- FTSE 100 falls 39 points to 8160
- Caterer Compass impresses with more quarterly growth
- US futures pointing to mixed start
4.13pm: Oil and copper drag FTSE down
The FTSE is in the red as we head towards the closing minutes of Tuesday's session in London, down 0.5%.
Markets are a biting their nails ahead of a big few days for corporate earnings, says Chris Beauchamp, chief mrket analyst at IG.
"The morning gains for Europe have mostly slipped away, and it has been an uncertain start on Wall Street too as investors hunker down and await earnings from Tesla and Alphabet."
He notes that the Vix volatility index remains down for the second session in a row, suggesting that stocks "could resume their gains should tonight’s earnings beat expectations".
Weighing on London's blue-chips today has been a fall in copper and other commodities, with oil prices at fresh six-week lows, Brent crude down 1.65% to $81 a barrel now.
"Recent history has shown that oil prices tend to decline over the summer and early autumn, and worries about demand growth have sparked off fresh losses this afternoon," says Beauchamp.
"This spells fresh trouble for the FTSE 100, which has been desperately seeking a catalyst for a new rally. With oil and metals prices suffering it seems the index’s rangebound period has some way to go."
Water companies Pennon Group PLC (LSE:PNN, OTC:PEGRY), United Utilities Group PLC (LSE:UU.) and Severn Trent PLC (LSE:SVT), down 3.1%, 1.6% and 1.2% respectively, have also soiled the performance of the index after the Environment Agency said it was recruiting 500 more staff to quadruple company inspections.
It will take hard work to clean up our waterways after 14 years of the Tories.
But this Labour government has hit the ground running. Watch this. pic.twitter.com/A75Aa8tO9q
— The Labour Party (@UKLabour) July 23, 2024
Top of the leaderboard was Compass Group PLC (LSE:CPG) after its quarterly update reassured any investors who had been doubting the catering giant after a recent warning by a major rival.
Analysts said comments from the management were encouraging and the company is now entering a "sweet spot", according to Jefferies.
Aerospace suppliers Rolls-Royce and Melrose rose 3.1% and 1.7% late in the session, which could be linked to reports coming out of the Farnborough International Airshow.
There were also reports from Rolls-Royce about construction of new prototype engines for short-haul aircraft, with test flights expected in 2027.
CEO Tufan Erginbilgic said engineers are working to scale down Rolls' experimental Ultrafan engine to fit it onto narrow-bodied planes.
3.52pm: Nationwide cuts 5yr fix mortgage below 4%
Nationwide Building Society has announced a new range of sub-4% mortgages, starting tomorrow.
The announcement of five-year fixed mortgage rates dropping below 4% is "a significant and positive development for both homeowners looking at remortgaging and prospective buyers alike", says Andrew Montlake, managing director at mortgage broker Coreco.
"This move signals a more favourable borrowing environment and provides a much-needed boost to market confidence and consumer sentiment."
Dariusz Karpowicz at Albion Financial Advice says "a lender of its size dipping below 4% could set a trend for other major lenders to follow".
"This is fantastic news for borrowers, signalling potentially more competitive rates in the near future. Could sub-4% fixed rates be here to stay? Let’s hope so. It’s about time borrowers were given a break."
3.41pm: Eurozone consumer confidence improves, US home sales drop
Some economic data from Europe and the US now.
The euro-zone's advance consumer confidence index improved in July to -13.0 from -14.0 in June, in line with the consensus forecast.
This was the sixth straight month of improvement and "is likely to continue to trend higher now that real incomes are recovering strongly", says economist Melanie Debono at Pantheon Macroeconomics.
"We think EZ consumer confidence will continue to climb — as wage growth is likely to outstrip inflation for the rest of the year and unemployment remains pinned near record lows — supporting spending over the coming quarters, in line with our view that consumers will drive GDP growth for the rest of this year."
US existing home sales dropped to 3.89 million in June, from 4.11 million, which was below the consensus estimate of 3.99 million.
The seasonally adjusted supply of existing homes rose to 3.7 months, from 3.4 in May, hitting, the highest level in more than four years.
"A sharp fall in June sales always looked likely given the further decline in pending home sales in May," says Pantheon's Oliver Allen.
But he says the improvement in supply mostly reflects the weakest June since 1995 rather than many more homes coming onto the market.
"The lack of supply therefore continues to be a significant barrier to activity. The average 30-year rate on a new mortgage is still around 7%, down from the near-8% peak but far above the sub-4% rates that most homeowners have locked in."
2.47pm: US stocks start lower but quickly rally
After a slight stumble at the start, Wall Street's main indices have quickly jogged higher.
The Nasdaq Composite index is already up 0.25% and the S&P 500 0.16% higher, while the Dow Jones is just lagging slightly in the red.
Meta Platforms and Tesla are among the key drivers, both up around 1%, followed by Amazon, Microsoft and Alphabet, with Nvidia roughly flat, offsetting small losses for Apple.
In London, the FTSE 100 has slightly slowed its tumble, down 0.47%, with the FTSE 250 down 0.41%.
2.15pm: London stocks take another dive
The FTSE 100 index has yo-yoed back down into the red, falling 27 points or 0.3% to 8,171, with the FTSE 250 down 84 points or 0.4%.
All but three of the largest 30 blue chips in London are now in the red.
Joining miners Anglo American, Glencore and Rio Tinto among the big fallers are telecoms companies Airtel Africa and BT Group, property developer Segro, Londonmetric, Unite Group and Land Securities.
2pm: Spotify and TNT Sports
This week is a big one for tech companies, starting today with Google parent Alphabet Inc (NASDAQ:GOOG) and Elon Musk's Tesla Inc (NASDAQ:TSLA) both reporting after the closing bell in New York.
Ahead of that there's been some early tech reporting, including Spotify Technology SA (NYSE:SPOT), whose US-listed shares have danced 14% higher in pre-market trading to a three-year high, after the music and podcast streamer smashed forecasts with seven million new Premium subscribers.
The Swedish-headquartered company's rapidly expanding podcast offering, which now hosts a quarter million shows, also helped to support advertising revenue growth.
Across the Atlantic, Warner Bros Discovery Inc (NASDAQ:WBD)'s TNT network has had to increase its spending to try and keep the NBA basketball TV broadcast rights, one of its most lucrative sports content deals.
TNT has shown NBA games since 1989 with its current rights package costing $1.20 billion annually to the end of the next season.
"Regrettably, the league notified us of its intention to accept other offers for the games in our current rights package, leaving us to proceed under the matching rights provision, which is an integral part of our current agreement and the rights we have paid for under it," said TNT.
“We have reviewed the offers and matched one of them."
Paperwork was submitted to the league today and the sports broadcaster now expects the NBA to execute its new contract.
1.20pm: Telecoms watchdog to review spectrum fees
UK telecoms watchdog Ofcom has agreed to review the fees it charges mobile network operators including BT Group PLC to use mobile spectrum bands.
The former monopoly has been pressuring the regulator to review annual fees since March, when it wrote to the regulator to request a review.
“We have now considered BT’s request, and we consider that the evidence suggests that a fee review is justified,” Ofcom said in a statement published on Tuesday.
12.45pm: Sterling increasingly favoured
While the dip in the pound, down to near a two-week low, is seen as providing a boost to UK multinationals, analysts are predicting sterling will romp higher in coming months.
The pound is the best-performing currency among the G10 currencies so far in 2024, though July has seen an unwinding of the "carry trade".
This has been most visible in the USD/JPY, which has declined 2.8% so far this month, and that may get a further boost this week with US inflation numbers.
Europe’s largest asset manager, Amundi, is forecasting the pound will benefit from a more stable economy and government, from $1.2907 today to as high as $1.35 by the end of the year.
Yesterday, in a similar vein, the chief investment officer of RBC BlueBay said the UK was on the verge of becoming "the most politically stable country in the G7 for the first time in quite a long time"
JPMorgan also predicted sterling will regain $1.35 by next March for the first time in what will be three years, which is also Goldman Sachs' long-term target for the GBP/USD.
Likewise, Citi said it sees the GBP strengthening against the euro to £0.82 from £0.8416 today, which would be the first time since the Brexit result in 2016.
12.22pm: Aston Martin and suppliers hit by Porsche warning
Automotive and auto-adjacent shares took a hit on Tuesday after copping a knock-on effect from a Porsche profit warning earlier.
Porsche warned that supply shortages of certain aluminium alloys due to production facility floodings will cause a multibillion-euro hit to full-year revenues and narrower profit margins.
Porsche shares slid 4% as a result, with other stocks in the segment all being bid lower, including FTSE 250-listed Dowlais Group PLC, down 2%, and Aston Martin Lagonda (LSE:AML), which dipped 1.3%.
11.55am: Footsie and European stocks feeling more positive
Just before midday and the FTSE 100 has started to mount a bit of a rally, up 26 points or 0.3% now.
Now only six of the top 20 stocks are in the red, with pharma companies, tobacco giants and financials moving into positive territory.
European markets are all in the green as well too, though the FTSE 250 is not quite in the green yet, but has trimmed its losses to less than 20.
US futures are mixed, with the Nasdaq 100 down but S&P and Dow futures both marginally higher.
The US dollar is down 0.26% against the euro and down 0.24% versus the pound.
"The pound being at its lowest levels since July 11th will bring cheer to the bigger dollar earners on the index, somewhat offsetting the falls from miners today," says Chris Peters, trading floor manager at Accendo Markets.
He adds that a positive outlook from both Compass and Beazley earlier "could be contributing to a more positive sentiment for investors" too.
11.17am: More investment in solar and wind 'just waiting' for govt support
Following the earlier projections from Cornwall Insight on the £48 billion of investment needed to take UK solar and wind to the levels Labour has pledged, James Alexander, CEO at the UK Sustainable Investment and Finance Association, says "we know there is more investment than Cornwall Insight's projected £48 billion cost, just waiting to be invested in the UK".
But he says barriers to investment like planning and inadequate grid capacity are "sending that investment abroad," with research showing that 63% of UK energy companies have moved or plan to move investments out of the UK.
"Crowding in private capital through tactical deployments of public investment can be effective, as we have seen with the US' inflation reduction act, but creating the correct policy environment for investments to thrive is also crucial.
"In a time of escalating global tensions, minimising our reliance on gas imports is essential, and only private capital has the investing power to drive the transition and make the UK a green powerhouse.”
11.03am: More investment needed in renewables
Renewable energy such as solar and wind power need almost £50 billion of extra investment to fully decarbonise the UK electricity grid by 2030, energy consultants Cornwall Insight have warned.
The latest benchmark power curve forecast shows that these sources of power are on track to account for just 44% of electricity generation by the end of the decade, compared to the 67% needed.
On entering government, Labour pledged to deliver a zero-carbon power system by 2030, with a promise to double onshore wind, triple solar power and quadruple offshore wind capacity.
Cornwall says this will require adding 35GW to onshore wind (17GW above projected levels), 50GW to offshore wind (27GW above projections), and 55GW to solar (10GW above projections).
10.35am: FTSE inch above flatline
The FTSE 100 has broken into positive territory, by just one point in fact at just under 8200.
It's hard to see what's happened exactly.
There's been no assistance from the miners, which remain the big fallers and unmoved from earlier.
Heavyweight oilers Shell and BP are also a drag, with Brent crude having taken a dive in the past hour, down 1.2% to $81.61 per barrel.
The pound is down slightly, 0.15% off versus the dollar at 1.2912.
The FTSE was lower this morning "largely because of its lack of tech, which is the star sector so far this week", says market analyst Kathleen Brooks at XTB.
She noted that notable US value companies underperformed on Monday, including airlines and oil and gas companies, while the small and mid caps of the Russell 2000 rallied, led by small cap tech stocks.
10.13am: Porsche profit warning
Porsche AG (ETR:P911) has issued a profit warning, which comes a day after announcing it is ditching its 2030 electric vehicle sales targets.
The sportscar maker, majority owned by Volkswagen Group (XETRA:VOW), said it is “currently affected by a significant supply shortage with regard to special aluminium alloys” following a flooding at a production facility.
“Despite immediate countermeasures, it is becoming apparent that the impending supply shortage will lead to impairments in production,” warned Porsche.
10.07am: Losses pared
The Footsie's losses have been pared in the past half hour, now down 10 points, though of the top 15 largest companies by market cap, only three are in green - Unilever, GSK and LSEG.
Compass Group, which is in the top 20 largest stocks, is doing its best to keep the index in the right direction, up 4.5% now.
Barclays analyst Vicki Stern says expectations were low going into the Q3 results today, but the 10.3% organic growth number beat the consensus forecast of 9.5% was taken well by the market.
She says the FY guidance update was also a slight raise to "underlying operating profit growth above 15%" on a constant-currency basis, with organic revenue growth above 10% compared to "towards 15% EBIT growth with 10% OSG" previously, while the FY consensus OSG was for 10.2% and 15% EBIT growth and 7.1% margin.
The positive tone in management's comments on net new contracts, retention and /signings momentum "is key", says Stern, "as this has been a source of concern for the last few Qs".
Losses have also been trimmed for the FTSE 250, down 33 at 21,105.
Hammerson, SThree and Future are the top risers there.
9.23am: Water regulation shake-up
Water companies are all leaking lower, led by Pennon Group PLC (LSE:PNN), down 1.4%, following an update from the Environment Agency that set out further plans to transform regulation of the water industry.
The agency, as well as showing its South West Water business remained one of the worst performing in the past year, said in the report that the pace of improvement from companies "continues to fall short".
It laid out plans to recruiting 500 more staff and quadruple inspections by next March.
United Utilities Group PLC (LSE:UU.) and Severn Trent PLC (LSE:SVT) were both down 0.8%.
8.52 am: FTSE and most of Europe in the red
The Footsie is holding at just around 30 points to the negative in this first hour, a deficit in the region of 0.35%.
It's mid-cap sibling is down 0.2%.
European stocks are mostly in the red, led by France's CAC 40 and Italy's FTSE MIB, down 0.4%.
Germany's DAX is the exception, up 0.4%, led by Bayer, Infineon and Siemens.
"The Chinese commodity clouds weighed on the FTSE100 at the open," says market analyst Richard Hunter at Interactive Investor, as copper prices come under pressure due to growing concerns about the ongoing weak demand from the People's Republic.
Hunter notes that weakness in the mining sector has been exacerbated by two broker downgrades on Anglo American, whose Kumba iron ore subsidiary also reported a production update today, where it said the macro and logistics environment continues to be "challenging".
The FTSE 350 mining sector has sunk to its lowest level since early April.
8.41am: Recruitment and pubs
Top risers in the FTSE 350 is SThree PLC (LSE:STEM), with the specialist science, technology, engineering and mathematics recruiter's shares up 3.4% after it reported half-year results.
Despite first-half net fee income (NFI) falling 9.5%, in line with the pre-close update, profit before tax was up 5% and the dividend was hiked 2%.
Analyst Sanjay Vidyarthi at Panmure Liberum said: "With no signs of recovery in new business wins yet, the lower contractor base going into FY25E will make NFI growth difficult."
He cut his 2025 PBT forecast by 9% but hailed admires SThree’s "resilience versus peers in terms of EBIT, margins, productivity and FCF".
Outside the FTSE 350, pubs and hotels business Fuller Smith & Turner PLC (AIM:FSTA) said sales had been strong in the first sixteen weeks of its current financial year with margins improving.
Ahead of its AGM, chief executive Simon Emeny also called on the new government to reform business rates.
“We have a new UK government in place, and I urge Sir Keir Starmer to stand by his commitment to overhaul our archaic business rates system.”
The London-focused pub and hotel owner reported like-for-sales growth of 5.3% in the period to 20 July, which covered the month of the Euro 2024 tournament.
8.15am: FTSE starts lower
The FTSE 100 has stumbled lower at the open, down 17 points to just under 8182, a fall of 0.2%.
Mining giants are the main weight around the index's neck, with Glencore PLC (LSE:GLEN), Anglo American PLC (LSE:AAL) and Rio Tinto PLC the big fallers, down 2%, 1.7% and 1.4% respectively.
Top of the leaderboard is Compass after the catering group reported continued 10%-plus growth in the past quarter.
Lloyds insurer Beazley PLC (LSE:BEZ) is next, up 2.6%, after putting out an update to reassure that as a leading cyber insurer, Friday's global IT outage the event "will not change" its current guidance for the full year.
7.59am: Rightmove rent data
The latest data from Rightmove PLC came out last night, showing rental inflation easing slightly.
Average advertised rents outside of London hit a new all-time high of £1,314 per calendar month in the second quarter of 2024, indicating a 7% jump from the previous year.
In London, rents hit a new record of £2,661, 4% above the same period in 2023.
While these figures show that rent inflation has come down steadily from the 16% peak witnessed in 2022, supply remains considerably bottlenecked.
7.47am: Compass points to more growth
FTSE 100-listed caterer Compass Group PLC (LSE:CPG) served up solid quarterly numbers, with organic revenue climbing 10.3%.
For the full year, it said it now expects underlying operating profit growth to be above 15% on a constant-currency basis, with organic revenue growth above 10%.
It said all regions performed well, and industry trends remained strong to provide it with an "exciting" menu of potential new business.
7.35am: Google turned down
Cyber security startup Wiz has turned down a proposed $23 billion takeover from Google in favour of pursuing an initial public offer.
It would have been the largest-ever purchase for Alphabet Inc (NASDAQ:GOOG).
Instead, Wiz intends to proceed with its IPO, according to an internal memo by its co-founder, reported by CNBC.
7.26am: Stability for stock markets
Markets began to stabilise again yesterday, says Deutsche Bank's Jim Reid, pointing to the Magnificent 7 tech giants rising 2.3% to lead the recovery after a four-day slump last week.
"The moves came as earnings season is about to ramp up, with Tesla (+5.15%) and Alphabet (+2.26%) set to be the first of the Mag 7 to announce results after the US close today.
"We’ll have to wait to see what those bring, but the optimism spread across markets ahead of that," he says.
For markets, he says the reaction was mainly focused on a few specific assets, "and it basically led to a partial reversal of the 'Trump trade' that was evident last week - although not everything behaved as you would have expected.
"In essence, the perception is that Biden’s withdrawal makes it more likely that the Democrats will keep control of the White House, and the Republicans are less likely to get the full sweep that would also see them win both chambers of Congress, so making Trump’s policies marginally less likely to be implemented."
Solar energy firms did well, while in currencies the Mexican peso strengthened against the US dollar and was one of the top-performing global currencies.
"While there were some clear moves in specific assets, it was difficult to detect a broader move to price in any political outcomes across equities and bonds," says Reid.
To the day ahead, macroeconomic data releases include the European preliminary consumer confidence indicator, US existing home sales for June, the Richmond Fed’s manufacturing index for July, and today’s US earnings releases include Alphabet Inc (NASDAQ:GOOG), Tesla Inc (NASDAQ:TSLA), Visa Inc (NYSE:V, ETR:3V64), Coca-Cola, General Electric and General Motors.
7.17am: FTSE 100 called lower
The FTSE 100 has been called lower on Tuesday as the index continues a summer season as changeable as the weather.
Futures for London's blue-chip benchmark are pointing 31 points lower, after it finished up 43 points at 8,198.78 at the start of the week.
European futures are mixed, with the Eurostoxx 50 and Gernany's DAX seen heading higher but France's CAC 40 joining the FTSE in the red.
Asian markets are also inconsistent, with Japan's Nikkei and Singapore's benchmark higher, but the Hang Seng in Hong Kong, the Shanghai Composite and India's Sensex all lower.
Overnight, US stocks finished on the front foot, led by the tech-packed Nasdaq and small-cap Russell 2000, which jumped 1.6% and 1.7% respectively, while the S&P 500 rose 1.1% and the Dow Jones 0.3%.
One reason for the FTSE's possibly heading lower is the price of oil, with Brent crude down 0.1% at $82.35 per barrel.
"The expectation that OPEC will start unwinding its production restrictions in Q4 and the rising odds that Trump presidency would further boost the US production take the upper hand," says market analyst Ipek Ozkardeskaya at Swissquote Bank.
"From a technical standpoint, oil has now stepped into the medium-term bearish consolidation zone and could experience deeper declines."