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London open: Stocks fall after US selloff, amid earnings deluge
London stocks fell in early trade on Thursday, taking their cue from a downbeat session on Wall Street, where tech names came under pressure.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “Underwhelming results from Tesla and Alphabet painted the equity markets in the red yesterday. The S&P 500 experienced its worst selloff since December 2022 with a 2.30% drop. It tested its 50-DMA (near 5428) to the downside. Nasdaq 100 tumbled 3.65% and sank below its own 50-DMA.
“Tesla dived more than 12% on earnings miss and no fresh news on robotaxis, Google lost 5% on prospects of increased AI spending. Google’s capex spending will reach or exceed $24bn that will bring the total spending this year to almost $50bn – or around 84% more than the past five-year average according to the WSJ. The company CEO thinks that underinvesting is a bigger risk than overinvesting. But that narrative is no longer welcome among investors.”
At 0830 BST, the FTSE 100 was down 0.8% at 8,086.65, as investors waded through a barrage of corporate news.
Centrica tumbled as the British Gas owner said it was extending its share buyback programme but posted a drop in first-half profits in what it called a more “normalised” external environment.
In the six months to 30 June, adjusted operating profit fell to £1.04bn from 2.08bn in the same period a year earlier, with pre-tax profit down to £1.1bn from £2.07bn. Adjusted operating profit at British Gas Energy slid to £159m from £969m.
Rentokil and Airtel Africa were also in the red after results, while Lloyds Banking Group fell as it reported a drop in first-half profit as costs rose.
In the six months to the end of June, statutory pre-tax profit at the bank fell 14% from the same period a year earlier to £3.32bn. This was due to lower net interest income and higher operating expenses, partly offset by a lower impairment charge, the bank said
AstraZeneca lost ground even as the pharmaceuticals giant lifted its full-year guidance and posted an 18% increase in total revenue for the first half to $25.6bn, driven by significant growth in product sales and alliance revenue.
BT was under the cosh as it reiterated full-year targets after what it called a “solid start” to the year, with strong growth in fibre and customer numbers, but said revenues were held back by a weaker performance in the business division.
Centamin, CMC Markets and broadcaster ITV were also weaker after results.
On the upside, consumer goods company Unilever rallied despite posting worse-than-expected second-quarter underlying sales.
British American Tobacco gained as its first-half profits beat analysts’ expectations, while opioid addiction treatment maker Indivior surged as it announced a $100m share buyback programme and said second-quarter results were in line with updated guidance.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Unilever Plc | +5.39% | +237.00 | 4,634.00 |
| 2 |  |
British American Tobacco Plc | +2.87% | +74.00 | 2,650.00 |
| 3 |  |
Imperial Brands Plc | +1.44% | +30.00 | 2,116.00 |
| 4 |  |
Relx Plc | +1.21% | +42.00 | 3,524.00 |
| 5 |  |
Smith & Nephew Plc | +0.90% | +10.00 | 1,121.50 |
| 6 |  |
Easyjet Plc | +0.86% | +3.80 | 444.50 |
| 7 |  |
Diageo Plc | +0.46% | +11.50 | 2,508.00 |
| 8 |  |
Compass Group Plc | +0.35% | +8.00 | 2,302.00 |
| 9 |  |
Ocado Group Plc | +0.34% | +1.40 | 412.50 |
| 10 |  |
Pearson Plc | +0.29% | +3.00 | 1,029.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | -8.04% | -11.50 | 131.55 |
| 2 |  |
Itv Plc | -4.98% | -4.20 | 80.15 |
| 3 |  |
Rentokil Initial Plc | -4.26% | -20.20 | 453.50 |
| 4 |  |
Astrazeneca Plc | -3.39% | -414.00 | 11,800.00 |
| 5 |  |
Fresnillo Plc | -3.21% | -19.50 | 587.50 |
| 6 |  |
Sse Plc | -3.19% | -59.00 | 1,789.50 |
| 7 |  |
Rolls-royce Holdings Plc | -2.84% | -12.60 | 431.30 |
| 8 |  |
Intercontinental Hotels Group Plc | -2.82% | -228.00 | 7,848.00 |
| 9 |  |
Carnival Plc | -2.73% | -36.00 | 1,283.50 |
| 10 |  |
Antofagasta Plc | -2.67% | -52.00 | 1,894.00 |
US close: Stocks sharply lower following Q2’s first big-name tech earnings
Wall Street stocks closed sharply lower on Wednesday after investors got their first taste of Q2 big tech earnings overnight and thumbed over a number of data points.
At the close, the Dow Jones Industrial Average was down 1.25% at 39,853.87, while the S&P 500 lost 2.31% to 5,427.13 and the Nasdaq Composite saw out the session 3.64% lower at 17,342.41.
The Dow closed 504.22 points lower on Wednesday, extending losses recorded in the previous session.
Google parent company Alphabet met expectations with its latest quarterly earnings report after the close but YouTube advertising revenues fell short of estimates, while electric carmaker Tesla‘s quarterly earnings nearly halved as a 7% year-on-year drop in revenues and price cuts put pressure on profits.
On the macro front, US mortgage applications fell 2.2% in the week ended 19 July, according to the Mortgage Bankers Association, trimming the previous week’s 3.9% increase. Applications to refinance a mortgage were broadly flat, while applications to purchase a new home fell 4%.
Elsewhere, a preliminary reading of June’s goods trade balance narrowed to $96.84bn in June, according to the Census Bureau, down from May’s revised two-year high of $99.37bn and below consensus estimates for a reading of $98.0bn.
On another note, wholesale inventories were up 0.2% month-on-month at $903.3bn in June, according to the Census Bureau, cooling from the prior period’s 0.6% rise and below market expectations for a print of 0.5%.
Still on data, flash readings of S&P Global‘s manufacturing and services PMIs showed an unexpected decline to 49.5 and a modest improvement to 56 in July, respectively.
Finally, new home sales fell 0.6% month-on-month to 617,00 in June, according to the Census Bureau, as higher prices and mortgage rates continued to weigh on buyers’ affordability.
In the corporate space, AT&T exceeded market expectations with its Q2 numbers, with the telecommunications giant revealing that its monthly bill-paying wireless phone subscribers had surged by 419,000, well ahead of consensus estimates for an increase of 284,800.
Thursday newspaper round-up: Thames Water, mortgage costs, UK car production
Thames Water has breached its licence to supply water to nearly 16 million people after some of its debt was downgraded to junk status. The regulator Ofwat could now fine Thames, the country’s largest water monopoly, up to 10% of its annual turnover, equating to hundreds of millions of pounds. However, since the company is already teetering close to temporary renationalisation, Ofwat is likely to hold off on any immediate large fines. – Guardian
As many as 320,000 UK adults have been pushed into poverty by soaring mortgage costs after the sharpest increase in interest rates since the 1980s, a leading thinktank has said. Highlighting the damage caused by Britain’s exploding mortgage timebomb, the Institute for Fiscal Studies (IFS) said individuals who needed to renew their home loans or take out new ones in the past two years had experienced a sharp fall in their disposable income. – Guardian
An Abu Dhabi-backed firm has invested $100m (£77m) in one of Britain’s biggest microchip companies as the Gulf state seeks to become a major player in artificial intelligence (AI). Fortress Investment Group, majority owned by Abu Dhabi’s wealth fund Mubadala Capital, has backed Imagination Technologies with a loan that can convert to equity in the company over time. – Telegraph
Top partner pay at Clifford Chance inched up by £40,000 to average £2.04 million as the City law firm reported its best financial performance for seven years. The “magic circle” firm announced that revenue for the year finishing at the end of last April rose by 9 per cent to £2.3 billion, the highest increase since 2017. That generated an overall partnership profit of £856 million, an annual increase of 10 per cent. – The Times
UK car production fell by 7.6 per cent in the first six months of the year, as manufacturers retooled their factories towards electric vehicle production. According to the Society of Motor Manufacturers and Traders (SMMT), factories turned out 416,074 new models, 34,094 fewer than in the same period in 2023. The fall in overall car production was driven by a significant decline in exports, while the number of cars produced for the UK market actually expanded by 17.7 per cent year-on-year to 106,157 in the first six months of 2024. Cars produced for export fell by 13.9 per cent to 309,917 vehicles. – The Times
