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London open: Stocks nudge up; Ocado and Melrose under the cosh
London stocks nudged higher in early trade on Tuesday following a mixed close on Wall Street, as investors eyed the release of a key US inflation reading and UK GDP data later in the week.
At 0850 BST, the FTSE 100 was up 0.1% at 8,288.22.
Market participants were turning their attention to US personal consumption expenditure data for May, which is due on Friday. In the UK, meanwhile, first-quarter GDP figures will be published.
In equity markets, Admiral was the standout gainer on the FTSE 100 after an upgrade to ‘buy’ from ‘hold’ at Berenberg. It said the valuation is attractive and there is scope for further EPS upgrades.
“Investor Warren Buffett once said: ‘It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’ Fortunately, today investors can buy Admiral, a wonderful company, also at a wonderful price,” Berenberg said in a research note.
Saga gained as the over-50s holidays and financial products firm said it remains on track to hit targets after an in-line start to its financial year, despite ongoing challenges in the insurance market.
Real estate group Landsec rose after saying it raised its stake in Kent’s Bluewater Shopping Centre to 66.25% following a further £120m investment.
On the downside, Melrose Industries slumped after Airbus cut earnings guidance and delivery targets. Rolls-Royce also took a hit.
Ocado was under pressure after Morgan Stanley cut its price target on the shares to 215p from 345p.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Admiral Group Plc | +1.99% | +51.00 | 2,620.00 |
| 2 |  |
Smurfit Kappa Group Plc | +1.44% | +52.00 | 3,672.00 |
| 3 |  |
National Grid Plc | +1.01% | +9.00 | 897.80 |
| 4 |  |
Centrica Plc | +0.95% | +1.30 | 138.50 |
| 5 |  |
Flutter Entertainment Plc | +0.82% | +120.00 | 14,720.00 |
| 6 |  |
Direct Line Insurance Group Plc | +0.79% | +1.60 | 204.00 |
| 7 |  |
Bhp Group Limited | +0.71% | +16.00 | 2,255.00 |
| 8 |  |
Sse Plc | +0.71% | +13.00 | 1,839.00 |
| 9 |  |
Sage Group Plc | +0.70% | +7.50 | 1,074.00 |
| 10 |  |
Shell Plc | +0.70% | +19.50 | 2,814.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -5.47% | -17.10 | 295.40 |
| 2 |  |
Melrose Industries Plc | -4.75% | -27.60 | 554.00 |
| 3 |  |
Rolls-royce Holdings Plc | -4.65% | -21.90 | 449.40 |
| 4 |  |
Bae Systems Plc | -1.44% | -19.50 | 1,333.00 |
| 5 |  |
Wpp Plc | -1.36% | -10.40 | 754.80 |
| 6 |  |
Ashtead Group Plc | -1.35% | -74.00 | 5,420.00 |
| 7 |  |
3i Group Plc | -1.34% | -42.00 | 3,086.00 |
| 8 |  |
Prudential Plc | -1.26% | -9.60 | 749.40 |
| 9 |  |
Spirax Group Plc | -1.20% | -105.00 | 8,625.00 |
| 10 |  |
Crh Plc | -1.09% | -64.00 | 5,810.00 |
US close: Nasdaq falls on mixed day for stocks
Wall Street experienced a mixed close on Monday as traders navigated the final week of the second quarter.
The Dow Jones Industrial Average saw gains, increasing by 0.67% to end the day at 39,411.21 points.
In contrast, the S&P 500 dropped by 0.31% to 5,447.87, while the tech-heavy Nasdaq Composite took a more significant hit, falling 1.09% to finish at 17,496.82.
Currency markets showed minimal fluctuations, with the dollar last down 0.01% on sterling to trade at 78.82p, while it remained steady against the euro at 93.17 euro cents.
Similarly, the greenback held constant on the yen, changing hands at JPY 159.62.
“Just as worries about poor market breadth hit the mainstream, breadth begins to recover,” said IG chief market analyst Chris Beauchamp earlier.
“Last week saw Nvidia soar and the Nasdaq 100 hit 20,000, but the new week has continued where Friday left off, with old economy stocks rallying and tech continuing to drop back.
“This kind of rotation is very healthy for a continuation of the rally into July.”
Dallas Fed reports slight improvement in manufacturing sector
In economic news, the Dallas Federal Reserve reported a slight improvement in its manufacturing sector index for June, which rose to -15.1 from -19.4 in May, suggesting a less negative outlook among regional manufacturers.
The Fed’s national activity index meanwhile showed modest gains, moving from -0.17 in March to 0.01 in April, indicating a stabilisation in national economic activity.
Attention was now turning towards the upcoming release of the personal consumption expenditures (PCE) index for May, expected on Friday.
Economists anticipated that core PCE, which is closely monitored by the Federal Reserve for inflation signals, would show a decrease to 2.6% year-on-year, from a previous 2.8%.
“Coming off the back of last week’s bumper services PMI reading, there is a concern that the vibrancy of the US economy could ultimately produce a longer wait for those desperate for that first Federal Reserve rate cut,” said Joshua Mahony, chief market analyst at Scope Markets.
“With crude oil prices on the rise once again today, keeping a lid on fuel costs will remain a key factor in avoiding a fresh resurgence in price pressures.”
Across the Atlantic, the UK Confederation of British Industry (CBI) noted that manufacturing output had stabilised in the past three months, following a period of growth – the first in over a year and a half.
Despite that stability, the volume of export orders has declined sharply, underscoring challenges in international markets.
Manufacturers remained cautiously optimistic, expecting a modest increase in output in the coming quarter.
On the continent, business sentiment in Germany deteriorated in June, as the Ifo Institute‘s business climate index declined to 88.6, down from 89.3 in May.
The dip was driven by a decrease in future expectations and a notable contraction in manufacturing, with the manufacturing gauge falling deeper into negative territory.
However, there was a slight improvement in the service sector, which could provide some balance to the broader economic picture.
Nvidia and Super Micro in the red, Affirm rises on broker coverage
In equity markets, Nvidia Corporation dropped 6.68%.
The fall comes after a recent surge in its stock value, with Monday’s movements attributed to profit-taking by investors.
Similarly, Super Micro Computer experienced a sharp decrease, falling by 8.65%, marking its worst daily performance since early May.
On the upside, Apple shares edged up 0.31% despite facing new regulatory challenges in Europe, where it was accused of violating the Digital Markets Act.
United Parcel Service (UPS) also saw gains, rising by 1.46%.
The increase followed news of UPS selling its Coyote Logistics division to RXO for just over $1bn – significantly less than the $1.8bn it paid nine years ago.
Buy-now-pay-later provider Affirm Holdings surged by 12.82%, driven by positive analyst coverage from Goldman Sachs, which initiated a ‘buy’ rating on the stock.
Analyst Will Nance highlighted Affirm’s underwriting capabilities as a standout feature compared to its fintech peers.
Tuesday newspaper round-up: Energy suppliers, Boeing, Thames Water
EDF, Utilita and British Gas have been named as the worst energy suppliers for customer service, as research shows industry standards have slipped sharply. Citizens Advice said customer service ratings across the industry were among the lowest ever between January and March and average ratings had fallen by 10.5% compared with the same period in 2021. – Guardian
Qantas has dropped out of a ranking of the top 20 best airlines in the world a month after it agreed to a $100m fine for allegedly selling flights to customers which did not exist. In this year’s world airline awards by Skytrax, Qantas dropped seven places, from 17th to 24th, while Qatar Airways was named the world’s best airline ahead of Singapore in second place. – Guardian
Boeing should face criminal charges after violating a settlement over two fatal crashes involving its 737 Max aircraft, US prosecutors have said. The aerospace giant has been accused of breaching a settlement related to the crashes, which took place in 2018 and 2019. The two crashes in Indonesia and Ethiopia killed 346 people, resulting in the longest grounding of a commercial jet in US history for the 737 Max. US prosecutors have said that Boeing violated the terms of its settlement and have recommended that the Department of Justice bring criminal charges, according to Reuters. – Telegraph
Britain’s ambitions to become a global leader in artificial intelligence are being put at risk by substandard mobile data networks, the boss of Vodafone has cautioned. In a strongly worded warning, Margherita Della Valle told The Times that this means the UK will be less quick to adopt and take advantage of the technology than its rivals. – The Times
A Labour government would be opposed to renationalising Thames Water, the troubled utility firm with a highly uncertain future. Jonathan Reynolds, the shadow business and trade secretary, said “people should not expect the state to bail out bad investments”. His comments come days before the general election next Thursday. – The Times
