30th Jul 2024 16:54
(Alliance News) - Blue-chips in London closed lower on Tuesday as investors weighed a mixed bag of earnings and awaited a trio of interest rate decisions in the coming days.
Mid-caps fared better, with the FTSE 250 adding more than 180 points. St James's Place was the star of the show, soaring 25%.
The FTSE 100 index closed down 17.94 points, 0.2%, at 8,274.41. The FTSE 250 ended up 180.44 points, 0.9%, at 21,432.51, and the AIM All-Share closed up 0.84 of a point, 0.1%, at 778.16.
The blue-chip FTSE 100 had earlier hit an intra-day low of 8,235.55.
The Cboe UK 100 ended down 0.1% at 827.48, the Cboe UK 250 closed up 1.3% at 18804.88, and the Cboe Small Companies ended down 0.2% at 17,302.60.
The mood was brighter in Europe. The CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended up 0.6%.
In New York, at the time of the London close, the DJIA was up 0.1%, the S&P 500 index was down 0.7%, and the Nasdaq Composite was down 1.4%.
Figures in the US showed job openings were stronger than expected in June, while consumer confidence also improved.
According to the Bureau of Labor Statistics' Job Openings & Labor Turnover Survey, available positions decreased to 8.18 million in June from a upwardly revised 8.23 million reading in the prior month. May's figure was revised up from 8.14 million. FXStreet consensus had predicted a fall to 8.03 million.
Meanwhile, US consumer confidence picked up more than expected in July.
The Conference Board consumer confidence index rose in July to 100.3 from a downwardly revised 97.8 in June. A Bloomberg-cited consensus predicted a reading of 99.7.
The present situation index, based on consumers' assessment of current business and labour market conditions, declined to 133.6 from 135.3 last month.
But, the expectations Index, based on consumers' short-term outlook for income, business, and labour market conditions, improved in July to 78.2. That's up from 72.8 in June but still below 80 (the threshold which usually signals a recession ahead).
The figures come ahead of non-farm payrolls numbers on Friday and the Federal Reserve's interest rate decision on Wednesday.
The US central bank is widely expected to leave interest rates unchanged but could tee up an easing in monetary policy at its September meeting, analysts believe.
"Encouraging inflation news and a further rise in the unemployment rate have pushed Fed officials closer to cutting. The FOMC is set to hold steady next week but is likely to revise its statement to hint that a cut at the following meeting in September has become more likely," analysts at Goldman Sachs said.
Ahead of that, the Bank of Japan will make its interest rate call on Wednesday, and the Bank of England will follow on Thursday.
Bank of America expects a 25 basis points bank rate cut in August by the BoE, although it is a "close call".
"Expect no clear guidance on the future rate path, with continued focus on data," BofA added.
The pound was quoted at USD1.2829 at the London equities close Tuesday, lower compared to USD1.2847 at the close on Monday. The euro stood at USD1.0808 at the European equities close Tuesday, down against USD1.0819 at the same time on Monday. Against the yen, the dollar was trading at JPY153.88, slightly lower compared to JPY153.91 late Monday.
Earnings saw mixed fortunes for a number of blue-chips.
Diageo gave back 5.1%. Sales in the year to June 30 fell 1.3% from USD27.89 billion from USD28.27 billion. Pretax profit fell 3.3% to USD5.46 billion from USD5.64 billion.
"While fiscal 24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves," Chief Executive Debra Crew said.
In the new financial year, Diageo said the "consumer environment continues to be challenging".
"Looking ahead, Diageo expects the consumer environment to remain tough for now. As such they expect negative [organic sales growth] and margin trends to persistent into fiscal 2025. With consensus forecasting growth, this is likely to prompt downgrades," Citi analyst Simon Hales wrote.
Hales thinks consensus earnings per share forecasts will fall around 10%.
Also declining, miners Glencore, Anglo American and Rio Tinto lost 2.5%, 2.7% and 1.0%.
Barr, Switzerland-based Glencore said copper production fell 5% to 462,600 tonnes for the first six months of 2024 from 488,000 tonnes a year earlier.
Steelmaking coal output was down 8% to 3.4 million tonnes from 3.70 million tonnes. Ferrochrome production for the first half slumped 16% to 599,000 tonnes from 717,000 tonnes.
Gold was flat at 369,000 ounces, while silver was 3% lower at 9,117 ounces from 9,446 ounces.
Glencore Chief Executive Officer Gary Nagle said 2024 is expected to be a year of two halves, whereby the tracking of its year-to-date production versus guidance is expected to be caught up during the second half of the year.
But Standard Chartered rose 5.9% as it announced its largest ever buyback, alongside improved earnings.
"We produced a strong set of results for the first half of the year, demonstrating the value of our franchise as a cross-border corporate and investment bank and a leading wealth manager for affluent clients. We generated double-digit income growth, with positive momentum continuing into the second quarter, and with continued discipline in managing our expenses," said Chief Executive Officer Bill Winters.
A USD1.5 billion buyback starts "imminently", it said. The firm reaffirmed its previous guidance for 2024 as a whole, except for income guidance, which was upgraded.
Operating income is expected to increase above 7% in 2024, while net interest income is expected to be between USD10 billion and USD10.25 billion.
In February, Standard Chartered had guided for operating income to increase between 5% and 7% in the period from 2024 to 2026, and around the top of this range in 2024.
Banking peer Lloyds Banking Group fell 2.3% after UBS downgraded to 'neutral' from 'buy'. The broker thinks the stock is "up with events".
News that a major probe into whether people overpaid on their car loans has been extended, also weighed on Lloyds.
The Financial Conduct Authority said it was giving motor finance companies more time to respond to customer complaints.
Lloyds, which owns car finance firm Black Horse, said earlier this year that it was setting aside about GBP450 million to cover potential costs relating to the issue and any compensation payouts.
In the FTSE 250, St James's Place soared after first half results surpassed expectations.
Bank of America said the update, "with new business, retention and profitability all comfortably beating expectations, reaffirms that its business model is intact".
Gross inflows of GBP8.53 billion beat expectations of GBP7.9 billion by 8%, BofA said.
BofA said the "blow-out" update "should lead to upgrades and could help SJP rebuild credibility after an annus horribilis left the stock out of favour".
In 2023, St James's Place came under pressure from UK regulators over its fee structure, promising in October to remove penalties for early withdrawals by customers starting from the second half of 2025.
Brent oil was quoted at USD78.51 a barrel at the London equities close Monday, down from USD79.80 late Friday. Gold was quoted at USD2,384.97 an ounce at the London equities close Tuesday, higher against USD2,377.22 at the close on Monday.
In Wednesday's UK corporate calendar, there are half-year results from GSK, HSBC and Rio Tinto.
As well as interest rate decisions from Japan and the US, there is a consumer price reading from the eurozone. There is also unemployment data from Germany due out.
By Jeremy Cutler, Alliance News reporter
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