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London open: FTSE tumbles amid US recession fears
London stocks fell sharply in early trade on Thursday as worries about a US recession dented sentiment and as investors waded through a barrage of corporate releases.
At 0855 BST, the FTSE 100 was down 1.1% at 8,075.98.
JPMorgan said in a research note on Wednesday that there is now a 35% chance the US economy will enter recession by the end of this year, up from 25% last month.
The bank said said US news “hints at a sharper-than-expected weakening in labour demand and early signs of labour shedding”.
If a US recession doesn’t happen this year, JPM said there was a 45% chance it would happen by the second half of next year.
Patrick Munnelly at Tickmill Group said: “Despite assurances from US Fed officials that the world’s largest economy is not headed for a recession, stocks wilted under pressure amid concerns about the outlook for the U.S. economy.
“As a result, Asian stock markets are trading mostly lower on Thursday, following the generally weak handover from Wall Street overnight. In addition, increased geopolitical tensions are negatively impacting the markets.”
In equity markets, Spirax-Sarco tumbled as its first-half pre-tax profit came in 10% below consensus estimates amid challenging trading conditions.
Recruiter PageGroup was in the red as it posted a slump in first-half profit as revenue fell in “challenging” market conditions.
Hill & Smith and Helios Towers also lost ground on results.
On the upside, Beazley surged to the top of the FTSE 100 as it delivered a record first-half profit of $728.9m.
Entain rallied as the sports betting and gaming group lifted its full-year guidance after a stronger-than-expected second quarter.
Housebuilder Persimmon advanced as it reported a decline in first-half pre-tax profit but said it was on track to deliver full-year completions at the top end of guidance.
Hikma, CRH, TI Fluid Systems and Lancashire Holdings also rose on the back of well-received results.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hikma Pharmaceuticals Plc | +7.39% | +136.00 | 1,976.00 |
| 2 |  |
Crh Plc | +3.16% | +194.00 | 6,336.00 |
| 3 |  |
Persimmon Plc | +2.92% | +45.00 | 1,583.50 |
| 4 |  |
Hiscox Ltd | +1.74% | +20.00 | 1,168.00 |
| 5 |  |
Gsk Plc | +1.14% | +17.50 | 1,552.50 |
| 6 |  |
Flutter Entertainment Plc | +0.49% | +70.00 | 14,415.00 |
| 7 |  |
Whitbread Plc | +0.04% | +1.00 | 2,824.00 |
| 8 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 9 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
| 10 |  |
Royal Bank Of Scotland Group Plc | +0.00% | +0.00 | 120.90 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Spirax Group Plc | -7.50% | -640.00 | 7,895.00 |
| 2 |  |
Bt Group Plc | -4.89% | -6.65 | 129.25 |
| 3 |  |
Carnival Plc | -3.31% | -34.50 | 1,007.00 |
| 4 |  |
Fresnillo Plc | -3.03% | -16.50 | 528.50 |
| 5 |  |
Ocado Group Plc | -2.99% | -11.70 | 379.00 |
| 6 |  |
Ashtead Group Plc | -2.77% | -146.00 | 5,116.00 |
| 7 |  |
Scottish Mortgage Investment Trust Plc | -2.74% | -22.60 | 802.40 |
| 8 |  |
Segro Plc | -2.73% | -24.60 | 876.00 |
| 9 |  |
Rentokil Initial Plc | -2.56% | -11.90 | 453.60 |
| 10 |  |
Prudential Plc | -2.49% | -16.00 | 627.80 |
US close: Stocks erase gains as rebound proves short-lived
Early gains for US stocks were wiped out by the close on Wednesday, with all three Wall Street benchmarks closing firmly in the red, as the rebound following Monday’s sell-off came to an abrupt end.
The Dow partially bounced back on Tuesday following a rapid three-day sell-off which saw 5.2% of its value wiped out on the back of fears about a US recession. However, the index was in the red once again on Wednesday, finishing down 0.6% at 38,763.45.
Meanwhile, the S&P 500 declined 0.8% to 5,199.50 and the Nasdaq dropped 1.1% to 16,195.81.
“The light macro and earnings calendar this week has proved to be an unexpected blessing, giving investors space to reassess their outlook on the next few months,” said Chris Beauchamp, chief market analyst at IG.
“However, it might not take much to tip them into risk off mode again, particularly if signs of a fresh unwind in the yen trade rear their head.”
Mortgage applications were the only major release of the day. Applications surged by 6.9% in the week ended 2 August, according to the Mortgage Bankers Association, the sharpest increase in almost two months, erasing the prior two week’s declines. Applications to refinance a mortgage soared almost 16%, while applications to purchase a new home ticked up just 1%.
Market movers
Airbnb shares dropped 13% after the rental platform posted second-quarter results that fell short of expectations and posted revenue guidance for the third quarter that underwhelmed investors.
Lyft announced its first-ever quarter in the black on the back of a record number of rides, but shares tanked 17% as guidance for the current quarter disappointed.
Disney beat estimates thanks to its first-ever streaming profit but warned of potential weakness at its theme parks, causing shares to fall 4%.
CVS Health fell 3% as it slashed its full-year profit guidance and announced a plan to cut as much as $2.0bn in expenses amid an increase in insurance costs.
Tesla dropped 4% after issuing a software update to nearly 1.7m cars in China to fix an issue with the bonnet latch that affected a similar number of vehicles in the US last month.
Thursday newspaper round-up: Ocado, Boohoo, pensions
The UK’s largest employers have warned the jobs market is cooling amid a slowdown in wage growth in July and a fall in vacancies, extending an almost two-year downturn in hiring demand for permanent staff. Figures from the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG showed a fall in permanent staff placements in July as large employers made more redundancies and hired fewer new starters. – Guardian
Ocado is testing offering everyday products such as pasta, rice and washing liquid in refillable packaging in a first by an online supermarket. The scheme will trial a reusable vessel that can take food or laundry products with no extra costs for customers. The first phase of the trial, starting this month, will include 2kg packs of basmati rice and 1kg of penne pasta, both under the Ocado Reuse brand. Phase 2 coming later this year, will add 3 litre containers of Ocado Reuse non-bio liquid detergent and Skies fabric conditioner. – Guardian
Fast fashion retailer Boohoo is seeking to offload its office in London’s Soho as it battles to shore up its balance sheet. The troubled retailer has been looking for offers of around £60m for its base in the capital, according to market sources, just three years after splashing £72m on the building. It is understood that any deal will include a sale-and-leaseback agreement in which Boohoo will occupy the premises at 10 Great Pulteney Street for up to five years. – Telegraph
The former boss of Credit Suisse has lost a blackmail case against an ex-housekeeper who had a nervous breakdown after working at his luxury villa. Tidjane Thiam accused the domestic worker of extortion when she demanded almost 600,000 Swiss francs (£547,000) in compensation for alleged abusive working conditions. However, a judge in Zurich rejected the claims, ruling that the former staff member had acted within her contractual rights. – Telegraph
Regulators are pushing ahead with reforms which they say will help millions of savers to get better value for money from their pension schemes, including a new scoring system to identify the best and worst performing plans. A reformed system would shift the emphasis from lowest cost to highest value for money, potentially enabling schemes to invest in higher-returning illiquid assets including private equity and infrastructure. – The Times
EY has become the first of the Big Four accounting firms to be fined for breaching the cap on fees it can earn from providing consulting services to an audit client. The Financial Reporting Council found that EY carried out twice as much consulting work than it was allowed to for Evraz, the Russian steelmaker backed by Roman Abramovich. – The Times
