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London open: FTSE 100 at three-week low ahead of data
UK stocks were trading at their lowest levels in three weeks on Wednesday morning as investors digested a wave of disappointing corporate earnings from Wall Street overnight and awaited a flurry of economic data.
The FTSE 100 was down 0.4% at 8,136 within the first hour of trade. It has not closed below this level since 2 July.
In after-hours trade in the US, Tesla shares fell sharply after the electric carmaker said net profits fell 45% in the second quarter, while Google parent Alphabet disappointed with slowing ad sales growth.
“As such, two of the Magnificent 7 stocks failed to create euphoria when they reported their Q2 results yesterday. The less-than-ideal set of earnings comes at a time when investors are questioning whether the AI rally has gotten ahead of itself,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Visa, UPS and GM also underwhelmed investors with their latest numbers over the past 24 hours, with futures on the three Wall Street benchmarks showing a sea of red ahead of the opening bell.
After a relatively quiet economic calendar so far this week, the schedule picks up on Wednesday with a host of purchasing managers’ indices (PMIs) due from across the Eurozone, the UK and the US. Early releases show the composite PMI from France improved from 48.8 to 49.5, but declined in Germany from 50.4 to 48.7.
Reckitt and easyJet rise
Reckitt Benckiser was a high riser, gaining 4% on plans to slim down its portfolio to focus on core businesses and offloading several home care brands.The Durex and Dettol maker said it would look to sell brands including Air Wick, Mortein, Calgon and Cillit Bang. Its Mead Johnson Nutrition business, which makes Enfamil and Nutramigen, is now also up for sale.
Also impressing the market were easyJet’s third-quarter results which showed a big increase in profits driven by an 8% rise in passenger numbers and a 1% rise in revenue per seat. The FTSE 100 low-cost carrier said easyJet holidays saw 49% growth in profit before tax to £73m, with a 33% increase in passenger numbers.
Gold and silver miner Fresnillo rose after saying it was on track to meet full year guidance after strong second quarter production. The Mexico-based company said quarterly attributable silver production of rose 8.4% quarter on quarter to 14.6 million ounces, but gold production was down 7.7% to 130,000 ounces.
Financial stocks were leading the downside, with Scottish Mortgage Inv Trust, Experian, Prudential, 3i Group, Standard Chartered, NatWest and Beazley all among the top 10 fallers list.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | +5.68% | +24.30 | 452.00 |
| 2 |  |
Fresnillo Plc | +4.00% | +24.00 | 624.00 |
| 3 |  |
Intertek Group Plc | +2.53% | +118.00 | 4,778.00 |
| 4 |  |
Informa Plc | +1.35% | +11.40 | 858.40 |
| 5 |  |
Antofagasta Plc | +1.23% | +23.50 | 1,936.50 |
| 6 |  |
International Consolidated Airlines Group S.a. | +1.18% | +1.95 | 166.85 |
| 7 |  |
Itv Plc | +0.96% | +0.80 | 84.45 |
| 8 |  |
Intercontinental Hotels Group Plc | +0.75% | +62.00 | 8,290.00 |
| 9 |  |
Rio Tinto Plc | +0.70% | +34.00 | 4,906.00 |
| 10 |  |
Ashtead Group Plc | +0.53% | +28.00 | 5,326.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -4.18% | -18.00 | 412.80 |
| 2 |  |
British Land Company Plc | -2.01% | -8.00 | 391.00 |
| 3 |  |
Land Securities Group Plc | -1.90% | -12.00 | 621.00 |
| 4 |  |
3i Group Plc | -1.56% | -48.00 | 3,023.00 |
| 5 |  |
Bt Group Plc | -1.50% | -2.10 | 137.85 |
| 6 |  |
Gsk Plc | -1.46% | -22.00 | 1,487.50 |
| 7 |  |
Rolls-royce Holdings Plc | -1.39% | -6.40 | 453.60 |
| 8 |  |
Scottish Mortgage Investment Trust Plc | -1.30% | -11.40 | 867.00 |
| 9 |  |
Segro Plc | -1.28% | -11.60 | 893.80 |
| 10 |  |
Centrica Plc | -1.23% | -1.75 | 139.95 |
US close: Stocks lower as Q2 tech earnings come into focus
Wall Street stocks closed lower on Tuesday as market participants got their first taste of big-name tech earnings for Q2.
At the close, the Dow Jones Industrial Average was down 0.14% at 40,358.09, while the S&P 500 lost 0.16% to 5,555.74 and the Nasdaq Composite saw out the session 0.06% weaker at 17,997..35.
The Dow closed 57.35 points lower on Tuesday, taking a modest bite out of gains recorded in the previous session.
Google parent company Alphabet met expectations with its latest quarterly earnings report but YouTube advertising revenues fell short of estimates, while electric carmaker Tesla‘s quarterly earnings nearly halved as price cuts put pressure on profits.
Elsewhere, soft drinks giant Coca-Cola hiked its full-year guidance on the back of increased global demand throughout Q2, while cigarette maker Philip Morris reported a 34% jump in quarterly profits amidst an “outstanding” quarter in which revenues topped estimates.
On the macro front, existing home sales fell by 5.4% in June, according to the National Association of Realtors, hitting an annualised rate of 3.89m units, the sharpest monthly decline since 2022.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR chief economist Lawrence Yun. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
On another note, the Richmond Federal Reserve‘s manufacturing index declined for a second month in a row, hitting -17 in July for the lowest reading since May 2020, down from -10 in June and missing expectations of a slight improvement to -7.
Wednesday newspaper round-up: Reckitt, Tesla, Virgin Atlantic…
Reckitt is under pressure from top shareholders to revisit a sale of its nutrition business, following litigation and a series of other setbacks at the division that have sent the company’s share price to decade lows. The FTSE 100 consumer giant acquired the Mead Johnson infant formula business in 2017 for $17bn — its largest-ever acquisition — and it has been plagued by mishaps ever since. Meanwhile, the wider group, which makes Lysol detergent and Durex condoms, has underwhelmed investors as it struggles to build back sales volumes following a period of high inflation and suppressed consumer demand. – Financial Times
Earnings at Tesla almost halved as discounts and price cuts pile pressure on the electric carmaker’s profit margins. Elon Musk, the company’s CEO, blamed “a bit of a hangover” after rivals cut prices “very substantially, which has made it a bit more difficult for Tesla”. Tesla has sought to drum up interest in its plans for robotaxis, artificial intelligence and “genuinely useful” humanoid robots as deliveries slipped amid cooling demand. – The Guardian
Virgin Atlantic is to charge passengers a green levy on every flight as it seeks to cover the costs of using sustainable aviation fuel (Saf). Shai Weiss, the chief executive of the UK airline, confirmed plans for the environmental surcharge, which he said will come into force over the next 18 months. It comes as airlines gear up for the mandated use of Saf, which costs three times as much as kerosene. – The Telegraph
Informa is in advanced discussions to acquire Ascential, its rival events specialist, for £1.16 billion, providing a further boost to deal activity in the City. Ascential’s board said it is minded to accept the 568p-per-share offer from the FTSE 100 owner of the Miami Boat Showand World of Concrete. – The Times
Sir Keir Starmer’s plans for a housebuilding revolution risk breaching human rights laws, lawyers have said. They say the Government will face a string of legal battles over its proposal to reduce compensation to landowners forced to hand over their assets under compulsory purchase order (CPO) powers. As outlined in the King’s Speech, the Government wants to reduce how much money is paid to owners and developers for use in housebuilding, saying it wanted to make the payouts “fair but not excessive”. – The Telegraph
