16th Jul 2024 09:33
(Alliance News) - Stock prices in London opened lower on Tuesday, as hopes for lower interest rates in the coming months was offset by investor concern about a second US presidency for Donald Trump.
While the 'Trump trade' contributed to higher close in New York on Monday, following the assassination attempt on the former president, the financial picture is more mixed for Europe, remarked Ipek Ozkardeskaya, senior analyst at Swissquote Bank. The continent and its companies may face higher tariffs and trade tensions, she said.
On Wall Street, the Dow Jones Industrial Average closed up 0.5% on Monday, the S&P 500 up 0.3%, and the Nasdaq Composite up 0.4%.
Early Tuesday in London, the FTSE 100 index was down 30.02 points, 0.4%, to 8,152.94.
Burberry continued to drag on the blue-chip index. The luxury goods stock was down 1.8% early Tuesday, having lost 16% on Monday. Burberry made a sudden change of chief executive, as falling sales, particularly in Asia, prompted a profit warning and the suspension of dividend payments.
Also at the bottom of the FTSE 100 were miner Rio Tinto, down 2.5%, and credit-checking firm Experian, down 2.0%.
In a trading update on Tuesday, Rio Tinto left production guidance for 2024 mostly unchanged, though it lowered alumina guidance, due to issues at its Gladstone operations.
Experian said Chief Operating Officer Craig Boundy will leave in August to become chief executive officer of virus-blocking software firm McAfee. The announcement came as Experian said revenue increased by 7% in the first quarter, or 8% at constant exchange rates. Organic revenue growth also was 7%.
Airtel Africa led FTSE 100 gainers, up 3.2%. The provider of telecommunications and mobile money services in Africa will report first quarter results on Thursday next week.
B&M European Value Retail followed, up 2.0%.
The chain of discount stores on Tuesday reported revenue of GBP1.35 billion in the first quarter of its financial year, the three months that ended June 29. This was up 2.4% at constant exchanges. In the UK, revenue was up 1.5% in total, though like-for-like revenue was down 3.5%. B&M blamed a strong comparative from a year before and poor weather in the UK in April and May.
B&M was followed by two fellow retailers, J Sainsbury and Marks & Spencer, both shares up 1.1%.
The FTSE 250 was down 50.49 points, 0.2%, at 21,139.03, and the AIM All-Share was down 1.55 points, also 0.2%, at 783.93.
In the FTSE 250, Ocado shares were up 14%, after the online grocer reported a narrowed loss and provided a positive revenue outlook.
Ocado said its pretax loss narrowed to GBP153.9 million in the first half of its financial year, the 26 weeks that ended June 2, from GBP289.5 million a year before, as revenue grew by 13% to GBP1.54 billion from GBP1.37 billion. Revenue grew by 22% in Technology Solutions, by 5.6% in Logistics, and by 11% in Retail.
For the full year, Ocado guided 15% to 20% revenue growth for Technology Solutions, stable revenue for Logistics, and "mid-high single digits" percentage revenue growth for Retail.
Among small-caps, shares in payments firm Wise were up 4.2% after a trading update.
Wise said underlying income was GBP325.4 million in the first quarter of its financial year, up 22% from a year before. It still expects underlying income for all of financial 2025 to increase by 15% to 20%. The rising income was thanks to an 18% increase in transaction volume to GBP33.2 billion.
The Cboe UK 100 index was down 0.4% at 813.10, the Cboe UK 250 was down 0.1% at 18,420.68, and the Cboe Small Companies was down 0.6% at 17,220.45.
In European equities, the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was down 0.5%.
The pound was quoted at USD1.2969 early Tuesday in London, down from USD1.2984 at the equities close on Monday. The euro stood at USD1.0895, down from USD1.0912. Against the yen, the dollar was trading at JPY158.51, up from JPY157.85.
US Federal Reserve Chair Jerome Powell on Monday said recent data lifts the central bank's confidence that inflation is coming down towards its 2% target – a trend that signals interest rate cuts on the horizon.
"We didn't gain any additional confidence in the first quarter but the three readings in the second quarter, including the one from last week, do add somewhat to confidence," Powell said in an interview with David Rubenstein of the Economic Club of Washington DC.
While the central bank has focused largely on inflation – which surged in the wake of the pandemic – it is now also closely monitoring its mandate of promoting maximum employment, Powell added.
"If we were to see an unexpected weakening in the labour market, then that might also be a reason for reaction by us," he said.
In the UK, a Bank of England rate-setter said interest rates should be cut in order to stop squeezing the living standards of British households. Swati Dhingra, a member of the UK central bank's nine-strong Monetary Policy Committee, said "now is the time" for a reduction in the bank rate.
Equities market were mixed in Asia on Tuesday. The Nikkei 225 index in Tokyo closed up 0.2%. In China, the Shanghai Composite was up 0.1%, but the Hang Seng index in Hong Kong was down 1.5%. The S&P/ASX 200 in Sydney closed down 0.2%.
In commodities markets, gold was quoted at USD2,435.50 an ounce early Tuesday in London, down from USD2,436.88 late Monday. Brent oil was trading at USD84.20 a barrel, down from USD84.83.
In Tuesday's economic calendar, the eurozone trade balance for May is due at 1000 BST. In North America, US retail sales for June and the Canadian consumer price index for June both are due at 1330 BST.
By Tom Waite, Alliance News editor
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