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London open: Stocks rise after better-than-expected UK GDP
London stocks rose in early trade on Friday as data showed the UK economy grew more than first thought in the first quarter.
At 0835 BST, the FTSE 100 was up 0.7% at 8,236.15.
Figures released earlier by the Office for National Statistics showed gross domestic product grew by 0.7% in the first three months of the year, up from an initial estimate of 0.6% growth.
This follows 0.1% and 0.3% contractions in the third and fourth quarters of last year, respectively.
The figures showed that the services sector expanded by 0.8%, up from an initial estimate of 0.7% growth. Meanwhile, production was up 0.6% in the first quarter, down from 0.8% initially estimated. The construction sector contracted 0.6%.
Paul Dales, chief UK economist at Capital Economics, said the upward revision to Q1 GDP “suggests whoever is Prime Minister this time next week may benefit from the economic recovery being a bit stronger than our already above-consensus forecast”.
Still to come, US personal consumption expenditure for May is due out at 1330 BST.
Richard Hunter, head of markets at Interactive Investor, said: “For the most part, this week has been one of subdued moves ahead of the highly anticipated personal consumption expenditures (PCE) print today, which investors are hoping will pave the way for an interest rate cut from the Federal Reserve.
“A rise of 0.1% is expected, annualised to 2.6%, which would be marginally lower than the previous month’s 2.7% and some way from the peak of over 7% in 2022. Cooling inflation, alongside data yesterday which showed higher recurring unemployment and a drop in manufactured capital goods add to this narrative, although GDP growth for the first quarter was revised slightly upwards. If the PCE print is hotter than expected, it will reignite concerns of inflation having reaccelerated, while also pushing out the likelihood of an imminent cut.”
In equity markets, Tyman gained after Quanex Building Products announced an increased and final recommended cash and share offer the company. The revised proposal includes a special interim dividend of 15p per share in addition to the previous consideration of 240p and 0.05715 of a new Quanex share per Tyman share.
JD Sports tumbled after Nike plunged on Thursday as it cut its full-year guidance and said sales were set to fall 10% during the current quarter. It pointed to soft sales in China and “uneven” consumer trends.
Auction Technology was under the cosh after private equity firm TA Associates offloaded a 5% shareholding in the marketplace tech firm through a share placing with institutional investors.
Outside the FTSE 350, Keywords Studios rallied after saying it had received a sweetened £1.96bn takeover proposal from private equity firm EQT Group that it would be minded to recommend if a firm offer was made.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
3i Group Plc | +3.17% | +95.00 | 3,094.00 |
| 2 |  |
Intertek Group Plc | +2.23% | +106.00 | 4,854.00 |
| 3 |  |
Crh Plc | +1.92% | +112.00 | 5,932.00 |
| 4 |  |
Carnival Plc | +1.70% | +22.50 | 1,347.50 |
| 5 |  |
Rolls-royce Holdings Plc | +1.41% | +6.40 | 461.10 |
| 6 |  |
Hiscox Ltd | +1.40% | +16.00 | 1,156.00 |
| 7 |  |
Legal & General Group Plc | +1.37% | +3.10 | 229.40 |
| 8 |  |
Shell Plc | +1.35% | +38.00 | 2,851.50 |
| 9 |  |
Phoenix Group Holdings Plc | +1.35% | +7.00 | 527.00 |
| 10 |  |
Ocado Group Plc | +1.22% | +3.50 | 290.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smith (ds) Plc | -1.74% | -7.40 | 418.80 |
| 2 |  |
Bunzl Plc | -1.24% | -38.00 | 3,032.00 |
| 3 |  |
Wpp Plc | -1.11% | -8.20 | 732.80 |
| 4 |  |
Compass Group Plc | -0.95% | -21.00 | 2,180.00 |
| 5 |  |
Rentokil Initial Plc | -0.81% | -3.80 | 462.70 |
| 6 |  |
Sage Group Plc | -0.64% | -7.00 | 1,083.50 |
| 7 |  |
Burberry Group Plc | -0.60% | -5.40 | 894.40 |
| 8 |  |
Smiths Group Plc | -0.58% | -10.00 | 1,715.00 |
| 9 |  |
Halma Plc | -0.51% | -14.00 | 2,707.00 |
| 10 |  |
Croda International Plc | -0.47% | -19.00 | 4,001.00 |
US close: Stocks edge higher ahead of PCE data, but Walgreens tanks
US stocks closed with minor gains on Thursday with investors showing caution amid a barrage of mixed economic data ahead of Friday’s key PCE inflation report.
The Dow and S&P 500 both finished up just 0.09% while the Nasdaq gained 0.30%, with the latter two indices inching closer to last week’s record highs.
Eyes were turning to Friday’s release of the US core personal consumption expenditures index – the Federal Reserve’s preferred gauge of inflation – which is expected to show that the annual rate of core PCE inflation eased to 2.6% in May from 2.8% the month before.
“US stocks have rediscovered some of their upward momentum this afternoon, though we are now less than 24 hours away from tomorrow’s PCE price data,” said Chris Beauchamp, chief market analyst at IG.
“Should this point towards a further slowdown in price growth then the final day of June trading might go the same way as May’s, which saw a strong rally. A softer PCE reading could renew hopes of a September rate cut, which have taken a knock of late.”
Economic data comes in mixed
Initial jobless claims fell to 233,000 in the week ended 21 June, down from 239,000 the week before, coming in below the consensus forecast of 235,000. Claims declined for the second week after hitting a 10-month high of 243,000 in the first week of June. However, both the four-week moving average and continuing claims data for the previous week both rose.
Durable goods orders rose by just 0.1% in May following a revised 0.6% gain the previous month, though that was better than the 0.1% decline predicted by analysts.
Housing data for May continues to miss expectations, with pending home sales following the trend set by housing starts, building permits and new home sales over the past week. Pending sales dropped by 2.1% over the month, easing from the 7.7% slump in April but well below the 2.5% growth expected by the market.
Meanwhile, revisions to GDP growth for the first quarter meant the US economy expanded at an annualised rate of 1.4%, up from the preliminary reading 1.3% but still down from 3.4% in the preceding three-month period.
Market movers
Second-quarter earnings season is now well underway – though doesn’t really pick up for a couple of weeks when the big banks report.
Shares in Walgreens Boots Alliance plunged 22% after the pharmacy retail chain lowered its full-year profit guidance which it blamed on challenging industry trends and a worse-than-expected consumer environment in the US. The company is now guiding to adjusted earnings per share of $2.80-2.95 for its fiscal year ending 31 August, compared with an earlier prediction of $3.20-3.35.
Micron Technology shares were down 7% after the data storage group disappointed investors with its sales guidance after the bell on Wednesday. The company guided to revenues of $7.6bn for the current quarter, which was in line with expectations but may have underwhelmed investors following the stock’s 70% surge since early January.
Food ingredients maker McCormick gained 4% after reassuring the market with an in-line set of quarterly figures, though full-year earnings forecasts were lowered slightly.
Denim brand Levi Strauss dropped 15% despite only marginally missing consensus forecasts with a 8% year-on-year rise in quarterly sales, as chief financial officer warned in an interview that consumers were “generally cautious”. The share-price fall follows a 40%-plus gain in the stock so far this year.
Tech stocks were performing well, with Salesforce, Amazon.com, Cisco and Apple among the best performers on the Dow, while Nike edged higher ahead of the sporting goods giant’s results after markets close.
Friday newspaper round-up: Port Talbot, Elon Musk, Amazon
Tata Steel has told workers it could to cease operations at its steel plant in Port Talbot months earlier than planned because of a strike. The company had been planning to shut down one of the blast furnaces by the end of June and the second one by September. But workers at the south Wales site have been told that Tata plans to cease operations at both furnaces no later than 7 July because of the strike by members of Unite, which starts the following day. – Guardian
Tesla is claiming Elon Musk won his legal battle over his $56bn pay package because shareholders voted for the compensation, despite a judge rescinding it earlier this year, according to court filing made public on Friday. The company’s filing comes two weeks after Tesla shareholders voted to ratify the 2018 package of stock options. Tesla held the vote following a January ruling by a Delaware judge to void the compensation because Musk improperly controlled the negotiation process and the company misled shareholders about key details. – Guardian
The struggling US owner of Boots has shelved plans for a multibillion-pound sale for the second time, leaving the high street chemist at risk of a further squeeze on investment in its stores. Walgreens, which has owned Boots since 2014, abandoned plans to cash in as it revealed a damaging profit warning on Wednesday. The trading update, which also announced plans to close a large number of stores, saw its share price fall to its lowest level since 1997. – Telegraph
The next government can unlock £100 billion of investment by providing a more stable policy environment and an approach to regulation that encourages a “degree of risk-taking”, according to Dame Amanda Blanc. The chief executive of Aviva, the insurance group, said that businesses were ready to spend if the next administration provided “the right environment with the right incentives and, more than anything, the stability in public policy to allow us to invest the capital we manage on behalf of millions of others”. – The Times
Amazon faces a £2.7 billion legal action for “anticompetitive conduct” over claims that the technology group discriminates in favour of its own retail offers. The claim was issued on Thursday by Andreas Stephan, a law academic, on behalf of more than 200,000 British third-party sellers on Amazon. – The Times
