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London open: Stocks fall as investors eye US inflation reading
London stocks fell in early trade on Friday following heavy losses on Wall Street, as investors eyed the latest US inflation data.
At 0845 BST, the FTSE 100 was down 0.9% at 7,407.94.
Richard Hunter, head of markets at Interactive Investor, said: “There is little respite at present from inflationary concerns, giving investors little room for manoeuvre in navigating the darkening economic clouds.”
All eyes will be on the US consumer price index for May at 1330 BST. Hunter said there is “high potential” for the inflation reading to further upset investors should the number exceed expectations.
“At present, a rise of 0.7% is expected for May, which would leave core inflation at around 6%. However, anything higher would again prompt expectations that the Fed’s current policy would need to extend beyond the rate hikes already expected in June and July,” he said.
On home turf, banks were in focus after the Bank of England said the UK’s top banks were no longer “too big to fail”, meaning that none would require a bailout in the event of a crisis. However, it did find shortcomings at Lloyds, HSBC and Standard Chartered over resolution plans. Also included in the review were Barclays, NatWest, Santander UK, Virgin Money and Nationwide.
The BoE said: “The Bank’s assessment of resolvability shows that even if a major UK bank were to require resolution, customers would be able to keep accessing their accounts and business services as normal.”
Elsewhere, GlaxoSmithKline gained ground after saying that its vaccine for respiratory syncytial virus had shown “statistically significant and clinically meaningful efficacy” in adults aged 60 years and above in a phase 3 trial. The company said the primary endpoint of the trial was “exceeded with no unexpected safety concerns observed” and would now start talks with regulators to start immediately with anticipated regulatory submissions in the second half of the year.
Outside the FTSE 350, ProCook shares tumbled nearly 40% after the kitchenware retailer warned on profits as consumers tighten their belts.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sainsbury (j) Plc | +1.43% | +3.00 | 212.40 |
| 2 |  |
Johnson Matthey Plc | +0.98% | +20.00 | 2,065.00 |
| 3 |  |
Gsk Plc | +0.62% | +10.60 | 1,720.40 |
| 4 |  |
Ocado Group Plc | +0.46% | +4.20 | 919.60 |
| 5 |  |
Pearson Plc | +0.44% | +3.20 | 738.80 |
| 6 |  |
Persimmon Plc | +0.41% | +9.00 | 2,202.00 |
| 7 |  |
Melrose Industries Plc | +0.24% | +0.40 | 164.70 |
| 8 |  |
Ashtead Group Plc | +0.12% | +5.00 | 4,054.00 |
| 9 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 10 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Coca-cola Hbc Ag | -3.07% | -54.50 | 1,720.50 |
| 2 |  |
Associated British Foods Plc | -2.78% | -46.00 | 1,606.00 |
| 3 |  |
Crh Plc | -2.71% | -86.50 | 3,102.50 |
| 4 |  |
Easyjet Plc | -2.67% | -12.50 | 454.80 |
| 5 |  |
Carnival Plc | -2.65% | -23.20 | 851.40 |
| 6 |  |
Segro Plc | -2.46% | -25.50 | 1,013.00 |
| 7 |  |
Scottish Mortgage Investment Trust Plc | -2.20% | -17.60 | 781.20 |
| 8 |  |
Diageo Plc | -2.17% | -78.00 | 3,520.50 |
| 9 |  |
Wpp Plc | -2.09% | -18.20 | 853.60 |
| 10 |  |
Marks And Spencer Group Plc | -2.05% | -2.95 | 141.15 |
US close: Stocks sharply lower ahead of inflation reading
Wall Street stocks were sharply in the red at the close of trading on Thursday ahead of tomorrow’s hotly-anticipated inflation reading.
At the close, the Dow Jones Industrial Average was down 1.94% at 32,272.79, while the S&P 500 was 2.38% weaker at 4,017.82 and the Nasdaq Composite saw out the session 2.75% softer at 11,754.23.
The Dow closed 638.11 points lower on Thursday, extending losses recorded in the previous session.
Investor sentiment got a boost on Thursday after Bloomberg reported that China may be willing to let Jack Ma’s Ant Group go ahead with its initial public offering, indicating that Beijing may now very well be looking to dial back its tech crackdown and sending US-listed shares in Alibaba more than 4% higher in the process. The sudden scuttling of Ant’s IPO back in November 2020, just days before the fintech giant was set to go public, came as China sought to make changes to the sector’s regulatory environment.
Market participants also digested headlines from Europe, with the European Central Bank confirming its intention to hike interest rates at its policy meeting next month and downgrading growth forecasts. The Governing Council said it intends to raise key interest rates by 25 basis points at its July meeting and expects a further hike at its September meeting.
Treasury yields remained elevated on Thursday, with the yield on the benchmark 10-year note rising to 3.046%, while US benchmark West Texas Intermediate oil futures eased off 0.69% to $121.27 per barrel.
On the macro front, jobless claims in the US rose by more than expected during the latest week, although the Memorial Day holiday may have been partially to blame. According to the Department of Labor, in seasonally adjusted terms, initial unemployment claims rose by 27,000 to reach 229,000 over the week ending on 4 June. Economists at Barclays Research had forecast a rise to 215,000.
The four-week moving average of initial claims meanwhile rose by 8,000 to 215,000, while secondary claims, which are those not being filed for the first time and referencing the week until 28 May, were unchanged from the week before at roughly 1.31m.
No major corporate earnings were released on Thursday.
Friday newspaper round-up: UK debt, Grenfell, steak shortages
Rishi Sunak has been accused of wasting £11bn of taxpayers’ money by paying too much in interest servicing the government’s debt. The National Institute of Economic and Social Research (NIESR) said the losses were the result of the chancellor’s failure to insure against interest rate rises on £900bn of reserves created through the quantitative easing (QE) programme. – Guardian
Legal bills relating to the Grenfell Tower fire are on course to top a quarter of a billion pounds, according to figures obtained by the Guardian on the eve of the fifth anniversary of the disaster. The public inquiry into the causes of the fire that killed 72 people in the west London tower block has spent £149m so far with more than £60m going to lawyers working for the core participants, the inquiry revealed on Thursday. – Guardian
Supermarkets and restaurants are threatened with steak shortages as the surging cost of fertiliser and feed forces beef farmers to slaughter animals early. Meat processors warned that households will be forced to opt for cheaper cuts of meat such as mince as farmers cut back on fertiliser needed to grow grass for their cows. – Telegraph
A Swedish sex toy designer has scrapped plans to float on the London Stock Exchange. Stockholm-based Lelo has now started looking for a buyer instead after market volatility scuppered plans for a public offering. Lelo has attracted takeover interest from both corporate buyers and private equity funds, Bloomberg reported. – Telegraph
Companies would be criminally liable for fraud and computer misuse committed by senior executives under proposals laid out today by the government’s law reform advisers. The Law Commission is calling for a new offence of “failure to prevent fraud by an employee or agent”. The legislation would apply when a company had not ensured that appropriate measures were in place to prevent their employees or those acting on behalf of the business from committing a fraud for the benefit of the company. – The Times
