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London open: Stocks gain after US records; Whitbread jumps
London stocks rose in early trade on Tuesday following a solid close on Wall Street, which saw the S&P 500 and Nasdaq set new record highs.
At 0840 BST, the FTSE 100 was up 0.5% at 8,184.40.
Ahead of Thursday’s policy announcement from the Bank of England, investors mulled the Reserve Bank of Australia’s decision to leave its cash rate unchanged at a 12-year high of 4.35%, as expected.
Oxford Economics said: “Despite the RBA’s hawkish tone this month, we do not expect to see any more rate hikes. Another hike would represent a big departure from their current reaction function.
“We expect rates will stay on hold through 2024, with the first cut to come in early 2025.”
On home shores, the latest data from Kantar showed that grocery inflation eased to 2.1% in the four weeks to 9 June, from 2.4% in May.
Nevertheless, Fraser McKevitt, head of retail and consumer insight at Kantar, said the cost-of-living crisis is far from over.
“22% of households say they’re struggling, meaning that they aren’t able to cover their expenses or are just making ends meet,” he said.
“However, there are positive signs that many of us no longer feel the need to restrict our spending quite so much, with lower inflation helping to ease the pressure on people’s pockets. In May, we recorded the largest jump in the number of comfortable households since January 2023, rising by two percentage points on February 2024’s figure. Costs are falling in nearly one third of the grocery categories we track, including toilet tissues, butter and milk. That’s a big increase from last year, when just 1% of markets were declining.”
In equity markets, Premier Inn owner Whitbread rallied as it said it was confident on its full year outlook despite flat first quarter sales. Hotel sales were boosted by a strong performance in Germany, where they rose 15%, offsetting zero growth in the UK.
Telecom Plus also gained after it posted better-than-expected full-year pre-tax profit as customer and service numbers continued to grow.
In the year to the end of March 2024, adjusted pre-tax profit rose 21.5% to £116.9m, coming in above market expectations of £96.2m. The company, which trades as Utility Warehouse, hailed customer growth of 14.1% to just over 1 million, while service numbers increased by 328,949 to just over 3.1m.
Equipment rental firm Ashtead slumped, however, as its fourth-quarter profits came in shy of expectations and the company pointed to a further moderation of growth in the coming year.
Outside the FTSE 350, XP Power tumbled after Denver-based Advanced Energy Industries said it does not plan to make a takeover offer for the group as it has not been able to access the due diligence necessary.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Whitbread Plc | +3.51% | +102.00 | 3,005.00 |
| 2 |  |
Carnival Plc | +2.73% | +29.50 | 1,108.50 |
| 3 |  |
Ocado Group Plc | +2.71% | +9.40 | 356.90 |
| 4 |  |
Smurfit Kappa Group Plc | +2.25% | +80.00 | 3,642.00 |
| 5 |  |
Intercontinental Hotels Group Plc | +1.97% | +160.00 | 8,296.00 |
| 6 |  |
Sse Plc | +1.96% | +34.00 | 1,773.00 |
| 7 |  |
Bunzl Plc | +1.86% | +54.00 | 2,952.00 |
| 8 |  |
Informa Plc | +1.85% | +15.60 | 858.60 |
| 9 |  |
Hikma Pharmaceuticals Plc | +1.73% | +34.00 | 1,999.00 |
| 10 |  |
International Consolidated Airlines Group S.a. | +1.67% | +2.75 | 167.75 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ashtead Group Plc | -3.63% | -200.00 | 5,310.00 |
| 2 |  |
Tui Ag | -1.02% | -6.00 | 584.50 |
| 3 |  |
Fresnillo Plc | -0.92% | -5.00 | 538.00 |
| 4 |  |
Rio Tinto Plc | -0.56% | -29.00 | 5,152.00 |
| 5 |  |
Anglo American Plc | -0.17% | -4.00 | 2,367.00 |
| 6 |  |
Astrazeneca Plc | -0.08% | -10.00 | 12,418.00 |
| 7 |  |
Unilever Plc | -0.05% | -2.00 | 4,432.00 |
| 8 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
| 9 |  |
Just Eat Plc | -0.00% | -0.00 | 861.00 |
| 10 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
US close: Tech stocks push indices to new record highs
US stocks put in decent gains on Monday with the S&P 500 and Nasdaq both setting new record highs once again as equities in the tech sector put in a decent performance.
Markets started off a shortened trading week in positive fashion ahead of the Juneteenth US public holiday on Wednesday and a host of central bank meetings overseas, namely the UK, Norway, Switzerland and Australia.
The S&P 500 finished 0.8% higher at a fresh all-time high of 5,473.33, while the Nasdaq jumped 1.0% to set a new peak of 17,857.02. The Dow Jones Industrial Average meanwhile gained 0.5%, rebounding after having fallen in five of the past six sessions.
Goldman Sachs announced over the weekend that it has lifted its year-end target for the S&P 500 to 5,600, from 5,200 previously, due to “milder-than-average negative earnings revisions and a higher fair value price/earnings multiple”. The investment bank now raised its price projection for the index three times since December.
Comments from the former president of the Chicago Federal Reserve were making headlines after he said that an interest-rate could in September could be possible if economic data continues to improve. “If they got two more very good inflation reports, I think they would scratch their heads and say, maybe they are comfortable,” said Charles Evans, who served as the head of the regional Fed from 2007 to 2023.
Economic data on Monday showed that manufacturing activity in the state of New York weakened again in June, though not as bad as feared. The Empire State manufacturing index ticked up 10 points to -6.0. While still below the zero level, indicating a contraction in activity, the market was looking for a figure closer to -9.0.
“In what will be a shortened trading week in the US due to the Juneteenth holiday on Wednesday, the consumer will remain in focus with the release of retail sales data tomorrow,” said Richard Hunter, head of markets at Interactive Investor.
US retail sales are expected to have increased by just 0.2% in May after a flat performance in April. “Core to the fortunes of economic growth, and with waning sentiment given the higher levels of interest rates, the strength or otherwise of the consumer remains pivotal,” Hunter said.
Market movers
Tech stocks were in demand, with heavyweights such as Apple, Microsoft and Amazon putting in a decent performance.
However, Nvidia retreated slightly as investors took profits after a string of recent record highs, with shares having risen 20% over June alone to a record $131.88 on Friday. The stock has jumped 172% since the start of the year.
Meme stock GameStop was a heavy faller, dropping 12% after an investor meeting underwhelmed shareholders of the video-game retailer, with the market reportedly disappointed by the lack of details in the company’s future outlook.
Best Buy rallied after UBS upgraded the stock to ‘buy’ from ‘neutral’ and lifted the price target to $106 from $85.
Xponential Fitness surged more than a third after it announced the appointment of Mark King, most recently CEO of Taco Bell, as its new chief executive.
Sportswear and footwear giant Nike gained 1.7% on the same day its German rival Adidas saw shares tank on the back of reports it is investigating bribery allegations in China.
Tuesday newspaper round-up: Investment in the UK, London productivity, EPC
Investment in the UK has trailed other G7 countries including the US and Germany since the mid-1990s, according to a report that urges Labour and the Conservatives to reverse planned cuts to investment or risk long-term damage to economic growth. The Institute for Public Policy Research (IPPR) thinktank found the UK was bottom of the G7 league for investment in 24 out of the last 30 years, using figures from the Organisation for Economic Co-operation and Development (OECD). – Guardian
The consumer group Which? has called for an overhaul of the energy performance certificates (EPC) system after an investigation found assessments riddled with inaccuracies and unhelpful advice that could cost homeowners thousands of pounds. The investigation, which included Which? securing EPC assessments for 12 homeowners, found in one case an assessor had failed to mention a property’s solar panels or wood burning stove in their final assessment, while the cost of upgrades recommended to another owner would not have been recouped for 29 years. – Guardian
London is dragging down Britain’s productivity growth as office staff continue to work from home, new figures show. Productivity in the capital tumbled in 2022, according to the Office for National Statistics, taking output per hour worked – a key tool to measure each employee’s efforts – to its lowest level since 2009. London’s productivity dropped by 2.7pc between 2019 and 2022, the ONS said, with Wales the only other region to fall. – Telegraph
Britain has failed to improve on its disappointing record for business investment after ranking lowest among the G7 nations for a third consecutive year. According to new analysis by the Institute for Public Policy Research, Britain came bottom of the league table of the group of seven leading economies in terms of investment by private companies in 2022. It was 28th out of 31 countries in the Organisation for Economic Co-operation and Development, with only Greece, Luxembourg and Poland below it. – The Times
A Labour government risks fuelling inflation and job losses with its plan to introduce a “genuine living wage” for workers, economists at HSBC have warned. Sir Keir Starmer’s party has pledged to overhaul the remit of the Low Pay Commission, the independent body that advises the government on the national minimum and living wages, to ensure that it considers the cost of living when it makes its recommendations. – The Times
