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London stocks fell in early trade on Tuesday as worries about a global slowdown continued to weigh on investors’ minds.
At 0920 BST, the FTSE 100 was down 0.4% at 7,165.42.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘”There is a wariness on financial markets, as concerns about fresh Covid outbreak add to worries about a global slowdown, with investors staying cautious ahead of a fresh temperature check on the US economy.
“The latest US inflation reading is out tomorrow and already the CPI number is expected to be hot but if it comes in above the expected 8.8% year on year, it’s likely to cause a fresh bout of nervousness. Another scorching snapshot is likely to pour concrete into the path laid out by the Federal Reserve for an aggressive path of rate hikes, and cement concerns that growth will be flattened and the economy could contract.
“With shutdowns in China gathering pace as infections rise, it’s adding to nervousness about the destructive nature of Covid in the world’s second largest economy. Casinos and other businesses in Macau have been closed for the second time since the pandemic began, while millions of residents in Xi’an, Lanzhou and Haikou are in partial lockdown. In Shanghai mass testing is ominously underway yet again, just weeks after the city-wide lockdown was lifted, raising worries about the potential for more supply chain snarl ups.”
On home shores, the latest BRC-KPMG Retail Sales Monitor showed that retail sales fell in June, as surging inflation and the cost-of-living crisis caused shoppers to cut spending.
Total sales fell 1.0% last month, compared to an increase of 10.4% in June 2021. On a like-for-like basis, UK retail sales were down 1.3% on June 2021, when they had jumped 6.7%.
In the three months to June, food sales increased 2.2% on a total basis or by 1.6% on an underlying basis. But non-food-sales slid 3.3% and 4.2% on a total and like-for-like basis.
Total retail sales have now declined for three months in a row for the first time since the start of the pandemic in 2020, although the falls then were considerably large.
In equity markets, miners were under the cosh again, with Anglo American and Antofagasta both sharply lower.
British Land, Hammerson and Landsec were all knocked lower by rating downgrades at RBC Capital Markets.
Building materials distributor Grafton was weaker despite reporting a jump in first-half revenue and backing its full-year operating profit expectations.
On the upside, online trading platform Plus500 rallied after it said that revenue and profit for the current year were set to be ahead of market expectations following a solid performance in the first half.
United Utilities ticked higher after agreeing to sell its portfolio of renewable energy assets in a £100m deal.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +2.23% | +3.45 | 158.40 |
| 2 |  |
Centrica Plc | +2.15% | +1.78 | 84.60 |
| 3 |  |
Sse Plc | +1.92% | +33.50 | 1,779.50 |
| 4 |  |
Bae Systems Plc | +1.67% | +13.60 | 825.60 |
| 5 |  |
Severn Trent Plc | +1.47% | +41.00 | 2,838.00 |
| 6 |  |
Compass Group Plc | +1.45% | +26.00 | 1,815.00 |
| 7 |  |
United Utilities Group Plc | +1.35% | +14.00 | 1,047.50 |
| 8 |  |
Admiral Group Plc | +1.30% | +30.00 | 2,346.00 |
| 9 |  |
Burberry Group Plc | +1.18% | +19.50 | 1,670.50 |
| 10 |  |
National Grid Plc | +1.11% | +12.00 | 1,096.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British Land Company Plc | -3.72% | -17.20 | 445.60 |
| 2 |  |
Land Securities Group Plc | -3.59% | -24.20 | 650.80 |
| 3 |  |
Prudential Plc | -2.08% | -21.00 | 989.00 |
| 4 |  |
Standard Chartered Plc | -1.95% | -11.40 | 573.80 |
| 5 |  |
Marks And Spencer Group Plc | -1.93% | -2.60 | 132.15 |
| 6 |  |
Flutter Entertainment Plc | -1.91% | -148.00 | 7,604.00 |
| 7 |  |
Anglo American Plc | -1.91% | -52.00 | 2,672.50 |
| 8 |  |
Barclays Plc | -1.91% | -2.88 | 148.12 |
| 9 |  |
Carnival Plc | -1.90% | -12.20 | 628.60 |
| 10 |  |
Tui Ag | -1.90% | -2.45 | 126.70 |
US close: Stocks slip as investors prep for Q2 earnings
Wall Street stocks closed weaker on Monday, as market participants prepped for the beginning of the second quarter earnings season.
At the close, the Dow Jones Industrial Average was down 0.52% at 31,173.84, as the S&P 500 lost 1.15% at 3,854.43 and the Nasdaq Composite was off 2.26% at 11,372.60.
The Dow closed 164.31 points lower on Monday, extending losses recorded in the previous session.
“US markets have followed markets in Europe lower, with the main focus this week on the latest US consumer price index report, which is expected to see headline CPI reach a new 40 year high, close to 9%,” said CMC Markets chief market analyst Michael Hewson.
Covid-19 was in focus on Monday, with Shanghai declaring its first case of the BA.5 subvariant, forcing Macau to close its casinos for a week.
Also drawing an amount of investor attention was the yield on the two-year Treasury note, trading above its 10-year counterpart in an inversion many see as a recession indicator.
In equities, the primary focus early in the session was news that Elon Musk had opted to terminate a deal worth $44bn to buy social media giant Twitter.
The tech billionaire alleged that Twitter had been dishonest regarding the number of bots and fake accounts on the platform.
“On the downside Twitter shares are back in focus, opening sharply lower after Friday’s reports that Elon Musk is pulling the plug on the $44bn deal for the social media company,” CMC’s Michael Hewson said earlier.
“With Twitter set to bring legal action against Musk, the stage appears to be being set for a messy legal battle with Musk saying that Twitter needs to be more transparent with its user data and that its assessment that only 5% of its total users are bots is a massive underestimation.”
Shares in Twitter were 11.3% weaker by the close, with other tech plays following suit, as Facebook parent Meta Platforms slid 4.68% and streaming behemoth Netflix ended the day 5.15% weaker.
No major corporate earnings or data points were scheduled for release on Monday but PepsiCo, Delta Air Lines, JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup were all set to report before the end of the week.
Tuesday newspaper round-up: Strikes, Klarna, small business borrowers
Ministers have approved controversial plans to allow agency workers to replace striking workers, voting through the regulations on Monday night by 289 votes to 202. While the business minister, Jane Hunt, said the change, which was accelerated as a result of the ongoing rail strikes, was needed to remove the “outdated blanket ban” on using agency workers to cover official industrial action, critics say the measure is akin to a “scab charter”. – Guardian
Klarna, the “buy now, pay later” fintech darling that was once Europe’s most valuable private tech company, has seen its valueK slashed by 85% to less than $7bn in its latest round of fundraising. The company, which enjoyed stellar growth while also being criticised for potentially leading shoppers into unsustainable debt, announced the valuation after the conclusion of a difficult $800m funding round as investors continued to question the true worth of many tech businesses. – Guardian
A major microchip factory is to be built in France with taxpayer money as Emmanuel Macron scrambles to reduce dependence on Chinese imports. The facility is being constructed by STMicroelectronics and GlobalFoundries at an existing site in Crolles, near Grenoble, increasing its capacity from 10,000 to 22,000 wafers per week. – Telegraph
The City regulator has ordered bank boards to step in and improve the way struggling small business borrowers are handled after uncovering widespread mistreatment of companies across the banking industry. A Financial Conduct Authority review of 11 banks’ handling of borrowers who are in financial difficulty, including those struggling to repay taxpayer-backed pandemic loans, found “repeated instances of poor customer outcomes and failures to treat customers fairly”. – The Times
A pioneering workplace savings scheme for refuse collectors and other lower-paid workers in Britain has produced a remarkable level of take-up, which experts say could one day transform the way people save. Suez, the waste recovery and recycling group, has recorded a 66 times higher take-up rate compared with other employers by making its scheme opt out rather than an opt in. – The Times
