- FTSE 100 down 4 points at 8,288
- BP and Standard Chartered profits and returns impress
- Diageo and Sage Group results disappoint
4.26pm: FTSE battles back but fails to hold gains
The FTSE 100 battled its way back from a sizeable morning plunge back onto dry ground late in the session but does not look like it will make any gains on Tuesday, though losses are now small.
Losses from Diageo on the back of its disappointing results, along with declines for oil heavyweights on the back of oil prices weakening, and miners hit by China worries, meant that positive news elsewhere was offset.
Later today, after the US close we will see earnings from Microsoft, which could determine how things go tomorrow.
Wednesday's main event will be the Fed decision, but for UK investors there will be plenty of corporate news to chew over, including from HSBC, GSK, Endeavour Mining, Metro Bank, Rathbones, Rio Tinto, Shaftesbury and Taylor Wimpey.
3.51pm: FTSE 100 in positive territory
The FTSE 100 has crept almost five points into positive territory, its highest point today.
Topping the FTSE risers is still Standard Chartered PLC (LSE:STAN), up 6.6%, with a group of insurance and retail sector names on the leaderboard.
Insurers should be up on the lower Gilt yields.
Retailers, I'm not sure, though JPMorgan analysts had a note out on clothing retailers earlier, highlighting that they "do not think there is clear evidence of incremental weakness developing" in the European consumer, with UK weakness in particular having been weather driven.
There is "limited top-line read across from the luxury and airlines reporters, with disappointments instead reflecting normalisation of elevated and somewhat inelastic spending trends, particularly in airlines as consumers continued to prioritize holidays post the pandemic."
They did see some risk of price sensitivity for retailers, especially with freight costs remaining high.
3.45pm: US consumer confidence 'doesn't move dial' on Fed cut
The pick up in US consumer confidence (see below) in July included a fall in the 'current situation' component of the Conference Board survey which was more than offset by a jump in the 'expectations' component, reaching its highest level since January.
The expectations component of the survey has the "better, although still far from perfect, relationship with actual growth in real consumers’ spending than the headline index," says Oliver Allen at Pantheon Macroeconomics.
In practice, he expects a sharper slowdown in consumption growth over the next few quarters, given that the labour market is "showing much clearer signs of softening, real after-tax income growth is very weak, and the personal saving rate looks set to rise".
Numbers of consumers expecting the jobs market to deteriorate are consistent with a pick-up in the unemployment rate over the coming quarters, despite a small improvement in this balance this month, he adds, while inflation expectations also ticked down.
"Accordingly, nothing in this report changes our view that the Fed will be easing policy aggressively towards the end of this year."
3.20pm: US stocks show nerves
US stocks have shown a bit more nerves since strutting higher at the open.
The Nasdaq Composite index is now in the red, while the gains for the S&P 500 and Dow Jones are down to 0.1% and 0.25%
Investors continue to favour small caps though, as the Russell 2000 is up 0.56%.
Earlier, JOLTS job openings fell marginally in June, with data for the prior month revised higher, pointing to continued resilience of the labour market.
The private sector hiring rate fell to 3.7% in the latest survey, while the quits rate also fell to the lowest since 2018.
US consumer confidence rose to 100.3 in July from a downwardly-revised 97.8, above the consensus forecast of 99.7.
2.56pm: Auditors threatened with ban
The UK accounting watchdog has warned challengers BDO and Forvis Mazars about the quality of their audits, which it said did not meet its quality standards.
In its annual review of the UK’s largest auditors, the Financial Reporting Council (FRC) said praised a generally improved performance from the big four of Deloitte, EY, KPMG and PwC.
But the FRC said inspections found audits by BDO "declined significantly" from 69% to 38%, while those from Forvis Mazars dropped from 56% to 44%.
It warned that if there are no improvements next year it may take action, which could include a ban for listed companies.
2.45pm: US stocks rise, UK lifted by lower bond yields
US large cap stocks have opened fairly strongly higher, after housing market data came in weaker than expected.
The Dow Jones blue chips and Russell 2000 small cap indices are both up 0.5%, while the S&P 500 has advanced 0.3% and the Nasdaq Composite has inched 0.2% higher, paring an initial jump.
Meanwhile, the FTSE has returned back to flat.
This is as UK 2-year Gilt yields have dropped to the lowest since May 2023 at 3.843%, down more than 3 basis points today.
UK interest rate futures show 60% chance of a Bank of England rate cut this Thursday, up from 58% on Monday.
2.33pm: Oil prices weight on London index
Shell is in the red and BP's earlier gains have been slashed as oil prices take another leg lower, putting a bit of a brake on any recovery in the Footsie.
Brent futures are down 0.8% to $78.40 per barrel, not far off levels seen in June and February that would be the lowest since the turn of the year.
Brent crude is down almost 9% this month and 14% off the $91-plus seen in April.
Market analyst Neil Roarty at Stocklytics says: "As always, the decreasing cost of a barrel of oil is a story of supply and demand.
"On the supply side, there are increased hopes for a ceasefire in Gaza. That would bring much needed stability to the region, and in turn, a likely uptick in output."
On the demand side, recent economic data and tentative policy reactions from China, the world’s biggest oil importer have seen markets been quick to react, he says.
"What comes next will be closely tied to Gaza ceasefire negotiations and the broader performance of the global economy.
"With interest rate cuts likely on the agenda globally for the rest of the year, it wouldn’t be a major shock to see a bounceback towards April’s year-high price of $90 a barrel of Brent crude."
2.20pm: A 'particularly important' earnings season
The FTSE 100 has cut its losses to almost zero now, as we approach the US open, though it is still lagging the FTSE 250 (up 225 points) and Continental markets as investors continue to mull earnings out earlier.
This European earnings season, where around 40% of Stoxx 600 companies have already delivered results, "is particularly important", reckon strategists at Citi.
This view is based on European earnings forecasts having "recently rolled over after a strong run of upgrades".
Share price action has been "volatile", they note, even though the share of companies beating EPS expectations is only modestly below average, as we noted in yesterday's liveblog.
"A more worrying sign appears to be the recent uptick in negative forward-looking guidance," says Citi's equity strategy team.
"While we remain constructive on the European market over the next 12 months, this is conditioned on delivery of analysts’ EPS forecasts.
"Volatile conditions could remain for now, as key tailwinds from earlier this year (e.g., inflecting macro/EPS, hopes for China recovery) have turned into headwinds."
1.52pm: Premium bond rate cut
News of a UK rate cut, but it's not from the Bank of England but National Savings & Investments (NS&A), which drastically overshot its fundraising target in the financial year ending 31 March, raising £11.3 billion against a mid-range target of £7.5 billion.
This was despite cutting the Premium Bond prize rate from 4.65% to 4.40% in September, which failed to drive the expected sell-off among savers.
It means Premium Bond holders’ chances of winning tax-free rewards have gotten drastically worse.
1.30pm: Rolls gets nuclear power-up
Rolls-Royce Holdings PLC (LSE:RR.) shares have buzzed 1.4% higher after the UK's nuclear regulator passed the company's small modular nuclear reactor (SMR) on to the next stage of the regulatory approval process.
The Office for Nuclear Regulation said the Rolls SMR design successfully completed the second step of the generic design assessment (GDA) process.
Next, will be the third step of the process, before examining potential site-specific proposals.
12.47pm: US mixed start seen
The FTSE 100 index has cut its losses down to just over 10, a deficit of around 0.1%, while the FTSE 250 is up 208 points or 1% at 21,461.
US futures are pointing to another mixed session in New York.
Dow futures are just below flat, but S&P 500 futures are up 0.22% and Nasdaq 100 futures are indicating a 0.35% rise.
Yesterday saw a relatively flat start from US stock indices to what is seen as a big week for markets.
"There’s certainly going to be stacks of fresh information to assimilate, starting with Microsoft’s earnings after tonight’s close. Then we have results from Meta tomorrow, followed by Amazon and Apple on Thursday," says market analyst David Morrison at Trade Nation.
Aside from earnings, the Federal Reserve begins its monetary policy meeting today, with the verdict coming tomorrow.
No interest rate cut is expected, but some groundwork for what in September is predicted to see the first cut in over four years.
12pm: BP earnings miss but cash flow beats forecasts
BP's operating earnings of $5.4 billion were 15% below consensus forecasts but were "broadly in-line", says UBS, as an upstream miss was partly offset by a downstream beat.
"However, a lower-than-expected tax rate drove a 9% beat below the line," ie on cash flow, analysts at the Swiss bank added, while cash flow from operations is 13% ahead of forecasts.
On distributions, the announcement of a 10% increase in the dividend while also maintaining the run rate of buybacks was better than consensus forecasts.
11.53am: Stan Chart views
StanChart (LSE:STAN) shares are up 6% at 770p, but different analysts are seeing different things.
Shore Capital, for instance, has reiterated its 'buy' rating with a 955 fair value, while Keefe, Bruyette & Woods (KBW) has repeated its 'underperform' stance and 750p target.
"Standard Chartered’s shares have been left behind by the large domestic UK banks this year, but its underlying operating performance is nonetheless improving, while share buybacks will help it to capitalise on the considerable undervaluation in the stock," says Shore Cap.
KBW, meanwhile, acknowledged a "solid set" of result and that the shares "are not expensive" on a consensus p/e ratio of 5.7, "which is clearly positive from a buyback perspective".
But the analysts are cautious, seeing "every chance that regional political tensions will increase in H2, we see little reason to chase".
11.27am: Motor finance uncertainty to last for months say analysts
Shares in Lloyds Banking Group PLC (LSE:LLOY) are down over 2% this morning, on a UBS downgrade and an update from the FCA on its motor finance review.
The financial watchdog has delayed the publishing of its 'next steps' from end-September to March next year.
The FCA also says that a consumer redress scheme "is more likely than when we started the review".
Analysts at Peel Hunt reckon Close Brothers has an "outsize exposure" to the issue and "is the most impacted in our view".
They see Lloyds and Barclays as "exposed, but with a significantly lower level of materiality".
UBS, which issued its downgrade before the FCA announcement, says Lloyds share price is "up with events" and downgraded to 'neutral'.
10.47am: Germany v rest of Europe
European markets are still in the green, apart from the FTSE, after the disappointing German GDP print.
Market analyst Kathleen Brooks at XTB points out that Germany’s economy has registered a negative growth rate for five quarters since the start of 2022.
"Germany is once again the sick man of Europe," she says.
"Inevitably there is a comparison between the UK and Germany, while we won’t know the UK’s Q2 GDP data until 15th August, the UK’s Q1 GDP figure was 0.7%, a rate of growth Germany has not surpassed since Q1 2022."
These are preliminary GDP figures, but Brooks adds that Q3 growth seems to have also got off on a weak note too, with IFO business confidence falling sharply in July, and the July flash PMI reports showed the composite PMI report falling into contraction territory.
In contrast to Germany, she notes that French and Spanish growth rates are more in line with the UK, suggesting that Germany is an outlier, with France expanding at a 0.3% quarterly rate and a 1.1% annual rate, while Spain expanded at a 0.8% rate.
"The euro is higher today, even with Germany’s economy contracting last quarter. The euro has been subdued for most of the summer, however, it seems to be making gains ahead of key central bank meetings this week," she adds.
10.25am: German economy shrinks
Peeking through the deluge of UK corporate news, I spy a bunch of European data that came out a short while ago, including German and Eurozone gross domestic product figures.
The Eurozone economy grew 0.3% in the second quarter, which is better than the 0.2% expected, after GDP growth of 0.3% seen in the first quarter.
This is despite the German economy shrank 0.1% in the second compared to the first, which was worse than expectations, with economists having forecast growth of 0.1%.
10.14am: Markets 'nervy' due to rates, say analysts
It is a "catastrophic" share price performance from Diageo and a "weak" production update from Glencore that is the main problem for the FTSE 100, says Russ Mould at AJ Bell.
London is the only main European market in the red this morning, with the Frankfurt, Paris and Milan benchmarks all up around 0.3%, while Madrid's is up 0.2%.
The Euro Stoxx 600 index up 0.23%, with UK names at the top and bottom, St James Place up 22% and Diageo down 7%.
"BP’s strategy of pre-releasing bad news seems to have worked as that lowered expectations in the run-up to its results," Mould adds.
"The shares bounced back after second quarter profit beat forecasts, helping to make up for weak refining margins."
Victoria Scholar, head of investment at Interactive Investor says yesterday's small gain was "fuelled by rate cut hopes" but the UK blue-chip index is giving back some of those gains.
"It is a big week for UK investors as markets brace for the Bank of England’s rate decision on Thursday which is going to be a close call – the Monetary Policy Committee might cut rates for the first time since 2020 or it might make traders and investors wait another month so that it is more closely aligned with the Federal Reserve stateside," she adds.
Completing the trio of comments from the UK's largest investment platforms, Steve Clayton, head of equity funds at Hargreaves Lansdown, calls the general market mood "nervy [...] with interest rates decisions from the US Federal Reserve, the ECB and the Bank of England all expected this week, along with euro area GDP data.
"With markets still pricing in rate cuts before year end, each month raises the pressure to see them actually delivered."
He notes that crude oil sinking to a new two-month low overnight was behind some weakness, though Brent futures have climbed back up to $79 this morning.
"Traders are struggling to see anything other than a fully supplied market for crude in the months ahead, suggesting that major producers are going to need to show supply restraint if prices are to make any sort of meaningful recovery."
9.59am: China weighing on miners?
Glencore PLC (LSE:GLEN) is among a number of miners dragging on the Footsie this morning.
In its half-year production update, the mining and commodities giant said it would wait until its interim results next week before sharing its decision on whether to spin its coal arm off into a separate business.
In the meantime, coal is performing strongly, with forecasts for the remainder of the year increased. It was 'steady as she goes' for the remainder of the business.
Other miners like Rio Tinto and Anglo American could down on the back of China concerns, after the leadership in Beijing flagged increased policy support but offered "few new ideas", according to economists.
"The readout of the Politburo’s latest triannual meeting on economic affairs has just been published by state media. It was dovish in tone and adds to recent evidence that the leadership believes more counter-cyclical support is needed. But there are few signs that they are considering a wider rethink of the policy direction," says Julian Evans-Pritchard at Capital Economics.
He says there are "still few signs that the leadership is ready to embrace the kind of large-scale rate cutting cycle needed to drive a turnaround in private sector credit demand".
"As such, hopes for policy-driven improvement in near-term economic momentum largely rest with fiscal policy [... but] was short on new ideas for how fiscal policy should be deployed."
9.09am: Greggs serves up warm numbers
Another company helping feed the FTSE 250's gains is Greggs PLC (LSE:GRG), up 5% to a two-year high after reporting interim results that were slightly ahead of average City estimates, including an 19% dividend hike.
The pastie baker's results showed like-for-like sales up 7.4%, which matched the rate reported in the first 19 weeks of the year.
Directors increased the interim dividend to 19.0p per share as first-half sales rose 13.8% to £960.6 million and underlying profit before tax jumped 16.3% to £74.1 million.
The FTSE 250 is now up 186 points or 0.9%.
8.47am: Retail prices depressed
Earlier, the retail sector released its monthly inflation update, showing that the past month had seen little change overall.
Annual shop price inflation remained at 0.2% in July, according to the BRC-NielsenIQ Shop Price Index, as non-food prices remained in deflation, with an annual rate of -0.9% in July, while food inflation softened to 2.3% in July from 2.5%.
British Retail Consortium chief executive Helen Dickinson said clothing and footwear prices fell for the seventh consecutive month "amidst persistent weak demand" and the prices of books fell.
"The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024," she said.
"However this shows signs of reversing, suggesting renewed pressure on food prices in the future."
NielsenIQ's head of retailer and business insight, Mike Watkins, added that lower levels of shop price inflation can be expected "for a number of months to come".
"But with the squeeze on household finances continuing, consumer confidence only slowly improving, and poor summer weather so far, retailers will still need to keep any price increases to a minimum to encourage shoppers to spend."
8.31am: FTSE 100 down, 250 up
The FTSE 100 has continued lower but the mid-cap FTSE 250 has climbed out of the red.
Dragged down by falls for Diageo, Sage and Croda, London's blue-chip index is down 0.5% but the FTSE 250 is up 0.15%.
This is largely due to a 20% jump for St James's Place PLC (LSE:STJ), where interim results impressed.
These showed underlying cash profits little changed from last year at £205 million, but well ahead of the consensus forecast of £195 million as inflows of £1.9 billion were better than expected.
8.12am: FTSE 100 opens lower
The FTSE 100 has tumbled 29 points to 8,263 at Tuesday's open after a flood of mixed corporate results.
Big early fallers are The Sage Group PLC (LSE:SGE), down 7.3%, and Diageo PLC (LSE:DGE), down 7.9%.
Smirnoff, Johnnie Walker and Captain Morgan maker Diageo reported a larger-than-guided sales decline of 21.1% from the Latin America and Caribbean (LAC) region , while North American sales were down 2.5%.
This led to profits falling more than analysts expected.
Sage, meanwhile, reported organic revenue in line with consensus forecasts at 9%, though growth rates for its Business Cloud and other solutions were marginally slower than in the first half of the year.
Standard Chartered PLC (LSE:STAN) is top of the leaderboard after its reported PBT beat consensus by 2%.
7.54am: FTSE tipped for fall
FTSE 100 futures shifted from a flat start to a decline of around 32 points, despite the strong results from BP.
Currently, the indication is for a fall of around 25 points.
7.47am: BP beats forecasts
BP PLC (LSE:BP.) has posted second-quarter results showing larger profits than forecast and a bumper combination of dividends and share buybacks.
The oil supermajor hiked its dividend to 8 cents per share from 7.27 cents in the first quarter, which was as expected by analysts.
It also set out plans for a $1.75 billion share buyback as well as $3.5 billion for the second half of 2024.
Based on current oil and gas prices, BP said it plans share buybacks of "at least $14 billion through 2025".
Underlying replacement cost profit hit $2.76 billion for the second quarter, topping the $2.7 billion in the previous quarter and $2.6 billion a year earlier, as well as the consensus forecast of $2.54 billion.
7.37am: Diageo numbers worse than expected
Diageo PLC (LSE:DGE), the maker of alcoholic drinks including Guinness and Smirnoff, has reported a fall in annual sales and profit, but increased its dividend payout as it eyed a return to growth.
Group sales declined 0.6% to $20.3 billion due to a 3.5% drop in sales volumes, mostly from a 21.1% plunge in Latin America and the Caribbean, while North American sales were down 2.5%.
Organic operating profits fell 4.8% to $6 billion.
Chief executive Debra Crew said it was "a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility", where the company focused on "taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves".
Excluding Latin America and the Caribbean, organic net sales grew 1.8%, she noted, driven by growth in Africa, Asia Pacific and Europe regions.
7.16am: Flat FTSE 100 start expected
The FTSE 100 is expected to experience a flat start on Tuesday after the same was seen on Wall Street overnight.
London’s equity benchmark has been tipped for a small fall of three points, a day after it failed to hold onto strong initial gains to add only 6.6 points and close at just over 8,292.
Fresh economic data shows UK shop prices remained little changed in the past month but that house prices are picking up.
The British Retail Consortium’s shop price index in July remained unchanged on the previous month, showing retail inflation remained close to a three-year low.
Meanwhile, the Zoopla house price index indicated the housing market is hotting up, with house prices on track to increase by 2% this year, with sales agreed being 16% higher than a year ago.
As in London, stock markets in New York last night were not able to continue the buoyant mood in opening trades, with the S&P 500 and Nasdaq both finishing just above flat, while the Dow Jones fell 0.12% and the small- and mid-cap Russell 2000 lost 1.1%.
The ’Magnificent Seven’ tech giants recovered with a 1% gain, led by a 5% jump for Tesla on the back of a bullish call from Morgan Stanley (NYSE:MS).
Asian stocks are mixed too, with Japan’s Nikkei and India’s Sensex up 0.15% and 0.45%, but the Hang Seng down 1.4% and Shanghai Composite down 0.72% .
Today we have UK results from BP, Diageo, Greggs, St James’s Place, Glencore and Sage, while the big one in the US is Microsoft’s earnings.