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London open: Mining stocks weigh on UK markets
UK stocks retreated on Tuesday morning, with the heavyweight mining sector providing a drag, as investors treaded ahead of the start of earnings season for blue chip tech names in the United States.
The FTSE 100 was down 0.4% at 8,165 within the first hour of trade, pulling back after a 0.5% gain the previous session.
US markets performed well overnight, though nerves were starting to set in ahead of the start of the quarterly reporting season across Wall Street’s heavyweight tech sector with Tesla and Google due to release their results after the closing bell on Tuesday evening.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the earnings “could shift the wind in either direction”. Ozkardeskaya said: “The risk is, given the sky-high Big Tech valuations, any delay in AI revenue, any unpleasant detail, or any misstep could have a sector-wide negative impact and lead to a rapid selloff in AI-related stocks.”
The economic data calendar was looking relatively quiet across the UK and Europe, while existing home sales and the Richmond Fed manufacturing index was the only major releases due out in the US in afternoon trade.
Meanwhile, market participants were starting to looking ahead to some key US inflation data due out later in the week, with the personal consumption expenditures index for June scheduled for Friday. Inflation as measured by the PCE index – the Federal Reserve’s preferred gauge of price pressures – is tipped to have eased to an annual rate of 2.4% from 2.6% in May, with the core rate slowing to 2.5% from 2.6%.
“The upcoming inflation data could have a significant impact on interest rate expectations, with the US Fed widely anticipated to lower rates by a quarter point in September,” said analyst Patrick Munnelly from Tickmill.
Compass and Beazley jump, miners falls
Compass Group was a high riser, gaining 3% after boosting its full-year guidance following a bumper third quarter, in which the world’s largest catering company saw organic revenues rise 10.3%. It now expects to grow underlying profit and organic revenues above previous projections of 15% and 10%, respectively.
Insurance group Beazley also gained after reassuring investors that the ongoing IT outage linked to cyber firm CrowdStrike should not affect its profitability. “Based on what is known at this point, the event will not change the current undiscounted combined ratio guidance of low-80s for the full year,” the company said.
Heading lower were mining stocks, as silver, copper and iron ore prices struggled, with an interest-rate cut in China failing to excite commodities markets the previous session. Glencore, Anglo American, Fresnillo and Rio Tinto were all nursing losses.
Anglo American was also lower after saying that its South Africa-based iron ore mining subsidiary delivered a “solid” performance for the first half of the year, though macro and logistics environment were said to be “challenging”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Compass Group Plc | +4.88% | +107.00 | 2,298.00 |
| 2 |  |
Flutter Entertainment Plc | +1.42% | +220.00 | 15,745.00 |
| 3 |  |
Crh Plc | +1.37% | +86.00 | 6,354.00 |
| 4 |  |
Sage Group Plc | +1.05% | +11.00 | 1,060.50 |
| 5 |  |
Pearson Plc | +0.78% | +8.00 | 1,034.50 |
| 6 |  |
Ferguson Plc | +0.68% | +110.00 | 16,260.00 |
| 7 |  |
Whitbread Plc | +0.67% | +19.00 | 2,875.00 |
| 8 |  |
Hiscox Ltd | +0.65% | +8.00 | 1,230.00 |
| 9 |  |
Ashtead Group Plc | +0.64% | +34.00 | 5,332.00 |
| 10 |  |
Sse Plc | +0.62% | +11.50 | 1,853.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Limited | -1.86% | -40.00 | 2,110.00 |
| 2 |  |
Glencore Plc | -1.60% | -7.10 | 436.25 |
| 3 |  |
Anglo American Plc | -1.57% | -35.00 | 2,199.00 |
| 4 |  |
Croda International Plc | -1.40% | -57.00 | 4,015.00 |
| 5 |  |
Hikma Pharmaceuticals Plc | -1.17% | -22.00 | 1,858.00 |
| 6 |  |
Spirax Group Plc | -1.10% | -95.00 | 8,535.00 |
| 7 |  |
Phoenix Group Holdings Plc | -1.02% | -5.50 | 532.50 |
| 8 |  |
Rio Tinto Plc | -0.99% | -49.00 | 4,895.50 |
| 9 |  |
Standard Chartered Plc | -0.93% | -6.80 | 723.60 |
| 10 |  |
Persimmon Plc | -0.90% | -13.50 | 1,492.00 |
US close: Stocks higher following Biden’s election race exit
Major indices closed higher on Monday after Joe Biden dropped out of the US presidential race over the weekend.
At the close, the Dow Jones Industrial Average was up 0.32% at 40,415.44, while the S&P 500 advanced 1.08% to 5,564.41 and the Nasdaq Composite saw out the session 1.58% stronger at 18,007.57.
The Dow closed 127.91 points higher on Monday, reclaiming a portion of the losses recorded in the previous session.
President Joe Biden’s decision to drop out of the election race was in focus on Monday, with him opting to endorse vice-president Kamala Harris for the Democratic Party’s nomination.
Both Biden’s performance in last month’s debate and a recent attempt on Donald Trump’s life led to calls for the incumbent to bow out of the race in favour of Harris.
On the macro front, the Chicago Federal Reserve‘s national activity index decreased to +0.05 in June, down from an upwardly revised reading of +0.23 in May but ahead of market expectations for a reading of -0.09.
In the corporate space, Verizon posted quarterly revenues that came in short of estimates on the back of slower-than-anticipated handset upgrades.
Tuesday newspaper round-up: Kamala Harris, Crowdstrike, Vivendi…
Kamala Harris has secured enough delegates from her party to clinch the Democratic presidential nomination, as she pledged to offer Americans a “brighter future” compared to the “chaos, fear and hate” proposed by Donald Trump. The US vice-president was speaking in Wilmington, Delaware, on Monday, the first full day since President Joe Biden dropped his re-election bid and endorsed her for the Democratic presidential nomination, shaking up the 2024 race for the White House. – Financial Times
A US Congressional committee has called on CrowdStrike’s chief to testify at a hearing about the cybersecurity firm’s role in the global tech outage that brought flights, banks, and hospital procedures to a halt. On Friday, a major tech outage embroiled the world in chaos as computers running Microsoft Windows began to show the “blue screen of death”, which later became clear was due to a faulty update to a CrowdStrike software. – The Independent
Vivendi plans to float its French TV business Canal+ in London, providing a shot in the arm for the capital’s stock exchange after a number of high-profile companies opted for rival international financial centres such as New York. The move is part of a drive to break up the media conglomerate controlled by the billionaire Vincent Bolloré to realise value from its different operations. – The Guardian
The flooring retailer Tapi has struck a multimillion-pound deal to rescue the Carpetright brand and a number of stores from its collapsed rival’s administrators. Tapi is to buy the Carpetright brand, intellectual property, 54 stores and two warehouses, in a pre-pack administration deal that will complete today and save over 300 jobs. – The Times
The former Cabinet minister Nadhim Zahawi is leading a potential bid to buy The Telegraph, it has been claimed. Mr Zahawi, whose Cabinet appointments included a two-month stint as chancellor in 2022, has been approaching investors about a £600m bid for The Telegraph and The Spectator, according to Sky News. Mr Zahawi has discussed funding a potential bid with the Reuben family, the property billionaires who own a stake in Newcastle United Football Club, it was reported. – The Telegraph
Labour is likely to have to approve new gas-fired power stations in its attempt to decarbonise the UK’s electricity systems by 2030, in what would be a tricky decision for the new government. Keeping the lights on for the rest of the decade, and beyond, will require some additional baseload power, and new nuclear power stations will not be built in time, according to a report from the National Engineering Policy Centre. – The Guardian
Google’s parent company and Wiz have ended talks on a proposed $23bn acquisition, terminating what would have been the largest deal in the search group’s history. Google parent company Alphabet had been in talks to buy the Israeli cyber security company in what would also have ranked as the biggest ever purchase of a venture-backed company, according to PitchBook, a data provider. – Financial Times
