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London open: US politics, global IT glitch trip up investors
Stocks in London were trading lower in early trading as investors digested the latest political headlines out of the US and their potential implications for the stock market.
Investors were also tripped up by a cascade of IT glitches involving software made by Microsoft and Crowdstrike that was impacting airlines and lenders globally, as well as the London Stock Exchange.
“At this stage, we do not know how long the outage will last and the cause is unknown. It is hard to see risk managing to stage a meaningful recovery in Europe or in the US until this has been resolved,” said Kathleen Brooks, research director at XTB.
As of 0945 BST, the FTSE 100 was down by 0.52% at 8,162.53 points, alongside a 0.69% drop for the second-tier index to 21,086.97.
Stocks had fallen on Wall Street and in Asia on speculation about just how far the Federal Reserve would be able to cut interest rates should Donald Trump take the White House and what the effects of his tariff proposals would be.
“The effects of the Trump trade are not fully priced in markets according to our iFlow data,” analysts at BNY Mellon mused.
“The yield curve could steepen further if we see evidence supporting the views of a Congressional sweep for Republicans and a Trump win.”
There was also increasing speculation that the incumbent, president Joe Biden, might finally decide to sit out the next election.
“Of course, this political soap opera will unfold on X (formerly Twitter) and is likely to shift by the hour. There’s chatter about Harris/Obama, then Hillary/Obama, and even Harris with some other Democrat,” said Stephen Innes, managing partner at SPI Asset Management.
“What’s increasingly clear is that the Democratic Party is in disarray. But as I’ve said all along, and I’m not even on his side of the aisle, Biden has been a steadfast patriot, and regardless of your political leanings, this is a sad moment if the rumours hold.”
On home shores, according to the Office for National Statistics UK retail sales fell at a month-on-month pace of 1.2% in June.
That was considerably worse than economists’ forecast for a decline of 0.5%.
Data out from GfK overnight appeared to presage that result, with the consultancy’s consumer confidence index improving by one point in July to -13.
Britons were reported to have taken a wait and see attitude following the elections.
In parallel, the UK public sector’s net borrowing for last month was reported at £14.5bn, which was down from £17.8bn one year ago but above the £12bn anticipated by consensus.
LSE Group’s RNS service knocked out
The London Stock Exchange’s Regulatory News Service went haywire on Friday morning, close on the heels of an outage of US tech giant Microsoft’s online services on Thursday evening. Other corporates across Asia, including in Japan, Hong Kong and India also reported outages with some of their software overnight.
The deadline for a potential £5.4bn takeover of Hargreaves Lansdown has been extended to 5 August, the fund supermarket confirmed on Friday. The FTSE 250 firm said last month it was minded to recommend a 1,140p per share offer from a private equity consortium led by CVC Capital Partners, after it rejected an earlier approach. Under Takeover Panel rules, the consortium was given until 19 July to make a formal offer or walk away, a so-called put up or shut up.
A joint venture half-owned by Segro has sold a portfolio of logistics warehouses in Italy for €327m (£275m), the company said on Friday. The portfolio consists of four warehouses, two located in Milan and two in Rome, and has a total floor space of 338,745 sq m generates a passing rent of €19m. The Segro European Logistics Partnership (SELP) is a joint venture in which Segro holds a 50% interest. It was established in October 2013 and owns €6.7bn of big box warehouses and development land across seven Continental European countries. Segro acts as its asset, property and development manager.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | +1.87% | +5.80 | 316.30 |
| 2 |  |
Rolls-royce Holdings Plc | +1.86% | +8.10 | 442.70 |
| 3 |  |
Centrica Plc | +1.19% | +1.65 | 140.50 |
| 4 |  |
Sainsbury (j) Plc | +1.03% | +2.80 | 273.80 |
| 5 |  |
Taylor Wimpey Plc | +0.83% | +1.30 | 157.50 |
| 6 |  |
Berkeley Group Holdings (the) Plc | +0.81% | +40.00 | 4,950.00 |
| 7 |  |
Next Plc | +0.74% | +66.00 | 8,992.00 |
| 8 |  |
Melrose Industries Plc | +0.70% | +3.80 | 549.40 |
| 9 |  |
Bt Group Plc | +0.53% | +0.75 | 141.80 |
| 10 |  |
Relx Plc | +0.49% | +17.00 | 3,490.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Spirax Group Plc | -6.36% | -570.00 | 8,395.00 |
| 2 |  |
Ocado Group Plc | -3.64% | -14.30 | 378.20 |
| 3 |  |
Fresnillo Plc | -3.36% | -21.00 | 603.50 |
| 4 |  |
Burberry Group Plc | -3.16% | -23.80 | 728.20 |
| 5 |  |
Hiscox Ltd | -2.54% | -32.00 | 1,227.00 |
| 6 |  |
Prudential Plc | -2.29% | -16.40 | 700.80 |
| 7 |  |
Standard Chartered Plc | -2.22% | -16.20 | 714.20 |
| 8 |  |
Bhp Group Limited | -2.07% | -45.00 | 2,130.00 |
| 9 |  |
Anglo American Plc | -2.03% | -46.50 | 2,239.50 |
| 10 |  |
Glencore Plc | -2.03% | -9.15 | 441.75 |
US close: Stocks lower as Nasdaq extends slide another session
Major indices were in the red at the close of trading on Thursday following a heavy tech selloff in the previous session that saw the Nasdaq Composite deliver its worst daily performance since December 2022.
At the close, the Dow Jones Industrial Average was down 1.29% at 40,665.02, while the S&P 500 lost 0.78% to 5,554.59 and the Nasdaq Composite saw out the session 0.70% weaker at 17,871.22.
The Dow closed 533.06 points lower on Thursday, reversing much of yesterday’s gains.
As far as Thursday’s headlines were concerned, Americans lined up for unemployment benefits at an accelerated pace in the week ended 13 July, according to the Labor Department, which said initial jobless claims rose by 20,000 to 243,000, above market expectations for a print of 230,000 to register a fresh weekly high. Continuing claims increased by 20,000 to 1.86m, while the four-week moving average, which aims to strip out week-to-week volatility, increased by 1,000 to 234,750.
Elsewhere on the macro front, manufacturing activity in Philadelphia rose to a three-month high in July, with new orders and shipments rising to their highest levels in more than two years, according to data released by the region’s Federal Reserve Bank on Thursday. The index for general activity in July’s Manufacturing Business Outlook Survey increased to 13.9 this month with 39% of firms reporting growth in activity, compared with 25% reporting decreases and 29% experiencing no change.
In the corporate space, Discover Financial traded higher following Q2 results that topped expectations, while Beyond Meat was sharply lower on reports that the meat replacement business was set to meet with bondholders to kick off talks regarding a restructuring of its balance sheet.
Domino’s Pizza shares slumped on the back of quarterly sales that fell short of expectations, while DR Horton beat earnings expectations and announced a $4.0bn stock buyback and Snap-On topped earnings estimates but fell short on revenues.
Finally, Netflix shares headed south despite the streaming giant beating estimates on both the top and bottom lines as ad-supported memberships rose by shot up during Q2.
Friday newspaper round-up: Arena Television, social care, Obama, Netflix, Pret a Manger
Liquidators of Arena Television, the failed outside broadcast business at the centre of what has been called Britain’s “largest ever” asset-based lending fraud, are suing Lloyds Banking Group for up to £285 million. Lloyds and its Bank of Scotland subsidiary are accused of processing payments “without authority”, allegedly allowing Arena’s directors to perpetrate a “substantial and wide-ranging fraud” against scores of lenders, court filings show. – The Times
Labour has been urged to let tens of thousands of pensioners foot the bill for social care costs by delaying reforms, as councils face a £30bn funding blackhole. England’s largest councils have warned Sir Keir Starmer that without more money, reforms to prevent people from being forced to sell their homes to pay for care are “impossible”. Under reforms first proposed by Boris Johnson when he was prime minister in 2020, councils will be forced to implement a lifetime cap of £86,000 on care costs from October next year. – Telegraph
Working parents who are saving as much as £10,000 a year on their nursery costs could be hit with unexpected tax bills because of a clampdown on the misuse of a childcare “benefit” offered by some employers. HM Revenue and Customs has turned its sights on some workplace nursery benefit schemes which allow employees to pay the fees out of their pre-tax salary, resulting in them making big savings on income tax and national insurance. – Guardian
Barack Obama is understood to have told friends that President Biden must seriously reconsider whether he should remain as the Democratic Party’s White House nominee. The former president is said to have studied polling data in recent days and concluded that Biden, 81, who served for eight years as his vice-president, has a narrowing chance of beating Donald Trump. – The Times
British black comedy Baby Reindeer and the new series of Bridgerton helped drive record revenues of $9.6bn (£7.4bn) at Netflix, the streaming giant disclosed last night. Profits for the three months ending in June climbed by 44pc to $2.1bn compared to the previous year, while the US technology business added more than 8m new subscribers, beating Wall Street expectations with a total of 277.6m paying viewers. Executives at Netflix hailed the surprise success of Baby Reindeer, which has racked up more than 88m views since it was released in April. – Telegraph
Pret a Manger is axing its subscription offering members “free drinks”, almost four years after the deal launched in the UK to attract customers back after the Covid pandemic. In a move that has upset some customers, the coffee chain said it was “time to rethink” the Club Pret offer, and that instead of providing five drinks a day and a 20% discount on food for a cost of £30 a month, it would charge £10 for a subscription for half-price drinks. – Guardian
