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London open: Stocks bounce back; IHG rallies on results
London stocks rose in early trade on Tuesday, bouncing back from a heavy selloff the day earlier which saw global markets plunge.
At 0830 BST, the FTSE 100 was up 0.6% at 8,055.37, having closed down 2% on Monday.
Stocks tumbled on Monday after the non-farm payrolls report for July released on Friday came in much weaker than expected, fuelling concerns the US Federal Reserve may have made a mistake by not cutting rates last week.
Richard Hunter, head of markets at Interactive Investor, said: “After a decline of 2% yesterday, the FTSE 100 nudged ahead in early trade, with some of the largest fallers recouping part of their losses, most notably Melrose Industries, Pershing Square and Scottish Mortgage.
“Well received numbers from InterContinental Hotels provided another boost, while the very nature of the index, being awash with stable and established companies, may well have attracted some overseas buying interest by way of defensive positioning.
“Having recovered some of its poise, the premier index remains ahead by 4% so far this year, although the end to the volatile state of global markets cannot be called just yet.”
In equity markets, InterContinental Hotels rallied after saying its bottom line shrank by 10% in the first half due to the planned reduction of its so-called System Fund surplus, but underlying profits improved by 12% due to solid margin improvements and an acceleration in RevPAR growth in the second quarter.
Operating profit from reportable segments improved to $535m, up from $479m the year before.
Keller surged as it said its full-year performance was set to be “materially ahead” of current market expectations after a strong first half.
Waste management firm Renewi gained as it reported growth in first-quarter revenue and underlying EBIT, while Abrdn was in the black as first-half operating came in better than expected.
On the downside, Domino’s Pizza fell as it warned full-year profit would be towards the lower end of the current range of market expectations after a slower start to the first half.
Travis Perkins was also weaker as it posted a drop in first-half profit, pointing to continued weak demand across its end markets, and cut its profit outlook for the year.
Rightmove lost ground as it said its contract with OpenRent will end on 1 September, but reiterated its revenue and margin guidance for the full year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +3.63% | +16.40 | 468.30 |
| 2 |  |
Rolls-royce Holdings Plc | +2.91% | +12.90 | 456.70 |
| 3 |  |
Lloyds Banking Group Plc | +1.69% | +0.92 | 55.48 |
| 4 |  |
Barclays Plc | +1.19% | +2.45 | 208.65 |
| 5 |  |
Standard Chartered Plc | +0.96% | +6.60 | 693.40 |
| 6 |  |
Schroders Plc | +0.95% | +3.20 | 338.80 |
| 7 |  |
Coca-cola Hbc Ag | +0.82% | +22.00 | 2,716.00 |
| 8 |  |
Direct Line Insurance Group Plc | +0.76% | +1.30 | 172.00 |
| 9 |  |
3i Group Plc | +0.76% | +22.00 | 2,914.00 |
| 10 |  |
Bt Group Plc | +0.67% | +0.90 | 134.55 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rightmove Plc | -5.07% | -27.80 | 520.20 |
| 2 |  |
Smith & Nephew Plc | -1.93% | -22.50 | 1,144.50 |
| 3 |  |
Astrazeneca Plc | -1.78% | -222.00 | 12,236.00 |
| 4 |  |
Burberry Group Plc | -1.74% | -12.40 | 701.40 |
| 5 |  |
Gsk Plc | -1.52% | -23.50 | 1,523.50 |
| 6 |  |
Segro Plc | -1.43% | -12.80 | 884.60 |
| 7 |  |
British Land Company Plc | -1.26% | -5.00 | 390.40 |
| 8 |  |
Rio Tinto Plc | -1.16% | -57.50 | 4,879.00 |
| 9 |  |
Severn Trent Plc | -1.12% | -28.00 | 2,471.00 |
| 10 |  |
Intertek Group Plc | -1.11% | -52.00 | 4,640.00 |
US close: Dow Jones sheds more than a thousand points amid recession fears
Wall Street stocks closed sharply lower on Monday amid fears that a potential US recession may be on the horizon.
At the close, the Dow Jones Industrial Average was down 2.60% at 38,703.27, while the S&P 500 lost 3.00% to 5,186.33 and the Nasdaq Composite saw out the session 3.43% weaker at 16,200.08.
The Dow closed a whopping 1,033.99 points lower on Monday and the S&P 500 posted its worst day since 2022 as market participants continued to grow concerned that the Federal Reserve Bank may be moving too slow when it comes to interest rate cuts if it wants to avoid a recession.
Stocks tanked globally on Friday, while Japan’s Nikkei 225 closed more than 12% lower on Monday in its worst daily showing since 1987’s Black Monday crash on Wall Street.
Recessionary fears were the main reason for losses following worse-than-expected July nonfarm payrolls numbers from the Labor Department that fuelled fears that US central bank was behind the eightball when it comes to cutting interest rates to bolster an economic slowdown just a week after opting to keep its benchmark rate at the highest levels seen in 20 years.
US Treasury yields hit their lowest level since June 2023, while the Cboe volatility index surged to its highest level since early on in the Covid-19 pandemic, and Bitcoin shed roughly $8,000.
Tech losses were also in focus as Nvidia, Apple, Tesla and Broadcom were all sharply lower amid an ongoing rotation out of the sector. Elsewhere in the corporate space, BioNTech fell short of earnings expectations amid a slide in Covid vaccine sales, while Carlyle Group also posted an unexpected quarterly earnings drop.
On the macro front, S&P Global‘s composite PMI was revised lower to 54.3 in July, down from a preliminary reading of 55 and June’s 54.8 print, while its services PMI was downwardly revised to 55 from a preliminary reading of 56, up from the prior month’s 55.3 print.
On another note, the Institute for Supply Management‘s services rose to 51.4 in July, up from the four-yearly low of 48.8 seen in June and above market expectations for a reading of 51.
Tuesday newspaper round-up: Retail sales, Google, Warren Buffett
The late arrival of warm summer weather drove a recovery in retail sales last month, industry data shows, despite continuing signs of consumers holding back on big ticket purchases amid the cost of living crisis. Figures from the British Retail Consortium showed that UK total retail sales increased by 0.5% year on year in July, a recovery from the washout month of June when colder weather deterred shoppers from spending on the high street. – Guardian
Google violated antitrust laws as it built an internet search empire, a federal judge ruled on Monday in a decision that could have major implications for the way people interact with the internet. Judge Amit Mehta found that Google violated section 2 of the Sherman Act, a US antitrust law. His decision states that Google maintained a monopoly over search services and advertising. – Guardian
Warren Buffett’s stock empire has lost at least $15bn (£11.75bn) on its biggest holdings amid a global stock market sell-off. The money was wiped from the paper value of Berkshire Hathaway’s stock portfolio on Monday as Apple, Bank of America and Mitsubishi plummeted in value. The decline comes despite Mr Buffett’s investment company building up major cash reserves in recent months by slashing its stock market positions. – Telegraph
Sensitive British military projects face disruption from the threatened closure of one of the country’s last remaining microchip factories. Coherent, a US semiconductor company, ceased taking orders at its facility in County Durham and said the 310,000 sq ft site may have to be sold after Apple dropped the business as a supplier. It can now be revealed the factory’s customers also include Leonardo, the Italian defence giant that makes radar systems, electronic warfare devices and helicopters in the UK. It is understood the plant has previously supplied chips used for radar power amplifiers in Typhoon jets and other British military platforms. – Telegraph
A global scramble by opportunistic hedge funds to exit a well-trodden cheap borrowing gambit has been blamed for the share sell-off that shook financial markets on Monday. Japan suffered a fully fledged flight from shares with stock prices falling by 12 per cent and the jitters reverberated round the world, with share prices in London and then Wall Street falling sharply amid a stampede to reduce risk in portfolios and raise hard cash. – The Times
Rachel Reeves has refused to rule out changing a measure of the UK’s debt pile, in a move that could free up billions of pounds for the chancellor at her forthcoming autumn budget. Speaking on a trip to New York and Toronto, Reeves said she would set out the “precise details” of her fiscal rules in her maiden budget, amid speculation that the government will change its debt-to-GDP measure to exclude losses made by the Bank of England’s bond-buying programme. The tweak could free up to £17 billion in headroom for the government, according to calculations from City analysts. – The Times
