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LONDON MARKET OPEN: Stocks rise ahead of Jackson Hole, Nvidia results

23rd Aug 2023 08:54

(Alliance News) - Stock prices in London opened higher on Wednesday, as the mood in European markets continued to improve.

The FTSE 100 index opened up 21.63 points, 0.3%, at 7,292.39. The FTSE 250 was up 76.25 points, 0.4%, at 18,100.51, and the AIM All-Share was up 1.14 points, 0.2%, at 733.32.

The Cboe UK 100 was up 0.2% at 726.65, the Cboe UK 250 was up 0.4% at 15,871.53, and the Cboe Small Companies was down 0.1% at 13,373.06.

In European equities on Wednesday, the CAC 40 in Paris and the DAX in Frankfurt were both up 0.7%.

It was a quieter day on the UK company news front.

Reckitt Benckiser added 1.0%. The consumer goods firm said its Chief Financial Officer Jeff Carr will retire next March, with Shannon Reinhardt to replace him. Reinhardt is currently CFO at Nike Consumer, Brand & Marketplace. She will join the firm as CFO designate in October.

Elsewhere in the FTSE 100, gains were fairly broad-based. Airtel Africa added 1.5%, JD Sports was up 2.0%, and abrdn rose 1.9%.

The large-cap index is poised for a shake-up, according to Tuesday evening's indicative index changes published by FTSE Russell. Among several changes, high street retailer M&S is likely to rejoin, four years after being relegated to the midcap index. Hikma Pharmaceuticals and soon-to-be-acquired Dechra Pharmaceuticals could also join.

Meanwhile, Persimmon faces the boot from the index, amid a steep share price falls in recent months amid macro-economic challenges in the housebuilding sector.

In the FTSE 250, North Sea oil and gas firm Ithaca Energy reported a sharp drop in interim profit, which fell to USD248.7 million from USD1.74 billion a year before. Production rose 14% to 75,755 barrels of oil equivalent per day, but revenue fell 6.7% to USD1.25 billion from USD1.34 billion due to lower commodity prices over the period.

The firm warned that the UK government's Energy Profits Levy, as it currently stands, is likely to mean it will have to reduce investment across its operated and non-operated portfolio. This will include the deferral and cancellation of certain 2023 and 2024 projects, which will hit its medium-term production. Production in 2024 is expected to be lower than 2023. For 2023, it affirmed its annual production guidance of between 68,000 to 74,000 boe per day.

Gold was quoted at USD1,903.49 an ounce early Wednesday, higher than USD1,897.80 on Tuesday. Brent oil was trading at USD83.74 a barrel, down from USD84.25.

In the US on Tuesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average down 0.5%, the S&P 500 down 0.3% and the Nasdaq Composite up 0.1%.

Recent optimism was challenged, as S&P Global downgraded the credit ratings of several US banks.

The news put the wider US banking sector under selling pressure, as Citigroup shed 2.5%, JPMorgan fell 2.1% and Wells Fargo fell 2.3%.

"Rising rates won't be benign for banks as depositors move their funds into higher interest-bearing accounts, increasing banks' funding costs. The decline in bank deposits squeezes liquidity, while the value of securities that they hold in their portfolios decline. Plus, regional banks continue to face the risk of a sharp decline in commercial real estate loans," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

There were also gloomy quarterly updates from US retailers, which suggested declining consumer spending. Department store owner Macy's closed down 14%, reporting credit card delinquencies, and taking a "cautious" stance towards the second half. Dick's Sporting Goods fell 24%, warning that theft was behind a sharp drop in interim profit.

The pace of interest rates will be decisive in both the retail and banking sectors, with investors keeping a close eye on Federal Reserve Chair Jerome Powell's speech at Jackson Hole on Friday. The symposium begins on Thursday.

"The probability of higher rates for longer in an attempt to finally quash inflation is increasingly being reluctantly accepted by investors, while the jury remains out as to whether there could actually be more rises to come," interactive investor's Richard Hunter.

The pound and the euro advanced against the dollar in early exchanges in Europe.

Sterling was quoted at USD1.2757 early Wednesday, higher than USD1.2734 at the London equities close on Tuesday. The euro traded at USD1.0865, up from USD1.0851. Against the yen, the dollar was quoted at JPY145.70, down a touch versus JPY145.79.

The Nikkei 225 index in Tokyo closed up 0.5% on Wednesday, as survey data showed Japan's private sector expanded at a slightly faster pace in August.

The au Jibun Bank flash composite purchasing managers' index rose to 52.6 points this month, from the final reading of 52.2 in July.

The expansion was led by services, with the sector's flash PMI rising to 54.3 from 53.8, as new orders continued to improve.

However, manufacturing remained in contraction with a reading of 49.7, edging up from 49.6. Rates of reduction in output and new orders were less marked than the prior month, however.

Meanwhile, in China, the Shanghai Composite closed down 1.3%, while the Hang Seng index in Hong Kong was up 0.1%. The S&P/ASX 200 in Sydney closed up 0.4%.

Still to come, the economic calendar has a slew of PMI prints, with the EU, UK and the US all reporting flash figures from 0900 BST.

There will also be Nvidia's hotly-anticipated earnings results after the New York market close. The bar is set high for the chipmaker, with its shares having trebled in value since January amid feverish excitement about the scope for demand amid the advancement of artificial intelligence. Any outperformance or disappointment is likely to move other technology stocks.

By Elizabeth Winter, Alliance News senior markets reporter

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