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London open: FTSE gains as attention turns to US bank earnings
London stocks rose in early trade on Friday as investors turned their attention to the US, where banks are due to kick off the earnings season.
At 0825 BST, the FTSE 100 was up 0.5% at 8,266.45.
Richard Hunter, head of markets at Interactive Investor, said: “The latest inflation reading in the US provided a pleasant surprise which resulted in investors flocking to interest rate sensitive stocks and smaller companies.
“The scene is now set for further potential confirmation with the release of producer price index data later today. At the same time, banks such as JP Morgan Chase, Wells Fargo and Citigroup will report quarterly earnings which could also confirm whether any cracks are beginning to appear in the face of higher interest rates, most notably with regard to consumer debt default levels.
“Consumers have also been hamstrung by higher rates when considering large ticket purchases in anything from houses to cars, as well as loading up on credit card debts.”
The US producer price index for June is scheduled for release at 1330 BST, while Michigan consumer sentiment is at 1500 BST.
UK corporate news was scarce, but Ashmore lost ground as it said assets under management declined in the last quarter on the back of weaker investor sentiment.
The FTSE 250 firm, a specialist in emerging markets, said AUM fell by $2.4bn in fourth quarter to 30 June to $49.5bn.
Within that, the negative investment performance was $0.4bn while net outflows were $2bn, unchanged on the previous quarter.
Ashmore attributed the level of net outflows to institutional decisions to reduce exposure to emerging markets, with investor risk appetite remaining “subdued”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp Plc | +1.55% | +7.00 | 458.80 |
| 2 |  |
Rightmove Plc | +1.43% | +8.00 | 567.80 |
| 3 |  |
Carnival Plc | +1.42% | +18.00 | 1,286.00 |
| 4 |  |
Bhp Group Limited | +1.33% | +30.00 | 2,282.00 |
| 5 |  |
Gsk Plc | +1.33% | +20.00 | 1,525.00 |
| 6 |  |
Pearson Plc | +0.84% | +8.50 | 1,015.50 |
| 7 |  |
Astrazeneca Plc | +0.84% | +102.00 | 12,202.00 |
| 8 |  |
Antofagasta Plc | +0.78% | +17.00 | 2,199.00 |
| 9 |  |
Sage Group Plc | +0.66% | +7.00 | 1,060.00 |
| 10 |  |
Shell Plc | +0.66% | +18.50 | 2,833.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
United Utilities Group Plc | -1.87% | -20.50 | 1,073.50 |
| 2 |  |
St. James’s Place Plc | -1.41% | -8.00 | 560.00 |
| 3 |  |
Schroders Plc | -1.08% | -4.20 | 383.80 |
| 4 |  |
Severn Trent Plc | -1.07% | -29.00 | 2,686.00 |
| 5 |  |
Rentokil Initial Plc | -1.05% | -5.00 | 469.40 |
| 6 |  |
International Consolidated Airlines Group S.a. | -1.04% | -1.85 | 176.05 |
| 7 |  |
Direct Line Insurance Group Plc | -1.03% | -2.00 | 191.30 |
| 8 |  |
Ferguson Plc | -0.95% | -145.00 | 15,125.00 |
| 9 |  |
Sse Plc | -0.93% | -17.50 | 1,859.00 |
| 10 |  |
Prudential Plc | -0.87% | -6.40 | 733.40 |
US close: Stocks end mixed despite inflation slowdown, Daly comments
US stocks finished mixed on Thursday, with the Dow edging higher but the S&P 500 and Nasdaq sinking sharply back from record highs, despite rising hopes that the Federal Reserve may cut interest rates sooner than anticipated.
“Investors seem to have been on the rate cut rollercoaster for an unhealthy amount of time. […] But the latest set of US inflation figures suggest the first rate cut in the US could finally be nigh” said AJ Bell head of financial analysis Danni Hewson.
The Dow gained 0.08% to 39,753.75, while the S&P 500 fell 0.88% to 5,584.54 and the Nasdaq plunged 1.95% to 18,283.41.
Market bets for a rate cut at the Fed’s September meeting rose after the annual inflation rate fell more than forecast to its joint lowest level in more than three years in June.
“Expectation of a September cut by the Fed jumped after the cooler than anticipated CPI reading, with traders pricing in a 90% chance of a cut,” Hewson said.
Adding to speculation were comments from San Francisco Fed president Mary Daly who said that Thursday’s data supports the call for easing monetary policy – though she refrained from giving a prediction of when the first cut would come.
“With the information we have received today, which includes data on employment, inflation, GDP growth and the outlook for the economy, I see it as likely that some policy adjustments will be warranted,” she said.
All eyes on the data
The annual rise in the consumer price index slowed to 3.0% last month, down from 3.3% in May and below the consensus forecast of 3.1%. This was the lowest level since June 2023, matching a reading not seen since March 2021, while the monthly change in prices turned negative (-0.1%) for the first time since May 2020.
Meanwhile, core annual inflation, which strips out volatile items like food and energy, unexpectedly eased to 3.3% from 3.4%, surprising economists who had projected no change. This was also the lowest level since April 2021.
Brooks said the data “has given the green light to traders to fully price in a rate cut from the Fed in September”, with investors now pricing in a 80%-plus chance of a rate cut at that meeting. “The market is also pricing in more than two rate cuts this year, not long ago only one rate cut was priced in,” she said.
Meanwhile, initial filings for unemployment benefits totalled 222,000 in the week ended 5 July. That’s down from a revised 239,000 the week before and well below the dip to 236,000 expected by economists. The four-week moving average, which smoothes out week-to-week volatility, fell to 233,500 from a revised 238,750 the week before.
Market movers
Shares in Costco fell 4% on the back of the wholesale retailer’s announcement of its first price increase in seven years. The company said it was hiking its annual membership price by $5.
Apple slipped 2% after the European Commission approved plans to open up its contactless payments system to rivals, drawing a line under a long-running antitrust probe. Regulators ruled in 2022 that Apple was breaking competition laws by blocking rivals’ access to favour its own payment system. In response, Apple offered various concessions, which officials have spent the last six months testing.
Delta Air Lines dropped 4% after reporting a 30% fall in second-quarter net income and disappointing the market with its sales guidance for the current quarter.
Electric carmaker Tesla tanked 8% on the back of reports that the company is delaying the launch of its Robotaxi by two months.
Friday newspaper round-up: Post Office, Rosebank, Carpetright
Labour will miss its target of delivering 1.5m new homes this parliament without an emergency cash injection into the affordable housing sector, providers have warned. Housing associations and councils have written to deputy prime minister, Angela Rayner, saying her promise to deliver “the biggest boost to affordable housing in a generation” will be impossible unless there are urgent interventions to fix the financial pressures providers face. – Guardian
The chief executive of the Post Office has temporarily stepped back from running the company as he prepares for the final stage of the Horizon scandal inquiry. In an email to staff on Thursday, Nick Read said he was standing down for seven weeks to prepare for the “critical” seventh phase of the Post Office IT Horizon Inquiry, which is expected to begin in September. He will be temporarily replaced by Owen Woodley, who is deputy chief executive at the taxpayer-owned business, from July 15. – Telegraph
Pension funds are failing British savers by refusing to back high-growth businesses, the boss of the British microchip company Graphcore has said. The start-up has become the latest high-tech firm to sell to an overseas buyer. Nigel Toon, its chief executive, said that pension funds “tend to focus on cost rather than growth” and that this is a problem for the long-term value of people’s retirement savings. – Telegraph
Shares in a £50 million cash shell company attempting to replicate the success of the factory turnaround group Melrose Industries surged on their first day of trading as investors scrambled for a piece of the action. Investors pushed the share price of Rosebank Industries from the 250p at which cornerstone investors took part in a placing earlier in the week to 480p, a first-day climb of 92 per cent. – The Times
Carpetright has put itself up for sale in a move which could lead to hundreds of store closures and job losses. The floorings retailer, which trades from about 300 stores and has more than 3,000 employees, has appointed PwC to launch a formal sale process as it struggles amid a slowdown in demand and increased competition. – The Times
