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London open: Stocks gain on US rate cut hopes
London stocks rose in early trade on Wednesday as weaker-than-expected US jobs data fuelled expectations of a rate cut by the Federal Reserve later this year.
At 0840 BST, the FTSE 100 was 0.3% firmer at 8,253.52.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The wheel of speculation over when interest rate cuts will come in the US has stopped in a more positive position, buoying sentiment and helping push up the FTSE 100 in early trade.
“Weaker JOLTS jobs data indicates that the negotiating stance of American employees for higher wages is more fragile, adding to hopes that stubborn price pressures will ease. With interest rate cuts spied again on the horizon, Wall Street ended in more upbeat territory, and more optimism is washing through into trading in Europe. The globally focused blue-chip index has also been buoyed by indications that China’s recovery also appears more on track.
“Data from a closely watched purchasing managers’ survey showed the services sector notched up the fastest growth in ten months in May. The Caixin/S&P Global services PMI rose to 54, from 52.5, with anything over 50 indicating expansion.”
Looking ahead to the rest of the day, the S&P Global CIPS UK services PMI for May is due out at 0930 BST, while the US ADP report for May is at 1315 BST. Investors will also be eyeing the latest policy announcement from the Bank of Canada, which is widely expected to cut rates by 25 basis points.
In equity markets, Haleon rallied after an initiation at ‘buy’ at Berenberg, while Taylor Wimpey was boosted by an upgrade to ‘buy’ from ‘hold’ by the same outfit.
Paragon Banking surged to the top of the FTSE 250 as the specialist lender more than doubled interim profit and said it would extend its share buyback by up to £50m as customer demand returned after the ‘mini-budget’ fiasco of Liz Truss’s short-lived government last October.
WH Smith gained as the retailer said it remains on track to hit full-year forecasts despite a slowdown in sales growth in third quarter, as strong growth in the travel division was tempered by falling sales on the high street.
On the downside, B&M European Value Retail slid even as it said annual operating profits and sales grew in the double digits, helped by the opening of 78 gross new stores across the group, with earnings at the top end of guidance.
British Gas owner Centrica was in the red despite saying that current year trading was in line with expectations against the backdrop of a more “normalised” environment.
Workspace lost ground as it reported strong rental income growth in the year to 31 March, but said losses widened substantially due to falling property valuations.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +3.91% | +23.00 | 610.50 |
| 2 |  |
Smith & Nephew Plc | +3.55% | +35.30 | 1,030.50 |
| 3 |  |
St. James’s Place Plc | +3.19% | +16.00 | 518.00 |
| 4 |  |
Carnival Plc | +2.39% | +28.00 | 1,201.50 |
| 5 |  |
Gsk Plc | +1.95% | +31.50 | 1,646.50 |
| 6 |  |
Coca-cola Hbc Ag | +1.78% | +48.00 | 2,738.00 |
| 7 |  |
Pearson Plc | +1.64% | +15.40 | 957.00 |
| 8 |  |
Taylor Wimpey Plc | +1.64% | +2.45 | 152.25 |
| 9 |  |
Rentokil Initial Plc | +1.49% | +6.30 | 430.30 |
| 10 |  |
Imperial Brands Plc | +1.25% | +24.50 | 1,977.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | -4.50% | -6.40 | 135.85 |
| 2 |  |
Lloyds Banking Group Plc | -1.65% | -0.92 | 54.72 |
| 3 |  |
Barclays Plc | -1.44% | -3.10 | 211.90 |
| 4 |  |
Johnson Matthey Plc | -1.44% | -25.00 | 1,710.00 |
| 5 |  |
Hsbc Holdings Plc | -1.41% | -9.70 | 680.50 |
| 6 |  |
International Consolidated Airlines Group S.a. | -1.31% | -2.30 | 172.90 |
| 7 |  |
Ferguson Plc | -1.25% | -195.00 | 15,380.00 |
| 8 |  |
Smith (ds) Plc | -1.17% | -4.40 | 371.80 |
| 9 |  |
Mondi Plc | -1.07% | -16.50 | 1,529.50 |
| 10 |  |
Marks And Spencer Group Plc | -0.90% | -2.80 | 308.80 |
US close: Dow Jones reverses Monday’s losses
Wall Street stocks closed higher on Tuesday as traders shrugged off disappointing manufacturing data from the previous session and cheered falling bond yields.
At the close, the Dow Jones Industrial Average was up 0.36% at 38,711.29, while the S&P 500 advanced 0.15% to 5,291.34 and the Nasdaq Composite saw out the session 0.17% firmer at 16,857.05.
The Dow closed 140.26 points higher on Tuesday, reversing yesterday’s losses.
Weak manufacturing data continued to remain in focus on Tuesday as market participants wait to see if growth can carry on long enough as the Federal Reserve looks to see inflation decline further in order to make cuts to its base interest rate.
Also in focus, the yield on the benchmark ten-year Treasury note was down more than six basis points at 4.331%, while its two-year counterpart was nearly three basis points lower at 4.787%.
On the macro front, new orders for US manufactured goods rose by 0.7% month-on-month to $588.2bn in April, according to the Census Bureau, growing at an unchanged pace from the revised value in March, and marginally ahead of market expectations of a 0.7% increase. Durable goods orders expanded by 0.6%, while orders in nondurable goods industries rose by 0.8%.
Elsewhere, US companies advertised fewer positions still in April, a possible reflection of the ongoing cooldown in the demand for labour. According to the Department of Labor, in seasonally adjusted terms the number of job openings declined by 3.5% month-on-month to reach nearly 8.06m (consensus: 8.34m). On another note, the prior month’s reading was revised lower from 8.488m to 8.355m. The number of so-called ‘quits’ increased by 2.9% month-on-month to reach 3.507m, but as a proportion of all separations, they were unchanged at 2.2%.
Wednesday newspaper round-up: Airbus, Tesco, Royal Mail, Mike Lynch
Britain’s next government will need to fill a shortfall of up to £33bn in the public finances unless it is prepared to push through a fresh round of severe austerity measures, a thinktank has warned. The Resolution Foundation said the debate between Labour and the Conservatives over the funding of specific pledges was “detached from reality”, with election promises based on cuts that would be hard to deliver. – Guardian
UK exports of clothing and footwear to the EU have dived since Brexit, according to a new study that shows the extent to which complex regulations and red tape at the border have deterred firms from sending goods across the Channel. Exports of clothing and footwear sold to EU countries have fallen from £7.4bn in 2019 to £2.7bn in 2023, helping fuel an 18% slump in sales of all non-food goods exports to countries covered by the EU single market, according to the consultancy Retail Economics and online marketplace Tradebyte. – Guardian
Airbus has unveiled a new unmanned combat jet that will be capable of acting as a “loyal wingman” for RAF pilots flying Eurofighter Typhoon aircraft. The European aerospace giant unveiled the sleek-looking concept drone at the Berlin International Airshow, where defence companies are this week showing off their latest wares. – Telegraph
Tesco has rolled out a digital “marketplace” to sell products ranging from office furniture to giant chess sets, as the supermarket giant seeks to challenge Amazon online. Around 9,000 new products have been added to Tesco’s website, as the retailer seeks to attract shoppers with third-party brands, such as Hornby jigsaws and Beko air fryers. It comes as Tesco seeks to turn itself into a “one-stop shop for everything customers need”. – Telegraph
The right-hand man of the Czech tycoon seeking to pull off the £3.6 billion takeover of Royal Mail’s parent company has met union bosses in an attempt to convince them of the merits of the deal. Roman Silha, who heads mergers and acquisitions for EP Group’s investments, sought to reassure the Communication Workers Union, which has called for a new ownership model for the postal services company, including giving all its employees a stake in its future. – The Times
Closing arguments in the California fraud case against Mike Lynch concluded on Tuesday and the jury retired for deliberation. Lynch’s lawyers have portrayed the British businessman as a savvy entrepreneur in the trial relating to Hewlett-Packard’s $11 billion acquisition of Autonomy, his software company, in 2011. – The Times
