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London open: Stocks gain after retail sales, ahead of US data
London stocks edged up in early trade on Tuesday as investors mulled the latest UK retail sales figures and looked ahead to key US data releases.
At 0835 BST, the FTSE 100 was up 0.2% at 8,379.53.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “Today, the US will return from its long weekend and we could start seeing some action in the markets. It felt yesterday that the absence of the American markets revived the worries that we might see a rebound in US jobs figures this week – a scenario which would derail the Federal Reserve (Fed) doves, reshuffle the Fed cut expectations and give way to a potentially sizeable price action across different asset classes.
“Hiring and wage growth may have accelerated in August, for example, if that’s the case, the 50bp cut rates from the Fed will simply fall off the bus. And stronger-than-expected figures should, in the first place, let the US dollar recover a part of the recent losses, throw a floor under the US yields, disappoint indices and sectors that rely on rate cuts but give support to others – like the tech – who don’t really need the support of the Fed to do well.
“The jobs data will start flowing in from tomorrow, but investors will have a look at the final ISM figures today.”
The ISM manufacturing PMI for August is due at 1500 BST. Before that, the S&P Global manufacturing PMI, also for August, is scheduled for release at 1445 BST.
On home shores, data released earlier showed that retail sales were higher than last year in August despite already strong comparatives in 2023, though growth was relatively subdued amid a “challenging” environment that’s likely to last until the end of the year.
The British Retail Consortium-KPMG Retail Sales Monitor for August showed a 1% year-on-year increase in UK retail sales, against an increase of 4.1% in August 2023. This was above the three-month average growth rate of 0.4%, but slightly below the 12-month average of +1.2%.
Food sales were 2.9% higher in the three months to August, making up for the 1.7% decline in non-food sales.
“Sales growth picked up in August, particularly for food as people came together to host barbecue and picnic gatherings for family and friends, and for summer clothing, health and beauty products as people prepared for trips away and summer social events,” said BRC chief executive Helen Dickinson.
“While computing did well as university students made the most of summer discounting and readied themselves for the new academic year, other back to school related sales were weaker than normal as some families opted for second hand purchases.”
In equity markets, equipment rental firm Ashtead rallied to the top of the FTSE 100 after it posted a drop in first-quarter profit that was in line with market expectations.
Rolls-Royce was also a high riser, having slumped on Monday when it was hit by news that Cathay Pacific had temporarily grounded its fleet of A350 aircraft for inspections after discovering problems with its RR engines.
Hikma was boosted by an upgrade to ‘buy’ from ‘hold’ at Berenberg.
BA and Iberia owner IAG flew higher after an upgrade to ‘buy’ at Redburn. Airlines more generally were up after Wizz Air and Ryanair reported record passenger numbers for August.
Luxury timepiece seller Watches of Switzerland surged as it said it was on track to meet annual guidance after trading for the first 18 weeks of the financial year had been in line with expectations.
The company said demand for key luxury brands, particularly products on registration of interest lists, remained strong in both the UK and US markets, outstripping supply.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ashtead Group Plc | +3.96% | +212.00 | 5,570.00 |
| 2 |  |
Rolls-royce Holdings Plc | +3.02% | +14.00 | 478.30 |
| 3 |  |
Tesco Plc | +1.49% | +5.30 | 361.40 |
| 4 |  |
Banco Santander S.a. | +1.08% | +4.00 | 374.00 |
| 5 |  |
Sse Plc | +0.71% | +13.50 | 1,906.50 |
| 6 |  |
Reckitt Benckiser Group Plc | +0.71% | +31.00 | 4,411.00 |
| 7 |  |
Bt Group Plc | +0.68% | +0.95 | 140.65 |
| 8 |  |
Severn Trent Plc | +0.62% | +16.00 | 2,579.00 |
| 9 |  |
Intertek Group Plc | +0.61% | +30.00 | 4,936.00 |
| 10 |  |
Investec Plc | +0.60% | +3.50 | 582.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wheaton Precious Metals Corp. | -4.82% | -240.00 | 4,740.00 |
| 2 |  |
Bhp Group Limited | -2.23% | -46.00 | 2,017.00 |
| 3 |  |
Anglo American Plc | -2.19% | -48.50 | 2,166.50 |
| 4 |  |
Glencore Plc | -1.88% | -7.50 | 392.20 |
| 5 |  |
South32 Limited | -1.88% | -3.00 | 157.00 |
| 6 |  |
Melrose Industries Plc | -1.81% | -8.80 | 477.00 |
| 7 |  |
Ck Infrastructure Holdings Limited | -1.54% | -9.00 | 576.00 |
| 8 |  |
Natwest Group Plc | -1.52% | -5.20 | 337.70 |
| 9 |  |
Woodside Energy Group Ltd | -1.41% | -20.00 | 1,398.00 |
| 10 |  |
Rio Tinto Plc | -1.40% | -66.00 | 4,635.50 |
US close: Stocks higher following July PCE numbers
Wall Street stocks closed higher on Friday as investors digested a key inflation reading.
At the close, the Dow Jones Industrial Average was up 0.55% at 41,563.08, while the S&P 500 advanced 1.01% to 5,648.40 and the Nasdaq Composite saw out the session 1.13% firmer at 17,713.62.
The Dow closed 228.03 points higher on Friday, extending gains recorded in the previous session and setting the blue-chip index on a course for another record close.
Friday’s primary focus was last month’s personal consumption expenditures price index, with the Federal Reserve Bank’s preferred inflation gauge rising in July, according to the Commerce Department, in line with preliminary estimates. The personal consumption expenditures index increased by 0.2% month-on-month or 2.5% on a year-on-year basis, exactly in line with consensus estimates. Stripping out volatile food and energy prices, core PCE also increased 0.2% for the month but was 2.6% higher on the year, slightly softer than the 2.7% estimate.
Elsewhere on the macro front, the Chicago purchasing managers index rose to 46.1 in August, according to the Institute for Supply Management, up from 45.3 in July and ahead of market expectations for a print of 45.5.
Finally, consumer confidence in the States was virtually unchanged in August, as Americans continued to try and anticipate the winner of the next presidential elections. The final reading for the University of Michigan‘s consumer confidence index printed at 67.9 for August, against a reading of 66.4 in July. Economists had pencilled in a print of 68.0.
In the corporate space, athleisure giant Lululemon missed quarterly revenue expectations for the first time since March 2022, while cosmetics retailer Ulta Beauty posted its first earnings miss since May 2020.
Tuesday newspaper round-up: Electric cars, Manchester, Mountain Warehouse
Campaigners have called on the chancellor to introduce a controversial pay-per-mile road charging scheme on electric cars, warning of a £5bn “black hole” in tax revenues from motoring. In a letter to Rachel Reeves, the Campaign for Better Transport (CBT) urged her to reform vehicle taxes, with fuel duty poised to dwindle in the coming decade as petrol and diesel cars are phased out. – Guardian
Manchester has been named the “first-time buyer capital of Britain” after data revealed that those taking their first step on the property ladder accounted for 75% of home purchases made in the city with a mortgage last year. The research from the mortgage lender Halifax may also provide fresh evidence of how high house prices in London are forcing growing numbers of would-be capital dwellers to ditch that dream and look farther afield. – Guardian
London workers are returning to the office far more slowly than rivals in Paris and New York amid fears that UK productivity will suffer without rapid action. People in London spend an average of 2.7 days per week in the office, compared to 3.5 for Parisians and 3.1 for New Yorkers, according to the Centre for Cities think tank. Among firms with office directives in place, the average London employer mandates 3.1 days per week. This is behind top-performing Sydney’s four days and behind Singapore, New York, Toronto and Paris. – Telegraph
It may have started life with one shop in Swindon, but Mountain Warehouse, the high street chain whose outdoor clothing is beloved of hikers and dog walkers, is poised to take on even more of the American market after the British millionaire behind the brand bought a collapsed US rival. Mark Neale, the chief executive, founder and owner of the British chain, has struck a deal to acquire Eastern Mountain Sports (EMS) for £7.6 million, saving 100 jobs. Neale said he had been tracking the company for a “long time. EMS is such an iconic, well-established brand. I think it’s going to be a brilliant foothold for Mountain Warehouse in America. – The Times
The Qatari owners of Harrods have banked another £180 million dividend, despite a 17 per cent decline in operating profits at the world’s most famous department store. The luxury retailer is owned by Harrods Ltd, a company in turn owned by the state of Qatar via its Qatar Investment Authority sovereign wealth fund. The multimillion-pound payout came after operating profit at Harrods’ parent company fell by £35 million to £167.7 million in the year to February 3, according to accounts for Harrods Group (Holding) Ltd, which are due to be filed next week. – The Times
