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London open: FTSE edges lower amid ‘wait and see’ mood
London stocks edged lower in early trade on Tuesday following a downbeat close on Wall Street, as investors eyed a key US inflation reading due later in the week.
At 0825 GMT, the FTSE 100 was down 0.2% at 7,898.27.
Susannah Streeter head of money and markets at Hargreaves Lansdown, said: “The wait and see mood on the markets is continuing with recent exuberance fading, as investors look ahead to key consumer inflation data stateside, while they assess the implications of the latest ‘chip wars’ between the US and China.
“Shares in a number of semi-conductor specialist Advanced Micro Devices and Intel slipped after Beijing signalled that foreign company chips would be phased out of government computers and services and replaced with home produced versions. This latest chip skirmish isn’t not going to stop the AI juggernaut in its tracks, but it highlights one of the risks ahead for demand in the world’s second largest economy. It’s likely two spheres of AI influence will eventually emerge, one initially much larger led by US tech giants but China will attempt to play catch up in the years to come and forge alliances and partnerships with its own technology.”
On home shores, investors were mulling the latest data from Kantar, which showed that grocery price inflation fell to 4.5% in the year to mid-March – its lowest level since February 2022. However, 23% of British households still identify themselves as struggling financially.
The data showed that Ocado was the fastest growing retailer in Britain this month, while Morrisons has now been in consistent growth for over one year.
In equity markets, Auto Trader slumped as JPMorgan Cazenove put the shares on ‘negative catalyst watch’ ahead of full-year results.
Engineering group Smiths lost ground even as it reaffirmed annual guidance after a rise in half-year earnings and order growth.
Mobico – formerly National Express – was under the cosh again after RBC Capital Markets downgraded the shares to ‘sector perform’ from outperform’.
Dr Martens was hit by a downgrade to ‘sell’ at Goldman Sachs.
Softcat fell as the provider of IT infrastructure products and services reported a decline in full-year revenues.
On the upside, Ocado jumped to the top of the FTSE 100 as it said that in the first quarter of 2024, its Ocado Retail operation saw an 8.1% increase in total item volumes, leading to a 10.6% rise in revenue to £645.3m.
The company said the division – a joint venture with Marks and Spencer – saw its online market share climb to 13.5%, driven by a 6.4% rise in active customers, reaching 1.02 million.
Paddy Power owner Flutter Entertainment rose as it said full-year losses widened to $1.2bn from $370m a year earlier due to one-off costs but revenue jumped nearly 25% amid significant growth in the US.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +4.44% | +27.00 | 635.50 |
| 2 |  |
Kingfisher Plc | +3.26% | +7.80 | 247.40 |
| 3 |  |
Smiths Group Plc | +3.05% | +50.50 | 1,704.50 |
| 4 |  |
Standard Chartered Plc | +1.78% | +12.00 | 687.40 |
| 5 |  |
Rolls-royce Holdings Plc | +1.40% | +5.90 | 427.00 |
| 6 |  |
Direct Line Insurance Group Plc | +1.35% | +2.50 | 187.90 |
| 7 |  |
Ocado Group Plc | +1.13% | +5.10 | 457.70 |
| 8 |  |
Itv Plc | +1.08% | +0.78 | 72.76 |
| 9 |  |
Flutter Entertainment Plc | +0.93% | +160.00 | 17,445.00 |
| 10 |  |
3i Group Plc | +0.82% | +23.00 | 2,814.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Auto Trader Group Plc | -4.99% | -37.00 | 705.20 |
| 2 |  |
Fresnillo Plc | -1.53% | -6.90 | 445.10 |
| 3 |  |
Vodafone Group Plc | -1.23% | -0.84 | 67.54 |
| 4 |  |
Croda International Plc | -1.21% | -60.00 | 4,880.00 |
| 5 |  |
Anglo American Plc | -1.18% | -22.80 | 1,908.40 |
| 6 |  |
Rio Tinto Plc | -1.13% | -56.50 | 4,956.50 |
| 7 |  |
Rightmove Plc | -1.13% | -6.20 | 544.00 |
| 8 |  |
Ferguson Plc | -1.07% | -185.00 | 17,165.00 |
| 9 |  |
National Grid Plc | -0.94% | -10.00 | 1,059.50 |
| 10 |  |
Bhp Group Limited | -0.91% | -20.50 | 2,243.50 |
US close: Stocks slip after last week’s fresh highs
US stocks fell modestly on Monday, easing from record highs reached last week.
The Dow Jones Industrial Average decreased 0.41%, closing at 39,313.64, while the S&P 500 and Nasdaq Composite followed a similar trend, dropping 0.31% and 0.27% respectively, to end at 5,218.19 and 16,384.47.
In currency markets, the dollar was last 0.03% weaker on sterling, trading at 79.12p, while it strengthened 0.01% against the euro to 92.28 euro cents.
The greenback meanwhile exhibited a slight weakening against the yen, slipping 0.02% to change hands at JPY 151.39.
“US stocks traded cautiously on Monday as the holiday-shortened week began, with investors hesitating to increase their risk exposure ahead of critical inflation data,” said SPI Asset Management managing partner Stephen Innes.
“Although all three major US indices recovered from their intraday lows, the overall sentiment remained subdued.
“After a strong performance last week, investors may be taking a hiatus and possibly enjoying the spring break, while others are adopting a wait-and-see approach for the next bullish catalyst, such as a favourable outcome from the Fed’s preferred inflation gauge.”
Innes said that in that context, an ‘all-clear’ signal would entail the inflation data meeting consensus expectations or coming in lower than anticipated.
“As we enter the earnings season window, investors are eager to divert attention from the familiar inflation narrative dominating the markets.
“During this period, the default setting typically revolves around whether or not companies will deliver robust earnings growth to justify the S&P 500’s valuation, which currently stands at a lofty 21 times earnings.
“Hence, investors typically move into wait-watch mode as they get influenced by the bombardment of bears.”
New home sales dip modestly in February, underlying market still strong
On the economic front, the US housing market showed mixed signals in February.
While sales of new single-family homes unexpectedly declined by 0.3%, revised data for January indicated a stronger-than-expected performance.
The overall trend remained positive, driven by a persistent shortage of existing homes for sale.
Despite the slight February drop, new home sales were still 5.9% higher than the same month last year.
Economists noted that new home sales data can fluctuate monthly, making the longer-term trend a more reliable indicator of housing market health.
Chipmakers face pressure on China concerns
In equities, chipmakers AMD and Intel experienced declines, with AMD losing 0.57%, while Intel was down 1.74% by the close.
The downturn followed a Financial Times report that China was planning to phase out the use of the companies’ microprocessors in federal IT systems, favouring domestic alternatives.
Elsewhere, tech giants Apple, Meta and Alphabet saw their share prices slide pending possible fines from European regulators.
Apple declined by 0.83%, Meta by 1.29%, and Alphabet by 0.41%, as concerns centred around potential anti-competitive practices.
On the upside, Boeing shares ascended 1.36% after the company announced that its chairman, CEO and head of commercial airlines would all be stepping down.
Tuesday newspaper round-up: Amanda Staveley, ITV, Bidstack
Are 200,000 jobs really supported by the oil and gas industry in the North Sea? Campaigners and MPs are questioning the longstanding government claim. Ministers have repeatedly used the 200,000 jobs figure as justification for pushing ahead with more fossil fuel developments despite the escalating climate crisis and widespread opposition from scientists and energy experts. – Guardian
The Newcastle United co-owner Amanda Staveley faces having to pay a Greek shipping magnate more than £3m after a high court legal battle. Staveley had been issued with a statutory demand by businessman Victor Restis, who claimed she was liable to pay him £3.4m owed from an investment he made in her business ventures. – Guardian
Britain is producing the smallest amount of energy on record as a plunge in North Sea fossil fuels leaves the country more reliant than ever on imports. Around 40pc of oil and gas used in the UK is shipped in from abroad, according to a new report from Offshore Energies UK (OEUK). Meanwhile, 11pc of electricity is brought in using undersea cables linked to the Continent. – Telegraph
ITV’s legal bill soared to £24m last year as bosses grappled with the fallout from the Phillip Schofield scandal. The broadcasting giant racked up millions of pounds in legal costs in 2023, some of which related to a KC review into Mr Schofield’s affair with a young colleague. The This Morning presenter stepped down from ITV in May last year after admitting to an “unwise, but not illegal” relationship with a male studio runner more than three decades his junior. – Telegraph
A former City figure and his wife who allegedly received at least £23.9 million from London Capital & Finance have agreed a settlement with administrators of the collapsed minibonds business, it has emerged. Simon and Helen Hume-Kendall were accused of using the money they received from London Capital & Finance, which the firm had raised by selling toxic minibonds to thousands of small investors, to finance a luxury lifestyle, including lifetime membership of Annabel’s, the private members’ club in London, and expensive travel. – The Times
Executives of an insolvent Aim-quoted in-game video advertising company have bought the business out of administration via an apparent pre-pack sale. James Draper, the founder and chief executive of Bidstack, said they had acquired Bidstack Limited and all the operating entities of the group from administrators at Alvarez & Marsal Europe. – The Times
