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Investec Plc | -2.56% | -15.00 | 571.50 |
| 2 |  |
Bp 9% 2nd Prf | -2.15% | -3.50 | 159.50 |
| 3 |  |
Legal & General Group Plc | -1.86% | -4.30 | 226.70 |
| 4 |  |
Mondi Plc | -1.49% | -22.00 | 1,451.00 |
| 5 |  |
Glencore Plc | -1.35% | -5.60 | 407.70 |
| 6 |  |
Schroders Plc | -1.15% | -4.00 | 342.60 |
| 7 |  |
Banco Santander S.a. | -1.10% | -4.00 | 361.00 |
| 8 |  |
Antofagasta Plc | -0.95% | -17.50 | 1,831.50 |
| 9 |  |
Imperial Brands Plc | -0.88% | -19.00 | 2,130.00 |
| 10 |  |
Rio Tinto Plc | -0.73% | -35.50 | 4,800.00 |
US close: Stocks edge higher on FOMC minutes, NFP revision
US stocks edged higher on Wednesday, after minutes from the most recent Federal Reserve policy meeting and a downward revision to labour-market data cemented expectations for an interest-rate cut in September.
The Dow rose 0.14% to 40,890.49, the S&P 500 gained 0.42% to 5,620.85 while the Nasdaq advanced 0.57% to 17,918.99.
Minutes from the 30-31 July Federal Open Market Committee meeting released at 1400 EDT revealed that the “vast majority” of Fed officials thought it would “likely be appropriate” to ease monetary policy in September, as long as inflation trends continue as projected.
“Stocks stayed firmly in the green overnight as the Fed minutes all but locked in a September rate cut, especially with recent inflation data paving the way. But the surprise cameo from the NFP revision stole the show, sending bond yields on a downward spiral and delivering a body blow to the dollar,” said Stephen Innes, managing partner at SPI Asset Management.
The US economy created 818,000 fewer jobs than originally reported throughout the 12 months ended 31 March, according to the Labor Department’s preliminary annual benchmark revision. The Bureau of Labor Statistics stated annual job growth was nearly 30% less than the 2.9m initially reported for the period and marked the largest revision to total payrolls since 2009.
The 10-year US Treasury yield dropped to a low of 3.765% after the data, down from 3.818% on Tuesday, before recovering slightly by the close; while the US Dollar Index fell continued its downward path to its lowest levels since January.
Attention will now shift to the Federal Reserve’s economic symposium in Jackson Hole, Wyoming, on Friday with chairman Jerome Powell expected to speak on the central bank’s current opinion of the US economy.
Elsewhere on the macro front, US mortgage applications crashed 10.1% in the week ended 16 August, according to the Mortgage Bankers Association of America, reversing much of the prior week’s 16.8% increase. Applications to refinance a mortgage were down 15% despite a five basis point drop in benchmark mortgage rates to a fresh 15-month low, while applications to purchase a home fell 5%.
Retailers in focus
Shares in Target surged 11% after the discount retail giant posted a big quarterly earnings beat and upgraded its full-year profit outlook, even though it said full-year sales growth would be in the lower end of its guided range. Earnings per share for the second quarter surged 40% to $2.57, smashing the $2.18 expected by the market.
Heading the other way was department store Macy’s which tumbled 12% after cutting its full-year sales forecast as it delivered a mixed second-quarter report in which profits beat forecasts but sales came up short.
US-listed shares of Chinese ecommerce group JD.com tanked 4% after Walmart signalled its intention to dispose of its stake worth $3.7bn, causing the stock of the American retailer to rise 1%.
Meanwhile, TJ Maxx owner TJX Companies rose 6% after beefing up its full-year profit projections after a forecast-beating second quarter.
Thursday newspaper round-up: Asda, Post Office, M&S, Frasers Group
The owners of Asda are facing mounting pressure after figures showed the struggling supermarket chain’s share of the grocery market reached a “new nadir” as sales fell sharply this summer. The grocer’s sales fell 6.4% in the three months to 10 August, equivalent to more than £2bn in annual lost revenues, as it became the only member of the traditional “big four” supermarkets to see sales shrink, according to analysts at NIQ. – Guardian
Rachel Reeves is coming under renewed pressure to end the two-child benefit limit in October’s budget, after the Guardian revealed the chancellor is preparing to keep it in place. MPs and anti-poverty campaigners are warning that any delay in scrapping the policy will keep hundreds of thousands of children in poverty, with just weeks until Reeves unveils her first major fiscal package. -Guardian
The Post Office has spent more than £250m on legal fees linked to the Horizon IT scandal, a sum almost equivalent to the compensation paid out to the victims. Data obtained under the Freedom of Information Act revealed that the company had paid £256.9m to law firms and barristers’ chambers in the last decade, specifically in relation to the Horizon scandal. – Telegraph
Marks & Spencer is pushing to remove additives from its ready meals and sandwiches amid an outcry over so-called ultra-processed foods (UPFs). The supermarket is in heated discussions with food manufacturers in an effort to get rid of ingredients such as stabilisers, acidity regulators, antioxidants and emulsifiers from products sold under M&S’s Eat Well label, according to The Grocer. Such additives have long been common in supermarket products but have attracted fierce criticism recently over concerns they could be negatively impacting people’s health. – Telegraph
Frasers Group is stepping up its property-buying spree by adding another shopping centre to its portfolio. The FTSE 100 retailer majority-owned by Mike Ashley, is under offer to buy Fremlin Walk, an outdoor shopping centre, in Maidstone, from M&G Real Estate. The 350,000 sq ft scheme, which opened in 2005, is home to tenants including H&M, Boots, JD Sports and Pandora and generates an annual gross income of £4.3 million. In the autumn, a multi-brand anchor shop, which will be occupied by Frasers, Flannels and Sports Direct, store is to open. – The Times
