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London open: Stocks gain in quiet trade; Burberry out of fashion
London stocks rose in early trade on Friday, taking their cue from a positive session in Asia.
At 0850 BST, the FTSE 100 was up 0.4% at 8,412.00.
Richard Hunter, head of markets at Interactive Investor, said: “Amid broad buying interest the FTSE rose to bring its cumulative year to date performance to a positive 8.7%, and within a whisker of reaching the previous record levels which were achieved in May.”
Investors were mulling the latest data from Nationwide, which showed that house prices unexpectedly dipped on the month in August, but rose at their fastest annual pace since December 2022.
On the month, prices were down 0.2% following a 0.3% increase in July, and versus expectations for a 0.2% increase.
On the year, house prices picked up 2.4% in August following a 2.1% gain the month before and versus expectations for a 2.9% jump. Prices are still around 3% below the all-time highs recorded in the summer of 2022, Nationwide said.
The average price of a home stood at £265,375 in August compared to £266,334 in July.
Nationwide chief economist Robert Gardner said: “While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings (which makes raising a deposit more challenging).
“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Elsewhere, data from BRC-Sensormatic IQ showed that retail footfall across the UK experienced a slight decline of 0.4% year-on-year in August.
That represented a significant improvement from July’s 3.3% drop, indicating a degree of resilience in the sector despite disruptions caused by riots earlier in the month.
High street footfall saw a marginal decline of 0.3% compared to August 2023, recovering from the 2.7% decrease recorded in July.
Retail parks outperformed other retail locations, with footfall increasing by 2.6% year-on-year, a notable improvement from the 0.8% decrease seen in the prior month.
Shopping centres, while still experiencing a decrease in foot traffic, showed signs of recovery with a 1.8% drop, better than the 3.9% fall in July.
“As violent disorder erupted across the country earlier in the month, footfall was severely impacted as many people stayed away from shopping destinations,” said Helen Dickinson, chief executive of the British Retail Consortium.
“Retail parks saw footfall levels rise in the week following the riots as some continued to avoid high streets and shopping centres.
“Footfall recovered across all destinations towards the end of the month when warmer weather and summer sales prompted shoppers to browse their favourite stores.”
There wasn’t much happening on the equities front, but Burberry fell ahead of its expected demotion from the FTSE 100.
Rentokil was just a smidgen lower as JPMorgan placed the shares on “negative catalyst watch” into the 17th October third-quarter results.
RS Group gained, however, as JPM opened a “positive catalyst watch” on the shares ahead of the capital markets day on 24 September.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | +2.16% | +8.00 | 379.00 |
| 2 |  |
Antofagasta Plc | +1.83% | +33.50 | 1,863.50 |
| 3 |  |
South32 Limited | +1.63% | +2.60 | 162.00 |
| 4 |  |
Flutter Entertainment Plc | +1.54% | +245.00 | 16,120.00 |
| 5 |  |
Aib Group Plc | +1.33% | +6.00 | 455.50 |
| 6 |  |
Segro Plc | +1.16% | +10.00 | 870.20 |
| 7 |  |
Woodside Energy Group Ltd | +1.16% | +16.00 | 1,400.00 |
| 8 |  |
Glencore Plc | +1.12% | +4.50 | 404.60 |
| 9 |  |
Haleon Plc | +1.06% | +4.00 | 382.20 |
| 10 |  |
Reckitt Benckiser Group Plc | +1.04% | +45.00 | 4,384.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wheaton Precious Metals Corp. | -1.56% | -75.00 | 4,720.00 |
| 2 |  |
Smith (ds) Plc | -1.06% | -5.00 | 468.00 |
| 3 |  |
Rolls-royce Holdings Plc | -1.00% | -5.00 | 495.20 |
| 4 |  |
Scottish Mortgage Investment Trust Plc | -0.41% | -3.40 | 823.20 |
| 5 |  |
Informa Plc | -0.41% | -3.40 | 830.60 |
| 6 |  |
Aviva Plc | -0.40% | -2.00 | 504.00 |
| 7 |  |
Experian Plc | -0.38% | -14.00 | 3,689.00 |
| 8 |  |
Relx Plc | -0.36% | -13.00 | 3,565.00 |
| 9 |  |
Admiral Group Plc | -0.34% | -10.00 | 2,912.00 |
| 10 |  |
Intercontinental Hotels Group Plc | -0.34% | -26.00 | 7,608.00 |
US close: Dow rises but markets mixed as investors digest earnings, GDP data
US stock markets finished in mixed fashion on Thursday, with sharp falls for Nvidia weighing on both the S&P 500 and Nasdaq, while the Dow Jones Industrial Average managed to eke out another record.
The Dow closed up 0.6% at a new high of 41,335.05, but a 6% drop in the share price of Nvidia kept the S&P 500 to a flat finish and pushed the tech-heavy Nasdaq down 0.2%.
Investors were having to deal with a barrage of economic data on Thursday – including upgrades to GDP estimates, stable jobless claims and an unexpected plunge in pending home sales to a record low – along with a wave of corporate earnings which led to some dramatic swings in the retail sector.
“There was a big risk that Nvidia’s results might disappoint the market and cause investor sentiment to sour, leading to profit taking on a broader basis. That doesn’t appear to have happened, thanks in part to positive economic data which has dampened fears of a US recession,” said Dan Coatsworth, investment analyst at AJ Bell.
Economic data flurry in focus
The headline-grabbing data of the day was the revision to GDP figures for the second quarter, which showed that the annual rate of economic growth in the US more than doubled from the first three months of the year.
The secondary reading of GDP data showed that economic expansion accelerated to 3.0%, up from 1.4% growth in the first quarter and ahead of the 2.8% advance estimate due to higher consumer spending than previous thought.
Initial jobless claims fell by 2,000 to 231,000 last week, broadly in line with market expectations for a reading of 232,000, but still well above the average seen earlier in the year.
Also in focus on Thursday were housing market figures for July, which showed that the pending home sales index unexpectedly fell 5.5% to a record low, following a 4.8% jump the previous month. Economists had pencilled in a gain of around 0.5%.
In other news, the Census Bureau reported that US wholesale inventories rose 0.3% to $905.0bn in July, slightly ahead of forecasts for a 0.2% increase, while the US trade deficit in goods widened to a two-year high of $102.7bn in July, up from June’s downwardly revised $96.6bn shortfall.
Retailers mostly lower, Nvidia out of favour
Shares in Dollar General tanked by 32% after the discount retailer revised its annual sales and profit forecasts downward, citing a reduction in consumer spending on discretionary items. Dollar General projected same-store sales for the 2024 financial year to increase by just 1.0% to 1.6%, a significant reduction from its previous estimate of a 2.0% to 2.7% rise. It also lowered its earnings per share forecast to a range of $5.50 to $6.20, down from the earlier projection of $6.80 to $7.55.
Sector peer Dollar Tree also sank 10%, while Home Depot, Walgreens and Target all finished with heavy losses.
US-listed shares of Birkenstock fell 16% after the German sandal maker underwhelmed investors despite a record third-quarter performance, as it narrowly missed consensus forecasts with its top line.
However, Best Buy was a bright spark in the sector, rising 14% after hiking its profit forecast for the year, amid a positive shift in consumer demand for electronics. The US retailer said it now expected adjusted earnings per share to reach as high as $6.35, up from a previous estimate of $6.20, citing stronger-than-anticipated profitability in the first half of the year.
Semiconductor giant Nvidia finished down 6% as investors reacted to its second-quarter earnings the previous evening. The company comfortably beat both revenue and profit forecasts, but after such an impressive run in the stock so far this year – up 160% as of Wednesday’s close – expectations were already sky-high.
“Markets have a tendency to focus on the negatives when a company has seen such incredible gains, and this occasion appears to be a case of creating a negative narrative even in the absence of one,” said Joshua Mahony, chief market analyst at Scope Markets. “For now, the fact that the Q3 outlook is only marginally above estimates does raise some questions over whether the pace of growth will slow from here.”
Friday newspaper round-up: Train strikes, Lloyds, Reaction Engines
A series of weekend strikes by train drivers on LNER from Saturday has been called off, their trade union Aslef has announced. Passengers travelling between London and Edinburgh had faced the prospect of months of disruption after LNER drivers earlier this month announced 22 days of industrial action from the start of September until early November. On Thursday, Aslef said drivers had reached a resolution with LNER regarding the breaking of agreements. – Guardian
Britain’s biggest mortgage provider is increasing the maximum sums it is willing to lend first-time buyers in a £2bn move that experts say will bring home ownership within the reach of more people but could further increase house prices. Lloyds Banking Group’s decision to let people borrow more means those who meet the criteria may be able to buy a property they might have assumed was well out of their price range. – Guardian
A British plane engine company – dubbed the heir to Concorde – has seen more than £200m wiped off its value by a major investor as it struggles to raise funding. Schroders cut the value of its stake in Reaction Engines by 87pc, the fund manager said. It suggested that slow revenue growth meant the Oxfordshire company would need more time to break even. Reaction Engines has secured investment from Rolls-Royce, BAE Systems and the Government. – Telegraph
A mission to return two astronauts trapped on the International Space Station (ISS) to Earth is at risk of further delay after SpaceX’s Falcon 9 rockets were grounded. Upcoming missions using the rockets, developed by Elon Musk’s launch company, were put on hold by US regulators after a booster crashed and exploded on Wednesday. The Federal Aviation Authority (FAA) confirmed it had grounded the rockets pending an investigation. – Telegraph
A British driverless car company has received a significant vote of confidence in the form of an investment by Uber. Wayve, one of London’s leading artificial intelligence start-ups, announced the funding, which is understood to be less than $100 million, alongside a “partnership” with the American ride-hailing company that aims to get their technology taken on by car manufacturers. – The Times
Confidence among British businesses held steady at an eight-year high this month, led by construction companies that have been boosted by the Labour government’s ambition to increase housebuilding. The latest Lloyds Bank business barometer, a monthly survey of business sentiment, maintained its 50 per cent reading in August, keeping confidence at the highest level since November 2015. The index is well above the long-term average of 29 per cent. – The Times
