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London open: Stocks fall as Burberry, Rio Tinto lead the decline
London stocks fell in early trade on Tuesday as investors continued to mull political developments in the US, with Burberry and Rio Tinto on the back foot.
At 0915 BST, the FTSE 100 was down 0.4% at 8,154.70.
Patrick Munnelly at TickMill Group said: “Asian stocks declined, counterbalancing the gains in Wall Street, amid speculation about Donald Trump’s potential running mate JD Vance and the resulting new trade and geopolitical concerns. The MSCI AC Asia Pacific index experienced its third consecutive day of losses, dropping by 0.2%. Hong Kong witnessed the largest decline in stocks, while certain Chinese companies continued to fall due to investor anticipation of Trump’s tariffs. On the other hand, Japan’s stocks rose as exporters benefited from the weakening Yen.
“Jerome Powell, the Federal Reserve Chair, comments were seen as leaning towards a more cautious approach, leading to expectations of an interest rate cut in September. The possibility of Donald Trump returning to the White House has influenced trading and is on the minds of investors. Powell’s remarks, possibly his last before the Fed’s policy meeting, indicated that recent inflation data may lead to the inflation rate reaching the Fed’s target of 2%. This has caused a shift in market expectations, with traders now anticipating a significant easing of rates.”
In UK equity markets, Rio Tinto fell as the mining giant’s second-quarter iron ore shipments were worse than expected due to a train derailment during the period.
Burberry was under the cosh again, after Cartier owner Richemont highlighted weak demand in China and Germany’s Hugo Boss cut its annual sales guidance.
Experian was weaker even as it backed its full-year expectations and said revenue grew 7% in the first quarter.
United Utilities and Severn Trent lost ground as Ofwat said it was expanding its investigation into how companies manage their wastewater treatment works and networks to include them both.
Trustpilot slumped after Vitruvian Partners sold 12.5m shares in the company in placing at 220p each. The placing shares represent around 3% of Trustpilot’s issued share capital.
Vanquis Banking tumbled as it warned it does not expect to meet its FY24 guidance of low single digit return on tangible equity due to additional write-downs.
On the upside, online grocer and technology company Ocado surged as it reported narrower interim losses and lifted full-year guidance as revenue grew across all its divisions.
It lifted the full-year EBITDA margin at its technology solutions division to mid-teens from previous guidance of more than 10% and also forecast underlying cash flow to improve by £150m from £100m.
Losses before tax came in at £154m from a loss of £289.5m for the 26 weeks to June 2. Core earnings more than trebled to £71.2m, while sales were up 12.6% to £1.54bn.
B&M European Value Retail gained as it reported a 2.4% increase in group revenues for the first quarter, driven by volume growth and its store opening programme.
Precision measurement tools group Spectris rose after announcing the acquisition of US-based Micromeritics Instrument Corporation for $630m to bolster its offering in particle characterisation for advanced materials analysis.
Airtel Africa was the standout gainer on the FTSE 100 after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan Cazenove.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +15.89% | +54.10 | 394.50 |
| 2 |  |
Kingfisher Plc | +1.94% | +5.20 | 273.20 |
| 3 |  |
Marks And Spencer Group Plc | +1.93% | +5.80 | 305.70 |
| 4 |  |
Sainsbury (j) Plc | +1.84% | +4.80 | 266.00 |
| 5 |  |
Carnival Plc | +1.37% | +17.50 | 1,295.50 |
| 6 |  |
Centrica Plc | +1.36% | +1.85 | 138.25 |
| 7 |  |
Ferguson Plc | +1.01% | +160.00 | 15,935.00 |
| 8 |  |
Rolls-royce Holdings Plc | +0.96% | +4.30 | 453.80 |
| 9 |  |
Smith (ds) Plc | +0.80% | +3.40 | 426.80 |
| 10 |  |
Berkeley Group Holdings (the) Plc | +0.79% | +38.00 | 4,872.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | -2.58% | -134.00 | 5,058.00 |
| 2 |  |
Bhp Group Limited | -2.13% | -48.00 | 2,202.00 |
| 3 |  |
Severn Trent Plc | -2.08% | -54.00 | 2,544.00 |
| 4 |  |
United Utilities Group Plc | -1.98% | -20.50 | 1,014.50 |
| 5 |  |
Glencore Plc | -1.75% | -8.25 | 463.05 |
| 6 |  |
Antofagasta Plc | -1.59% | -34.00 | 2,111.00 |
| 7 |  |
Experian Plc | -1.54% | -56.00 | 3,584.00 |
| 8 |  |
Crh Plc | -1.20% | -74.00 | 6,114.00 |
| 9 |  |
Burberry Group Plc | -1.05% | -7.80 | 736.20 |
| 10 |  |
Easyjet Plc | -0.95% | -4.70 | 488.20 |
US close: Dow hits new record on Trump bets, Powell comments
US stocks advanced on Monday, with the Dow Jones Industrial Average reaching a new record high, as investors digested somewhat dovish comments from the Federal Reserve chair and the increased likelihood of former president Donald Trump returning to office following an assassination attempt.
The Dow finished the day up 0.5% at 40,211.72, surpassing its previous all-time closing high of 40,003.59 reached on 17 May. The S&P 500 rose 0.3% while the Nasdaq gained 0.4%.
Investors were zeroed in on Saturday’s attempt on Trump’s life, with many traders speculating that the incident may lead to an improved poll performance for the Republicans ahead of the November election.
The Republican National Convention also kicked off on Monday with Trump, currently leading Joe Biden in national polls, officially becoming the nominee to lead the GOP in the elections after receiving the majority of votes from national convention delegates.
“In the aftermath of the events at the weekend, Donald Trump’s chances of winning the election have surged to 67%, according to PredictIT’s survey, with Joe Biden’s chances languishing at 25%,” said Kathleen Brooks, research director at XTB.
“Thus, the prospect of a second Trump Presidency has unleashed the ‘Trump trade’ on the market. For now, the Trump trade is buy American stocks and ditch everything else. For example, US stocks are rising on Monday, yet European stocks are selling off sharply.”
In other news, Fed chair Jerome Powell said on Monday that inflation and economic activity had cooled in line with the Fed’s expectations, and recent price data “do add somewhat to confidence” that inflation will pull back to its 2% target. However, he clarified: “I’m not going to be sending any signals one way or another on any particular meeting.”
On the macro front, the Empire State manufacturing index fell to -6.6 in July, according to the New York Federal Reserve, slightly below market expectations from a reading of -6. New orders were stable, while shipments increased only ever so slightly. Despite current conditions, firms expressed optimism for future improvement, even though weak employment and capital spending plans remained a concern.
Market movers
Trump Media & Technology was the high riser of the day, surging 31% following this weekend’s assassination attempt on the former president, which is thought to have improved his standing in the polls. It was also announced that Trump’s criminal case regarding illegally retaining classified documents was dismissed in court.
Goldman Sachs rose 2.5% on the news that profits had soared 150% year-on-year in the second quarter on the back of increased investment banking activity.
BlackRock fell slightly despite announcing that total assets under management hit a fresh record in the second quarter, as revenues rose a less-than-expected 8% year-on-year.
Alphabet edged higher on reports it is in advanced talks to acquire cybersecurity firm Wiz for $23.0bn, according to the Wall Street Journal, potentially paving the way for Google’s largest ever acquisition.
Department store retailer Macy’s shares sank 12% after it terminated takeover talks with Arkhouse and Brigade.
Tuesday newspaper round-up: Elon Musk, Julian Dunkerton, SSE/TotalEnergies
Elon Musk has said he plans to give $45m a month to a Super Pac focused on electing Donald Trump, starting in July, the Wall Street Journal has reported. The tech billionaire, who endorsed Trump two days ago, has already donated what was described as “a sizable amount” to the America Pac, though the actual amount of the donation will not be made public in election filings until 15 July, Bloomberg reported. – Guardian
Britain is taking its first steps towards forging closer trading links with the EU in meetings between the new business secretary, Jonathan Reynolds, and international counterparts in Italy. In his first overseas visit since Labour’s election landslide, Reynolds will tell a G7 meeting of trade ministers in the Italian city of Reggio Calabria that the new UK government wants to foster a “closer, more mature relationship with our friends in the EU”. – Guardian
The founder of Superdry has insisted the struggling “dad brand” will become cool again as it prepares for life after delisting from the London Stock Exchange (LSE). Julian Dunkerton, who founded the retailer in 2003, vowed to make Superdry “so much more relevant” to customers as part of a major overhaul which will end its 15-year tenure as a UK-listed company. – Telegraph
The message is clear and simple. “Let’s remember the mission — to create a world of better leaders and managers,” the founder and former chief executive of Admiral Group declares to his almost 5,000 TikTok followers. Henry Engelhardt, who launched FTSE 100 insurer in 1993 and was its chief executive for 23 years before leaving the business, starts each of his videos with the same refrain as he teaches the generally younger viewers of TikTok the secrets of successful management. – The Times
SSE and TotalEnergies have created a joint venture to install 3,000 electric vehicle charging points in the UK and the Republic of Ireland. The new ultra-fast charging points are intended to provide enough power in only six minutes for a vehicle to travel more than sixty miles. The business, named Source, will install the charging points over the next five years. To maximise their use, they will be located in 300 hubs along main roads and in urban areas. – The Times
