Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
London open: Stocks edge down as investors eye US GDP, PCE
London stocks edged lower in early trade on Thursday as worries that rates will stay higher for longer continued to dent sentiment, with attention turning to upcoming US GDP and PCE figures.
At 0830 BST, the FTSE 100 was down 0.2% at 8,168.95.
Investors were looking ahead to the release of US Q1 GDP figures at 1330 BST and the latest PCE numbers on Friday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “All eyes are on the US GDP update due today, and the Fed’s favourite gauge of inflation – the core PCE number – due tomorrow. The US GDP is expected to have slowed significantly in the Q1, with – however – a significant rise in price pressures (that’s already priced in), while the core PCE print for April could hint at some easing in the latest pickup in inflation.
“The best outcome would be a reasonably soft growth coupled with easing price pressures, but we could realistically get a slowing growth coupled with an insufficient easing in price pressures, instead. To the Fed, the inflation number will matter more than the growth update as regardless of the deteriorating economic growth, the progress in inflation will determine whether the Fed could remain on path to cut rates this year.
“Therefore, it will be hard to interpret today’s GDP data before seeing tomorrow’s PCE print. And even then, Citigroup thinks that this week’s data will trigger limited price action; the upcoming US jobs and CPI updates in the next weeks will matter more.”
She added that for now, rising bond yields are taking a toll on stock valuations in the absence of other catalysts.
On home shores, the latest figures from Zoopla showed the number of houses for sale rose to an eight-year high in the four weeks to 19 May.
The average estate agent had 31 homes for sale, up 20% on the same period a year earlier and the highest level since 2017, according to Zoopla.
Richard Donnell, executive director at Zoopla, said: “The growth in the supply of homes for sale is evidence of renewed confidence amongst homeowners, some of whom delayed moving decisions in 2023.
“The quarterly rate of house price inflation has picked up in recent months as more sales are agreed and prices firm.
“The announcement of the election will slow the pace at which new sales are agreed while greater choice for buyers will keep house prices in check over 2024. It’s essential that those serious about moving in 2024 price their homes realistically if they want to achieve a sale.”
In equity markets, Auto Trader powered ahead as it said the new financial year had got off to a strong start and posted a jump in annual sales and profits.
The car marketplace specialist said revenues in the year to 30 May rose 14% to £570.9m. Within that, Auto Trader sales increased 12% to £529.7m while leasing specialist Autorama saw a 51% increase to £41.2m. Group adjusted earnings before interest, tax, depreciation and amortisation rose 14% to £375.3m, while pre-tax profits increased 18% to £345.2m.
Troubled bootmaker Dr Martens also gained as it held guidance for the current year and announced a cost savings target of up to £25m. It also posted a bigger-than-expected fall in annual revenue and operating profit as its US woes continued.
Revenue fell 12% to £877m against expectations of £900m, while operating profit plunged by a third to £122m compared with forecasts of £125m. Pre-tax profits were down 43% to £97m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Auto Trader Group Plc | +11.69% | +85.40 | 816.00 |
| 2 |  |
St. James’s Place Plc | +2.35% | +11.40 | 496.40 |
| 3 |  |
Direct Line Insurance Group Plc | +2.15% | +4.40 | 208.80 |
| 4 |  |
Burberry Group Plc | +1.85% | +19.00 | 1,045.00 |
| 5 |  |
Melrose Industries Plc | +1.68% | +10.20 | 616.80 |
| 6 |  |
Barclays Plc | +1.66% | +3.55 | 217.70 |
| 7 |  |
Hargreaves Lansdown Plc | +1.64% | +17.50 | 1,083.50 |
| 8 |  |
Carnival Plc | +1.56% | +16.50 | 1,076.50 |
| 9 |  |
Land Securities Group Plc | +1.49% | +9.50 | 648.50 |
| 10 |  |
Standard Chartered Plc | +1.48% | +11.40 | 781.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sage Group Plc | -2.97% | -31.50 | 1,028.50 |
| 2 |  |
Coca-cola Hbc Ag | -2.78% | -76.00 | 2,658.00 |
| 3 |  |
Severn Trent Plc | -2.31% | -55.00 | 2,328.00 |
| 4 |  |
Antofagasta Plc | -2.11% | -48.00 | 2,222.00 |
| 5 |  |
Intertek Group Plc | -1.70% | -82.00 | 4,748.00 |
| 6 |  |
Tui Ag | -1.18% | -6.50 | 543.00 |
| 7 |  |
Centrica Plc | -0.93% | -1.30 | 139.15 |
| 8 |  |
Associated British Foods Plc | -0.64% | -17.00 | 2,650.00 |
| 9 |  |
Bhp Group Limited | -0.59% | -14.00 | 2,339.00 |
| 10 |  |
Flutter Entertainment Plc | -0.59% | -85.00 | 14,430.00 |
US close: Stocks drop sharply as Treasury yields rise
US stocks declined on Wednesday with all but three stocks on the Dow finishing in the red as investors continued to scale back their appetite for risk ahead of key inflation data later in the week.
“Global equities shuddered at the prospect of interest rates staying higher for longer,” said Dan Coatsworth, investment analyst at AJ Bell.
“Despite plenty of earlier signals that central banks were in no rush to cut rates until inflation had fallen further, investors are only now coming to terms with the idea that monetary policy will stay tight for just a bit longer.”
The Dow finished down 1.1% at 38,441.54, falling for the fifth time in the last seven days as it continues to pull back from the 40,000+ level reached on 17 May. The Nasdaq, which hit a new closing high of 17,019.88 on Tuesday, retreated 0.6% to 16,920.58, while the S&P 500 fell 0.7% to 5,266.95, having touched a fresh peak last week.
Bond yields were rising across the US and Europe on Wednesday, sapping the demand for equities, ahead of inflation data from both regions on Friday. The core annual rate of eurozone consumer price inflation is forecast to have risen 10 basis points to 2.8% in May, while the closely watched PCE index is tipped to show that core US inflation held steady at 2.8% in April.
German 10-year bund yields rose to their highest level so far this year after data revealed that Germany’s annual inflation rate picked up in May, while the yield on a 10-year US Treasury was up 6.1 basis points at a three-week high of 4.618% by the close on Wall Street.
David Morrison, senior market analyst at Trade Nation, said the US inflation data in particular could lead to some “big market moves” if it significantly misses market expectations.
“Aside from this, there’s little in the calendar. So it shouldn’t be a surprise to see stock indices rangebound until we see the next catalyst for a big move. Perhaps it also shouldn’t be a surprise to see stocks drift lower now and pull back from their record highs as we approach the summer months,” he said.
Market movers
Salesforce was among the three stocks on the Dow that finished in positive territory, with shares rising ahead of the enterprise software provider’s quarterly results after the bell. Apple and Johnson & Johnson also eked out small gains.
ConocoPhillips fell 3% after announcing the acquisition of Marathon Oil worth $22bn, causing shares in the latter to gain 8%. The acquisition will add “highly complementary” acreage to ConocoPhillips’ existing US onshore portfolio, it said.
Pharma giant Merck inched lower on the news it will buy ophthalmology-focused biotechnology firm EyeBio for up to $3bn, getting its hands on a pipeline of clinical and preclinical candidates for the treatment of retinal diseases.
Retail brokerage Robinhood rose 3% after announcing a $1bn share buyback the previous evening, while carrier American Airlines plummeted 14% after cutting its sales and profit forecasts for the second quarter.
Thursday newspaper round-up: Sony Music, Royal Mail, house prices
A leading City lobby group is calling on the next government to bring in scams legislation that forces big tech and social media companies to cough up to £40m a year to reimburse customers and fight fraud on their platforms. The demand came in a ‘financial services manifesto’ released by UK Finance, which represents banks, payments companies and other financial firms. UK Finance and its 300 membershave long complained about having to shoulder the costs of fraud against their customers, despite a surge in the number of scammers targeting consumers through platforms such as Facebook and Google. – Guardian
Sony Music is in talks to buy Queen’s music catalogue, which includes songs such as Bohemian Rhapsody and Radio Gaga, in a potential $1bn (£800m) deal, according to Bloomberg. Sony is said to be working with another investor on the transaction that would be the largest sale of its kind and include merchandising and other business opportunities, according to the Bloomberg report, which said talks were continuing and might not result in a deal. – Guardian
Shell and ExxonMobil are nearing a $500m (£390m) deal to offload two gas sites in the North Sea amid the companies’ ongoing retreat from the UK’s oil basin. The duo are putting the finishing touches to a deal to sell the Clipper and Leman Alpha installations in the southern region of the North Sea to UK-based start-up Viaro Energy. Clipper and Leman Alpha are major gas sites and have been owned by Shell and ExxonMobil via a joint venture since the mid-1960s. – Telegraph
A top-ten shareholder in the parent company of Royal Mail has spoken out against the £3.6 billion takeover by its Czech tycoon shareholder. Columbia Threadneedle Investments, which holds about 5 per cent of International Distribution Services, believes that the offer of 370p a share undervalues the postal services group. – The Times
The number of homes for sale is at the highest level in eight years, according to Zoopla, which expects the extra supply to keep a lid on house price rises this year. The property search website has calculated that there are 20 per cent more homes on the market than there were at this time last year, when soaring mortgage rates pushed would-be buyers and sellers to the sidelines. – The Times
