8th Jul 2021 08:51
(Alliance News) -Â London stocks plummeted at the open on Thursday after Federal Reserve minutes showed surprise amongst rate setters over recent US inflation strength.
The FTSE 100 index was down 70.65 points, or 1.0%, at 7,080.37 early Thursday. The mid-cap FTSE 250 index was down 132.34 points, or 0.6%, at 22,837.90. The AIM All-Share index was down 0.4% at 1,259.87.
The Cboe UK 100 index was down 1.0% at 704.23. The Cboe 250 was down 0.4% at 20,574.13, and the Cboe Small Companies down 0.2% at 15,457.80.
In mainland Europe, the CAC 40 in Paris was down 1.0% while the DAX 30 in Frankfurt was 0.7% lower early Thursday.
The lower start in Europe comes after falls in Asia overnight as markets mulled the Fed minutes.
"Asian equities were mostly lower as markets digested last night's Fed minutes, which provided more colour on the planned reduction in asset purchases, potentially later this year," said Lloyds Bank.
Released late Wednesday, the Fed minutes showed rising prices amid the recovery from the pandemic shutdown were predicted, but the recent jump in US inflation was higher than officials had expected.
Given a risk that prices will remain higher for some time, officials stressed the central bank will need to be ready to pull back on its massive bond-buying programme, but offered no concrete hints as to when that will happen.
In the mid-June meeting, the policy-setting FOMC left the US benchmark interest rate unchanged in the range of 0.00% to 0.25% and also maintained its quantitative easing programme.
While temporary factors had been expected to boost inflation and then recede, the minutes showed "the actual rise in inflation was larger than anticipated".
In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong dived 2.9%. The S&P/ASX 200 in Sydney ended up 0.2%, however.
The Hang Seng extended losses into Thursday's session following a Chinese crackdown on technology firms. The Cyberspace Administration of China on Sunday ordered the removal of the Didi app after investigations found its user data collection in "serious violation" of regulations.
While Wall Street ended higher on Wednesday following the publication of the Fed minutes, futures are pointing to a negative open on Thursday, with the Dow Jones called down 0.8%.
Sterling was quoted at USD1.3769 early Thursday, flat on USD1.3770 at the London equities close on Wednesday.
The euro traded at USD1.1806 early Thursday, up from USD1.1793 late Wednesday. Against the yen, the dollar was quoted at JPY109.98, down versus JPY110.70.
Gold was quoted at USD1,805.64 an ounce early Thursday, higher than USD1,801.50 on Wednesday. Brent oil was trading at USD73.22 a barrel, up from than USD73.00 late Wednesday.
Dragging on London's FTSE 100 index in opening trade was B&M European Value Retail, down 2.8%. B&M reported a first-quarter revenue climb, though at a slower rate than the bumper growth the variety goods value retailer saw in its last financial year.
Revenue in the 13 weeks to June 26 rose 2.9% annually to GBP1.19 billion, from GBP1.15 billion, or 3.1% at constant currency. Constant currency revenue growth in the first quarter of the last financial year was 28%, highlighting just how much demand at B&M was boosted by Covid-19 lockdowns.
Persimmon shares were down 1.7% even as it reported a good first half, with revenue beating pre-pandemic levels.
Total revenue of GBP1.84 billion for the period is above both the GBP1.19 billion reported a year ago and the GBP1.75 billion registered for the same period in 2019. While the housebuilder delivered 7,406 new homes to customers in the half, below 2019's figure of 7,584, the average selling price jumped to GBP236,200 from GBP216,942.
The housebuilder said it intends to return 110p per share of surplus capital as a single additional interim dividend payment in relation to the 2020 financial year. Previously, it had intended to split up the dividend into two payments, one made in August this year and one in December.
However, the single 110p dividend will be paid on August 13, "accelerating and consolidating the previously indicated payments, and returning the group to distributing two capital return payments every 12 months, a year earlier than originally envisaged." There will be no further dividend payments in relation to 2020, it added.
Chief Executive Dean Finch said: "Persimmon is well placed for the future with a strong balance sheet and healthy liquidity. As such, we are pleased to announce the accelerated payment of the surplus capital distribution."
At the top of the blue-chips in London was Entain, up 1.8% after reporting 11% growth in net gaming revenue for the first half of 2021, boosted by a 42% jump in the second quarter.
Elsewhere in London, Deliveroo rose 3.0% as it lifted full-year gross transaction value guidance after a better-than-expected second quarter - though it does expect a slowdown in growth in the second half.
Gross transaction value for the second quarter of 2021 was up 76% year-on-year to GBP1.74 billion, with orders rising 88% to 78 million.
"Deliveroo has seen continued strong growth and consumer engagement in H1, and as a result of that plus increased expectations for H2 is increasing the guidance for full year annual GTV growth from between 30% to 40% to between 50% to 60%," it said.
The firm also confirmed its full-year gross profit margin guidance, though expects this to be in the lower half of its previously communicated range.
Gross transaction value of GBP3.39 billion, up 99% year-on-year, for the first half implies a result of GBP2.93 billion for the second half at the midpoint of guidance, which would mark a slower annual growth rate of 24%.
The economic calendar on Thursday has Irish consumer price index at 1100 BST and US initial jobless claims at 1330 BST. The ECB will announce the results of its strategy review at 1200 BST and hold a press conference at 1330 BST.
"The calendar is relatively thin today, with the main focus being the results of the ECB's strategy review," said Lloyds Bank.
The ECB is expected to unveil a symmetrical inflation target of 2%, compared to its current stance of 'below, but close to' 2% currently, which allows no room for overshoots.
"We need to thoroughly analyze the forces that are driving inflation dynamics today, and consider whether and how we should adjust our policy strategy in response," Lagarde said last September.
By Lucy Heming;Â [email protected]
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