Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
London open: Stocks fall after disappointing China data, Burberry profit warning
London stocks fell in early trade on Monday following disappointing Chinese GDP figures and a profit warning from Burberry.
At 0825 BST, the FTSE 100 was down 0.7% at 8,191.87, with investors also mulling an attempt on US presidential candidate Donald Trump’s life over the weekend, which has raised expectations he may win the election.
Data released earlier by China’s National Bureau of Statistics showed that second-quarter growth slowed to 4.7% year-on-year from 5.3% in the first quarter, missing expectations of 5.1% growth.
ING said “weak consumption and property continued to be a drag on growth”.
It added that more policy support will be needed in order to achieve this year’s 5% growth target.
House prices were 4.5% lower than last year in June, worsening from the 3.9% drop in May, registering the 12th consecutive decline and the steepest decrease since June 2015.
Annual retail sales growth slowed to 2.0% from 3.7%, missing the 3.3% estimate, reflecting continued weak domestic demand.
Meanwhile, industrial production growth eased to 5.3% year-on-year from 5.6%, while fixed asset investment growth slipped to 3.9% from 4.0%.
On home shores, data from Rightmove showed that house prices dipped in July as the general election, international sporting events and the start of the summer holidays unsettled the market.
According to Rightmove’s latest house price index, house prices eased 0.4% in July month-on-month, compared to June, when growth was flat. On an annual basis, prices ticked up 0.4%.
The national average asking price now stands at £373,493.
Rightmove said the drop was bigger than usual for this time of year, with new sellers hit with a series of distractions, including Euro 2024 and weeks of campaigning ahead of the 4 July general election.
The 20-year average for July is a 0.2% decline.
However, Rightmove added that growing expectations for an imminent cut in interest rates, along with a more stable political outlook following Labour’s historic win, boded well for the autumn market.
The number of sales being agreed was also an “encouraging” 15% above the same period a year ago, it noted.
Tim Bannister, director of property science at Rightmove, said: “Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing and result of the general election.
“We’ve now got the political certainty of a new government with a large majority, which we expect will help home-mover confidence. It’s very early days, but the new chancellor’s immediately announcements on housebuilding targets and planning reform are positive signs.”
In equity markets, luxury goods maker Burberry tumbled as it ousted its chief executive, suspended dividend payments and issued a profits warning after a slump in first-quarter revenues due to weak demand in all markets.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “This is a kitchen sink exercise par excellence, and underscores the enormity of the challenge facing Burberry in a world where Chinese sales can no longer be taken for granted.
“However, as one of the more heavily-shorted FTSE shares, and trading at 11 times earnings, perhaps today might see at least a short-term pop for the share price, on the basis that most of the bad news is now firmly in the price.”
Ocado tanked after a downgrade to ‘underperform’ at Bernstein, while oil giant BP gushed lower after a downgrade to ‘equalweight’ at Morgan Stanley.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hikma Pharmaceuticals Plc | +3.16% | +58.00 | 1,895.00 |
| 2 |  |
Bae Systems Plc | +1.81% | +23.00 | 1,291.00 |
| 3 |  |
Intercontinental Hotels Group Plc | +1.20% | +100.00 | 8,416.00 |
| 4 |  |
Ashtead Group Plc | +1.03% | +54.00 | 5,276.00 |
| 5 |  |
Ferguson Plc | +0.96% | +150.00 | 15,710.00 |
| 6 |  |
3i Group Plc | +0.90% | +27.00 | 3,043.00 |
| 7 |  |
Pearson Plc | +0.89% | +9.00 | 1,022.50 |
| 8 |  |
Itv Plc | +0.78% | +0.65 | 83.80 |
| 9 |  |
Relx Plc | +0.67% | +24.00 | 3,600.00 |
| 10 |  |
Unilever Plc | +0.65% | +29.00 | 4,463.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | -16.47% | -146.00 | 740.60 |
| 2 |  |
Ocado Group Plc | -9.29% | -35.30 | 344.70 |
| 3 |  |
Antofagasta Plc | -2.61% | -58.00 | 2,167.00 |
| 4 |  |
Croda International Plc | -2.06% | -84.00 | 3,990.00 |
| 5 |  |
Prudential Plc | -1.53% | -11.20 | 720.80 |
| 6 |  |
Sse Plc | -1.52% | -28.50 | 1,840.50 |
| 7 |  |
Marks And Spencer Group Plc | -1.29% | -4.00 | 305.60 |
| 8 |  |
Anglo American Plc | -1.11% | -26.50 | 2,369.50 |
| 9 |  |
Rentokil Initial Plc | -0.99% | -4.60 | 459.40 |
| 10 |  |
Vodafone Group Plc | -0.96% | -0.68 | 69.84 |
US close: Markets rise despite bank sell-off as rate-cut hopes increase
US stocks finished higher with the Dow topping the 40,000 mark for the first time in nearly two months despite a gloomy start to bank earnings season, as expectations of an interest-rate cut in September continued to climb.
Investors were largely shrugging off an upside surprise to June’s producer price index and instead chose to focus on Thursday’s sharper-than-expected slowdown in consumer-price inflation to its joint lowest level in more than three years.
All three main Wall Street benchmarks gained 0.6% on Friday, with the Dow in particular settling at 40,000.90, its highest closing level since 17 May.
In economic data, the US producer price index rose by 2.6% in June, up from 2.6% the month before and surprising economists who expected a slowdown to 2.3%.
“Producer prices at the headline rose slightly more than expected in June, but more encouragingly core prices, which strip out volatile components of the index, were unchanged. We expect lower oil prices and ongoing deflation at factory gates in China to help keep a lid on goods prices,” said Matthew Martin, US economist at Oxford Economics.
“With officials more attentive to downside risks to the labor market of restrictive monetary policy, we expect the central bank to deliver the first rate cut in September followed by a second in December.”
In other news, the University of Michigan’s consumer sentiment index showed its fourth straight monthly decline, dropping from 68.2 in June to 66 in July. The preliminary print marked the lowest reading since November and was well below forecasts of 68.5.
Banks disappoint
Citigroup, Wells Fargo and JPMorgan Chase & Co all closed in the red after the release of their second-quarter results.
Citigroup posted higher quarterly revenues and profit, alongside an increased dividend, but shares dropped 2% after net credit losses jumped 52%.
Wells Fargo sank 6% after posting a 9% decline in net interest income to $11.92bn, below the $12.12bn expected on the Street, primarily due to the impact of higher interest rates on funding costs.
JP Morgan fell 1% despite posting big increases on both its top and bottom lines, after boss Jamie Dimon continued to call attention to the potential risks on the horizon.
“The question for investors now is whether this sell-off is part of the rotation out of the higher performing stocks towards value investing, or is there something within these results that are unsettling investors,” said Kathleen Brooks, research director at XTB.
AT&T fell after revealing that the call and text logs of its customers were breached between May and October 2022. The company said it was working with law enforcement to arrest those involved, and understands that “at least one person has been apprehended”.
Monday newspaper round-up: Lloyds Banking, Sky News, Hotel Chocolat
A solar energy project developer linked to Thames Water is to be liquidated and its staff made redundant as the crisis engulfing the debt-laden water supplier puts strain on its complex corporate structure. Trinzic Operations Ltd, which is ultimately owned by Thames’s parent company Kemble Water Holdings, is to be voluntarily shut down, the Guardian can reveal. – Guardian
Lloyds Banking Group will start converting its disused office sites into social housing, as the UK’s largest mortgage provider lays the groundwork for a fresh housebuilding boom after Labour’s election win. The bank, which started reviewing its property portfolio during the Covid lockdown in 2020, is launching the programme with a decommissioned data and office space in Pudsey, West Yorkshire. Lloyds will sell the site to a local housing group with the agreement that 80 new homes will then be rented at about half the usual rate. Lloyds said it was assessing other potential offices and datacentres in the UK that it could do something similar with. – Guardian
Sky News has begun to slash its freelance budgets as bosses look to cut costs amid a decline in viewing figures. The Telegraph has seen evidence that the broadcaster has reduced its use of freelance workers in roles including producers and guest bookers. Staff have reported a sharp reduction in the number of shifts available in recent months. – Telegraph
Scrapping inheritance tax relief would hit thousands of family businesses with a £1.4bn bill each year, firms have warned, amid fears Labour is plotting a raid on the estates of grieving families. More than 3,000 family businesses would be hit with soaring inheritance tax bills each year if the relief was scrapped, which could trigger company liquidations and job losses, the lobby group Family Business UK (FBUK) warned. – Telegraph
The British luxury brand Hotel Chocolat plans to open 25 new shops and expand manufacturing in the UK, with the backing of its new owner Mars. The chocolatier, bought last year by the US confectionery giant, will open the stores next year in cities such as Belfast and Glasgow, as well as market towns including Ilkley, West Yorkshire, and Morpeth, Northumberland. Plans are also afoot to “upsize” in existing locations such as Nottingham and Chichester, West Sussex. – The Times
The former boss of LXi Reit, the property investor, sent an email to colleagues at the investment firm Alvarium announcing the launch of Home Reit, even though he maintains that he has never been involved with the scandal-hit business. Simon Lee wrote an email to “Alvarium London Office” in September 2020, weeks before the float of the housing-for-the-homeless group that is now being investigated by regulators and sued by investors. – The Times
