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London open: FTSE recovers despite political turmoil
London stocks rose in early trade on Wednesday, recovering after heavy losses in the previous session, despite the latest political turmoil.
At 0835 BST, the FTSE 100 was up 2.1% at 7,176.05, having closed down 2.9% on Tuesday amid renewed concerns about inflation and a global slowdown.
On Tuesday evening, Chancellor Rishi Sunak and Health Secretary Sajid Javid resigned, leaving Prime Minister Boris Johnson’s future in doubt. Having tumbled in the aftermath of the news, sterling was regaining some composure, up 0.2% against the dollar at 1.1973.
Richard Hunter, head of markets at Interactive Investor, said: “The UK’s premier index staged a rebound in early exchanges, with gains broadly based and with the more beaten down stocks enjoying some relief. This comes after a punishing session yesterday which wiped almost 3% from the index as energy stocks felt the full force of the selling pressure.
“This was enough to add to the damage which has been done over recent weeks, and the FTSE 100 is now down by 3.5% in the year to date, despite the early bounce today.
“UK markets will be in general focus today as the latest round of political drama unfolds, with sterling likely to feel most heat.
“The imminent reporting season on both sides of the pond now takes on additional significance as investors attempt to gauge not only the current performance of corporates on the ground, but also outlook and guidance comments from companies given the murky waters of growth and economic prospects.”
In equity markets, Abrdn jumped to the top of the FTSE 100 after it announced the launch of a £300m share buyback programme.
Intermediate Capital rallied after The Times reported that the fund manager was in exclusive talks to buy Wembley Arena.
Online rail ticketing platform Trainline surged as it lifted annual guidance after a bigger-than-expected surge in demand for travel, particularly from US visitors.
Industrial thread maker Coats rallied after announcing the acquisition of Texon International Group, a footwear solutions provider, for an enterprise value of $237m.
Discoverie also gained after saying it had bought CDT, a designer and manufacturer of customised plastic enclosures for circuit boards, membrane keypads and associated electronics components, for £5m.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +5.74% | +37.20 | 685.00 |
| 2 |  |
Hargreaves Lansdown Plc | +3.49% | +26.60 | 789.80 |
| 3 |  |
Informa Plc | +3.23% | +16.60 | 531.00 |
| 4 |  |
Auto Trader Group Plc | +3.16% | +17.80 | 581.00 |
| 5 |  |
Relx Plc | +3.15% | +69.00 | 2,258.00 |
| 6 |  |
Scottish Mortgage Investment Trust Plc | +3.06% | +22.20 | 748.40 |
| 7 |  |
St. James’s Place Plc | +2.89% | +30.50 | 1,084.50 |
| 8 |  |
Mondi Plc | +2.82% | +39.50 | 1,440.50 |
| 9 |  |
Burberry Group Plc | +2.82% | +44.50 | 1,624.50 |
| 10 |  |
Micro Focus International Plc | +2.81% | +7.20 | 263.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | -3.03% | -22.00 | 704.80 |
| 2 |  |
Centrica Plc | -2.50% | -1.90 | 74.10 |
| 3 |  |
Standard Chartered Plc | -2.09% | -12.40 | 579.60 |
| 4 |  |
Hsbc Holdings Plc | -1.51% | -7.90 | 515.20 |
| 5 |  |
Barclays Plc | -0.80% | -1.18 | 146.30 |
| 6 |  |
Legal & General Group Plc | -0.47% | -1.10 | 232.50 |
| 7 |  |
Ferguson Plc | -0.45% | -40.00 | 8,946.00 |
| 8 |  |
Direct Line Insurance Group Plc | -0.25% | -0.60 | 235.70 |
| 9 |  |
Marks And Spencer Group Plc | -0.18% | -0.25 | 137.20 |
| 10 |  |
Lloyds Banking Group Plc | -0.10% | -0.04 | 41.32 |
US close: Stocks mixed as recession fears remain in focus
Wall Street stocks turned in a mixed performance on Tuesday as the US dollar rallied against the Euro and recession fears returned to the forefront of investors’ minds.
At the close, the Dow Jones Industrial Average was down 0.42%% at 30,967.82, while the S&P 500 was 0.16% firmer at 3,831.39 and the Nasdaq Composite saw out the session 1.75% stronger at 11,322.24.
The Dow closed 129.44 points lower on Tuesday, taking a bite out of gains recorded ahead of the Independence Day long weekend.
The blue-chip Dow headed south as the dollar moved higher against the Euro, up around 1.52% at roughly 0.973 at the close of trading on Tuesday – the USD’s strongest level against its European counterpart since 2003.
The Euro’s decline comes after Eurozone PMIs highlighted recession risks in the bloc, slipping to a 16-month low. If the European Central Bank fails to meet its objective of tapering inflation soon, some economists believe it likely that the EUR and USD will be at parity in the not-to-distant future.
Also in focus, traders were optimistic that the Biden administration may roll back several tariffs imposed on China during the Donald Trump era as part of an effort to ease inflation.
However, concerns regarding economic growth continued to hang over market participants as the US looks to recover from a brutal first half, which saw GDP decline in both quarters – a potential recession indicator.
Another potential recession signal was also drawing an amount of investor attention as the two-year and 10-year Treasury yields inverted after the benchmark 10-year note continued to move lower despite the Fed vowing to aggressively battle inflation. The 10-year note was sitting at 2.805% on Tuesday, while its two-year equivalent was at 2.829%.
Elsewhere, the price of oil also declined, with futures in US benchmark West Texas Intermediate falling below $100 a barrel.
On the macro front, new orders for US manufactured goods rose 1.6% month-on-month in May, according to the Census Bureau, beating Wall Street estimates for a 0.5% gain and following an upwardly revised 0.7% increase in April.
No major corporate earnings were slated for release on Tuesday.
Wednesday newspaper round-up: Missed bills, interest rates, CureVac, M&S
More than 2m households have missed a bill payment every month this year as people struggle to keep their heads above water in a “relentless cost of living crisis”, according to new research from consumer group Which?. In June an estimated 2.1m households missed or defaulted on at least one mortgage, rent, loan, credit card or bill, according to the consumer champion’s monthly insight tracker. This figure has been above 2 million every month so far this year, it said. – Guardian
Next to the container terminal at Portsmouth International Port, just a few hundred metres from the water’s edge, stands a new hi-tech border control post. Built over the past 18 months at a cost of £25m, a cost shared by the taxpayer and the port’s owner, Portsmouth city council, the high-specification facility should be in its inaugural week of use, handling post-Brexit checks on imports of animal, plant and forestry products arriving from the EU. – Guardian
The Bank of England has raised the spectre of a sharp rise in interest rates after deputy governor Sir Jon Cunliffe said that households could withstand borrowing costs as high as 5pc without defaulting on their debts. A combination of more fixed rate mortgage borrowers, lending caps imposed by the Bank in 2014 and taxpayer support during the cost of living crisis mean that families could cope with rates far higher than the 3pc peak forecast by markets in coming months, Sir Jon said. – Telegraph
The team behind Britain’s most-used Covid booster vaccine is being sued by a German pharmaceutical firm which has accused it of stealing the technology behind the jab. CureVac has filed a lawsuit against BioNTech in Germany, saying it is seeking “fair compensation” for infringement of its intellectual property rights related to the mRNA technology used in the vaccine. – Telegraph
Marks & Spencer Group suffered a sizeable investor revolt yesterday against the pay package last year for Steve Rowe, its outgoing chief executive. Almost 30 per cent of shareholders who voted at the annual meeting were against approving the retailer’s remuneration report, uneasy about a £1.6 million bonus that doubled Rowe’s salary at a time when there are still question marks over the company’s recovery and dividend. – The Times
