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London open: Stocks nudge down as investors mull PBOC
London stocks nudged lower in early trade on Tuesday as investors mulled the latest policy announcement from the People’s Bank of China and looked ahead to UK inflation data and an expected rate hike from the Bank of England this week.
At 0840 BST, the FTSE 100 was down 0.1% at 7,582.93.
Earlier, the PBOC cut two key lending rates as it looks to bolster the economy.
The central bank cut the one-year loan prime rate by 10 basis points to 3.55% and the five-year rate by 10 basis points to 4.2%. This was the first such move in 10 months.
Richard Hunter, head of markets at Interactive Investor, said: “In the absence of a cue from a closed Wall Street and with Asian markets drifting lower overnight, UK markets struggled for direction in muted early trade.
“US markets were closed for the Juneteenth holiday, leaving Asian investors to their own devices. The result was a dip in most major indices across the continent, with Chinese investors unable to muster much enthusiasm despite further interest rate cuts from the People’s Bank of China.
“Rates which affect corporate loans and the mortgage rate were cut, but had already been priced in by markets, where there was some disappointment that the reductions were not more aggressive. On top of the easing measures taken by the central bank over the last week, there is clear recognition that the Chinese economic rebound is struggling to maintain momentum, and a number of economists have also lowered their outlook for the region.
“A wider stimulus package is now seemingly required to rescue sentiment and boost economic growth, as the headwinds of high youth unemployment, an ailing property sector and an uncommitted consumer continue to weigh on markets across the region.
“The main UK markets took their lead from Asia and drifted in early exchanges. Domestically, the highlight and to some extent main concern of the week will be the Bank of England’s interest rate decision on Thursday, where another hike is widely expected.”
In equity markets, Currys rallied after Frasers Group took an 8.9% stake in the electricals retailer. Frasers, which owns House of Fraser, Flannels and Sports Direct, among others, was also a high riser.
Online supermarket Ocado was under the cosh after JPMorgan Cazenove cut its price target on the shares to 400p from 450p and placed the stock on ‘negative catalyst watch’ into first-half results. JPM said: “We believe Ocado’s online grocery activities will continue to face meaningful headwinds in the next months.”
Outside the FTSE 350, Lookers surged more than 30% after agreeing to be bought by Toronto-based car dealership Alpha Auto Group in a £465.4m cash deal. The price represents a 35.3% premium to the closing share price on Monday.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +1.30% | +8.20 | 638.80 |
| 2 |  |
Bae Systems Plc | +1.26% | +12.00 | 962.40 |
| 3 |  |
Astrazeneca Plc | +1.05% | +122.00 | 11,768.00 |
| 4 |  |
Centrica Plc | +0.88% | +1.05 | 119.70 |
| 5 |  |
Compass Group Plc | +0.88% | +19.00 | 2,189.00 |
| 6 |  |
Sse Plc | +0.86% | +16.00 | 1,870.00 |
| 7 |  |
Barclays Plc | +0.82% | +1.26 | 154.72 |
| 8 |  |
Relx Plc | +0.80% | +21.00 | 2,632.00 |
| 9 |  |
Imperial Brands Plc | +0.77% | +13.50 | 1,767.50 |
| 10 |  |
National Grid Plc | +0.72% | +7.50 | 1,055.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -4.99% | -21.70 | 413.20 |
| 2 |  |
Carnival Plc | -2.62% | -30.00 | 1,113.50 |
| 3 |  |
Tui Ag | -2.20% | -13.00 | 577.00 |
| 4 |  |
Rightmove Plc | -2.16% | -11.40 | 517.60 |
| 5 |  |
Itv Plc | -1.82% | -1.28 | 69.24 |
| 6 |  |
Anglo American Plc | -1.71% | -42.50 | 2,441.50 |
| 7 |  |
Smurfit Kappa Group Plc | -1.62% | -46.00 | 2,794.00 |
| 8 |  |
Glencore Plc | -1.59% | -7.30 | 451.70 |
| 9 |  |
Melrose Industries Plc | -1.53% | -7.80 | 503.00 |
| 10 |  |
Informa Plc | -1.47% | -10.60 | 709.40 |
Tuesday newspaper round-up: UK economy, Odey, John Lewis
More than half a trillion pounds’ worth of underinvestment by government and business over recent decades has left Britain’s economy trapped in a growth “doom loop”, according to a thinktank. Sounding the alarm as the economy struggles to gain momentum, the Institute for Public Policy Research said the UK risked falling further behind comparable wealthy nations without a sharp turnaround in approach. – Guardian
The Confederation of British Industry has been frozen out of regular meetings with other leading business lobby groups, hampering its fight for survival after a sexual misconduct scandal. Formerly Britain’s leading voice for business, the CBI has been battling to overhaul its culture and regain trust after multiple allegations of misconduct were made by female employees, including two who said they were raped. Those allegations resulted in an exodus of members from John Lewis to Aviva and led Labour and the Conservatives to cut ties with the organisation. – Guardian
One of Britain’s most senior hackers has left spy agency GCHQ to join the National Crime Agency (NCA) in a blow to Britain’s international cyber capabilities. James Babbage, commander of the National Cyber Force (NCF), is joining the NCA as head of its intelligence arm. – Telegraph
Crispin Odey has lost his status as a “fit and proper” individual in the City of London in another blow for the tycoon since he became mired in allegations of sexual misconduct. Odey, 64, was ousted from from the eponymous hedge fund he founded earlier this month and the Financial Conduct Authority’s register shows he is no longer certified by the firm to perform a role dealing directly with clients. It is a symbolic blow to Odey, one of Britain’s best-known hedge fund managers. – The Times
The partnership behind John Lewis and Waitrose has written down the value of its head offices by £15.6 million, providing the latest sign that the work-from-home revolution and higher interest rates are depressing commercial property valuations. The writedown came after the food-to-fashion retailer closed seven floors of its central London headquarters and “revised” the use of its office buildings in Bracknell, in Berkshire, according to new annual account filings. – The Times
