- FTSE 100 up 35 points at 8,044
- Monday saw the worst session since January
- US stocks rally towards recovery territory
4.01pm: FTSE 100 bounces towards close
London stocks have staged a recovery at the close and the FSTE 100 is now up more than 35 points at 8,044.
Helped by gains of around 1.5% for all three of the main US indexes, the UK's blue-chip index had looked as if it was set to close flat or lower, having spent most of the day in the red.
Other markets in Europe weren't as fortunate, with Germany's Dax flat, while France's Cac 40 dropped 0.15%.
Europe's broadest index the Stoxx50 also held flat while Spain's Ibex 35 dropped more than 0.3%.
The FTSE 100's top risers today were Melrose, up 7.5%, and Rolls-Royce, up 5%, both having been catapulted on the back of bullish broker notes.
Rightmove was the index's biggest faller, dropping 5% after it confirmed it had parted ways with OpenRent, the online lettings firm.
3.42pm: Currencies and commodities today
As the FTSE 100 levels out and US stocks recover, here's a look at how currencies and commodities have performed today:
- GDP/USD: -0.5% at $1.272
- GDP/EUR: -0.3% at €1.164
- EURO/USD: -0.25% at $1.092
- Brent Crude: +0.6% at $76.80
- WTI Crude: +0.8% at $73.53
- Gold: -0.6% at $2,390
- Silver: -0.7% at $27.07
3.22pm: Melrose rallies as brokers reassure
The FTSE 100 has flatlined at 8,017 as it nears the end of the day, with the markets having fluctuated from highs of 8,055 to lows of 7,954.
One company which was able to keep its head in the green throughout was Melrose, the FTSE 100's top riser after it jumped more than 6% on the back of a bullish broker note from Citigroup.
"We believe that there is a clear opportunity for rerating, particularly if management set a clear mid-term cash guide and lay out the path to achieving it,” the American bank said.
Melrose reported a free cash outflow of £145 million for the six months to June earlier in August.
Given its restructuring last year, cash flow is now expected to ramp up in the next few years, with FCF ahead of industry rivals with yields of greater than 8% by 2027.
2.56pm: Who's involved in Thames' cash cruch?
Thames Water, which has told Ofwat it only has enough cash to continue until May 2025, was issued a £104 million fine by the water regulator today for a series of sewage failings.
This is not the only potential fine looming around the beleaguered water firm, Thames Water could be slapped charge of 10% of its annual turnover for breaching its operating licence due to its credit rating being cut to "junk" status.
A £40 million fine is also issued for breaching rules on dividend payments, an offence Offwat is currently investigating the company for.
Thames will need to raise £750 million from its investors by next spring if it wants to stay afloat or avoid the possibility of nationalisation. Ofwat said it told the water firm about the fine back in December.
The shareholders that Thames Water will need to convince include the Canadian pension fund Omers, which owns 32%; China's sovereign wealth fund, 9%; the UK's biggest private pension fund, 20%; and a subsidiary of the Abu Dhabi Investment Auhtority, 10%.
2.36pm: US stocks lift at the open
Wall Street has opened higher, recuperating some of yesterday's losses in a sell-off that has sparked fears about a US recession.
These fears may have been quelled in the meantime, for now, all three of the US's key indexes have opened in the green or flat.
The tech-heavy Nasdaq has kicked off trading 120 points higher, helped by a 3.7% rise in Nvidia
Meanwhile, the S&P 5000 lifted 21 points to 5,209, while the Dow Jones held flat at 38,697.
Whether the US stocks remain in the green throughout the session or move downward like those in Europe appears to be the focus of analysts today.
"Market turbulence often presents lots of opportunities, but there is still excess froth to be shed as the unwinding of leveraged carry trades persists for now," Fawad Razaqzada| market analyst at City Index said.
"With a quieter US economic calendar ahead, there will be fewer new recessionary signals to unsettle traders, and the potential for supportive comments from Federal Reserve officials could ease market pressure.
"For now, the greenback has rebounded, helped in part by the stronger ISM services PMI that was released on Monday."
1.49pm: Carry trades to blame?
One of the reasons some economists believe the sell-off over the last few sessions was so severe was because of issues with a strategy known as "carry trades".
Carry trades involve investors borrowing currency at a low cost to help achieve greater returns when investing in another country.
In the case of yesterday, investors had been borrowing the Japanese yen as it remains cheap against the dollar and interest rates remain low.
Funds borrowed in the yen would then be invested into US stocks and government bonds in a bid for greater returns.
However, the Bank of Japan decided to raise interest rates for the second time in 17 years last week, leading to hordes of investors having to unwind their carry trades.
In reaction to the rate hike, the Japanese yen surged against the US dollar.
Traders were therefore forced to sell higher-risk investments in the face of higher borrowing costs, while also suffering losses from foreign exchange changes and reduction in valuations.
1.29pm: Wall Street to open higher
US stocks are set to open higher today, staging a recovery from yesterday, the worst session in nearly two years.
The Nasdaq, which suffered a 575-point drop on Monday, is set to open nearly 160 points higher at 18,163.
Meanwhile, the Dow Jones is set to rise 212 points to 39,072, while the S&P is predicted to increase 40 points to 5,255.
Investors will be holding their breath at the open, nevertheless, with hopes that the markets can push forward in the green rather than what has happened in Europe, where leading indexes have fallen for a third consecutive session.
“It’s too early to say the low is in,” wrote Keith Lerner, Truist’s co-chief investment officer.
“There has been damage done, and the repair process will likely take time. However, the risk/reward appears to be gradually improving as the market’s bar for positive surprises resets lower.”
1.10pm: Trading apps freeze amid market crash
Several major investment apps were temporarily unavailable for small investors during the stock market chaos on Friday and Monday, leading US regulators to launch an examination into their operations.
In what some veteran market followers said were some of the wildest stock market sessions of their careers, investment apps owned by Robinhood, Charles Schwab, Vanguard, TD Ameritrade (NASDAQ:AMTD) and Fidelity all saw aw technical issues or shutdowns.
Online brokerage Schwab said in a statement to customers on its website on Monday: "Due to a technical issue, some clients may have difficulty logging in to Schwab platforms", while Fidelity told media it was "aware some customers experienced intermittent issues".
Outage tracking website Downdetector said 14,500 Schwab users were affected, with more than 3,600 affected users for Fidelity.
The US markets regulator, the Securities and Exchange Commission, said it was "actively monitoring" the issues "for the orderly functioning of markets", a spokesperson told Reuters.
12.46pm: Zalando sees profits fly as guidance maintained
While UK retailers recieved a slight sales boost during July, according to the British Retail Consortium, it's not been as good for Zalando, the online clothing seller.
Its shares are down more than 2.5% despite its sales and underlying earnings increasing, allowing it to reaffirm its full-year guidance.
Revenues lifted 3.4% to £2.2 billion, while underlying earnings rose 18% to £147.1 million, leading management to reiterate expectations that annual sales will rise between 0% and 5%, while profit hit between £326 million and £386 million.
"By continuing to focus on the premium and sportswear segments of the apparel market, Zalando continues to differentiate itself from other online fashion retailers such as Shein and About You, allowing it to target a different consumer base away from young shoppers looking for affordable fast fashion," said Louise Deglise-Favre at Global Data.
"Zalando’s Business-to-Business (B2B) segment rose 10.3% in Q2, as it continued to attract new retailers thanks to its comprehensive offering which allows its partners to leverage the platform’s expertise in logistics, software technology and services.
"While this division is still in its infancy, representing a minor share of Zalando’s revenue, it has the potential to be highly lucrative as more retailers look to strengthen their online propositions but lack the skills and resources to do so.”
12.27pm: FTSE 250 stages slight recovery
The FTSE 100 is holding flat, hovering around the 8,000 mark, with the lead index struggling to stay in either the green or red.
Over in the world of mid-caps, the FTSE 250 has lifted 0.35%, or 70 points, to 20,306, showing more signs of recovering but remaining down 5.25% in the last five days.
Top fallers are Domino's, down close to 7% after it warned profits would be lower in the full year, while Morgan Advanced Materials and Hilton Food Group are down 3.5% and 2.5%, respectively.
International Workplace lifted 6.5%, while John Wood Group rose 4%, a day after it slumped close to 40% on the back of Sidara pulling out of takeover talks.
However, it is construction firm Keller Group which is the top riser, having jumped 10.5% after it reported profits more than doubled in the half year to end June.
Michael Speakman, chief executive, said it had been an outstanding first half for the group, which prepares ground ahead of the start of construction projects, especially in North America.
Interim underlying profits were £113 million, up from £67 million, as margins rose by 300 basis points (3%) while pre-tax profits rose 121% to £95.3 million and cash generated jumped 229%.
12.06pm: Banks could collapse without financial chaos, says BoE
Lloyds, HSBC, Barclays and NatWest could all be wound down without government intervention in the case they failed, the Bank of England revealed in its "resolvability" check of lenders.
Britain's top eight lenders would be able to 'resolve' or wind down in the face of the collapse without causing the financial system to be destabilised, indicating an improvement in the bank's measures from their actions in the lead-up to the 2008 financial crisis.
"Our assessment gives further reassurance that if a major UK bank were to fail today it could enter resolution safely: remaining open and continuing to provide vital banking services, with shareholders and investors – not public funds – first in line to bear the costs of failure," the BoE said in a statement.
Looking at the banks, which also include Santander UK, Standard Chartered, Virgin Money UK and Nationwide, the UK's central bank said there were some "shortcomings" and that some areas needed improvement, however, none were serious enough to cause wider issues should it collapse.
Despite the current safety in the banks' measures, experts at the BoE believe the lenders will need to be monitored going forward.
"Resolvability will never be ‘done’ and there will always be lessons to learn from putting the regime into practice," BoE Deputy Governor Dave Ramsden said in a statement.
11.44am: Rolls-Royce attempts to push FTSE 100 higher
London's FTSE 100 looks like it can't decide whether it wants to move into the green or stay in the red today.
The blue-chip index is up 10 points now having spent the last few hours down.
Helping push the index higher is Melrose, up 5%, IHG, up 2%, and Intermediate Capital Group (LSE:ICP), up 2%.
Another company up today is Rolls-Royce, +3.5%, after JP Morgan analysts updraged its price target from 475p to 535p.
JPMorgan noted significant improvements in Rolls-Royce's financial health, projecting that the company could have no net debt by the end of 2024.
“Relative to our expectations, the improved FCF is all coming from better profit and not from higher customer advances on long-term service agreements, so this is a ‘high-quality’ FCF upgrade in our view,” said JPM.
11.26am: UK construction sector grows at fastest speed in years
Britain's construction sector experienced its fastest growth rate in more than two years last month, according to the latest PMI figures.
The S&P Global UK Construction PMI increased to 55.3 in July from 52.2 in June, remaining above the 50 mark that separates growth from contraction for the fifth consecutive month.
It was also significantly ahead of the 52.4 that the markets had predicted.
With the rate of expansion in output at the fastest since May 2022, construction firms are strongly optimistic that activity will continue to expand over the coming year.
The FTSE 100 failed to react positively to the release despite the good forecasts and is currently trading close to flat following Monday's whacking.
Andrew Harker, economics director at S&P Global, said: "The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July.
"The strength of demand moved the sector closer to capacity, bringing a recent period of improving supplier performance to an end.
"There were also signs of inflationary pressures picking up, something that will need to be watched closely if demand strength continues in the months ahead."
11.08am: Abrdn lifts as profits edge higher
Abrdn has gone against the current downturn in markets, with its shares lifting 3% in response to its first-half results.
The asset manager and owner of Interactive Investor reported a slight improvement in profit and progress with its transformation despite fund outflows continuing.
Abrdn saw net outflows of roughly £1 billion in the first half of 2024, which was an improvement on the £6.5 billion outflow a year ago
This means net operating revenues fell 12% to £406 million.
However, adjusted operating profits inched 1% higher to £128 million, as costs were cut 9%, partly from a 13% reduction in front- and middle-office staff.
Analysts at Liberu, Panmure said: "The range of expectations for interim results was wide, which has not necessarily helped abrdn in the past, but the outcome is – across most lines of business – a bit better than might have been feared.
"While Jason Windsor has not been confirmed yet as CEO, his statement certainly reads like one of a CEO-in-waiting."
10.47am: GSK slides despite court win
GSK shares have dropped 1.5% despite it successfully refuting claims that its discontinued heartburn drug Zantac caused cancer.
An Illinois jury found that the product was not responsible for plaintiff Carrie Joiner's colorectal cancer.
Joiner had alleged that she developed cancer from a carcinogenic contaminant called NDMA in the blockbuster pill.
Zantac was marketed by GSK, Pfizer, Sanofi, and Boehringer Ingelheim. The companies face thousands of lawsuits in the US after the US Food & Drug Administration in 2020 requested the drug be pulled from the market due to concerns that its active ingredient, ranitidine, could degrade into NDMA.
Most cases are in Delaware state court, where a judge allowed over 70,000 lawsuits to proceed in June.
10.17am: Europe looks for Asian-style recovery
Asia was able to stage a recovery overnight, with Japan's Nikkei rising by double-digits a day after its worst session in the last few decades.
However, it hasn't been as clear cut for European stocks, with the Stoxx 600 lifting by 0.3%, while the FTSE 100 has begun to slip once again, now down around 25 points.
Matt Simpson, senior market analyst at City Index, said: “We’re not yet sure if this is just a breather between water-boardings or there is more pain to follow.”
IG chief market strategist Chris Beauchamp added: "If you wake up in the morning to discover that Japan is down 10-12pc, it’s going to scare the daylights out of the sanest person in the world, so it’s understandable that people take flight.
"On the flipside, I think people got a bit carried away yesterday and it always seems very dramatic at the time.
"It’s normal to see weakness this time of year. The question is - was that enough to reset markets or is there going to be more?"
10.02am: Domino's slides on profit warning
Domino's Pizza Group PLC saw its shares drop more than 6% this morning as investors reacted to the group's latest profit warning.
The pizza chain's UK master franchisee said that a slow start to the year would likely result in full-year underlying pre-tax earnings coming in at the low end of expectations for £144.3 million to £149.2 million.
Revenue dipped 1.8% to £326.8 million on the back of a 0.9% fall in total orders over the first half, Domino’s revealed.
Underlying pre-tax profit ticked up 0.8% to £51.3 million over the six months to June, Domino’s reported, with a 3.5p interim dividend being declared, against 3.3p last year.
“Following a slow start to the year, we now have good momentum in the business,” chief executive Andrew Rennie commented, with orders climbing 5.8% in July.
Shore Capital analysts said that despite the profit warning it still remains a buyer of the stock and argued that its growth plan in Europe could be key in helping its share price lift.
Katie Cousins at the UK broker said: "We continue to see a compelling growth story in DOM, fueled by store rollout and strategic investments including within Europe through DP Poland.
"Comparatives should ease during H2, and we believe along with new store contributions and improving trade, the Group should benefit from technological infrastructure and supply chain investments as well as the evolving customer acquisition strategy."
9.42: Spending dips in July despite Euros final - Barclays
Cautious spending habits and mixed weather in July meant that despite the Euros final taking place with England in it, overall spending in the UK dipped by 0.3%, Barclays revealed.
Analysing the card spending of its customers, the lender found that sales were below the 2.8% rate of inflation but ahead of June's 0.6% decline in spending.
Two out of five customers said they spent less due to portions of rainy weather, with non-essential spending dipping for a second consecutive month.
Digital spending soared by 11.1%, helped by the rise in new TV shows available on streaming services such as The Boys, House of the Dragon and Supacell.
Despite the month seeing performances by Taylor Swift at arenas around the country and the Euros final, spending on entertainment was down more than 6%, with analysts stating it was because it was up against tough comparatives with Barbenheimer having hit theatres.
Karen Johnson, head of retail at Barclays, said: “Shoppers and retailers alike will be ready to see the end of the summer showers. It’s encouraging to see seasonal staples such as BBQ supplies, beauty buys and holiday planning delivering signals of steady recovery.
“Despite England losing in the nail-biting final of the Euros, UK hospitality emerged as a true winner, when the Euros delivered a boost for pubs, bars and clubs. With the final days of the Olympics in Paris, Taylor Swift’s return to a sold-out Wembley Stadium for her final UK Eras Tour dates, and a heatwave on the cards, we hope summer spending will finish strongly in August.”
9.21am: Rightmove tumbles on OpenRent split
The FTSE 100 has slipped lower, dropping by around 6 points as the blue-chip index struggles to hold onto to its early morning resilience.
Today's biggest faller in the index is Rightmove, which dropped close to 5% after it confirmed it has parted ways with OpenRent.
The company assured that the letting platform’s departure from the property portal will not affect guidance this year.
After conditions for OpenRent’s membership to Rightmove could not be settled, the duo’s partnership will expire in early September, Rightmove announced on Tuesday.
This comes after OpenRent quietly withdrew from Rightmove, where it had advertised landlord’s properties, last month.
OpenRent’s departure reportedly came as Rightmove worked to up fees for some third-party property agents and platforms which use its site.
9.01am: Calmer waters to prevail, suggests analyst
“What a difference a day makes," said Matt Britzman, analyst at Hargreaves Lansdown in reaction to the global stock market's performance on Tuesday.
"The FTSE 100 is up 1.3%, US futures point to a similar rebound, and Japan’s Nikkei 225 almost made it to double-digit gains.
"Investors shouldn’t assume this relative calm means markets are back to behaving rationally again: the volatility index (vix) is still at elevated levels, suggesting more turbulence to come.
"The good news for longer-term investors is that no single piece of this puzzle warrants such a massive shift in sentiment, this looks to be more about a perfect storm of factors.
"Calmer waters should prevail and longer-term growth trends like the AI revolution remains very much intact."
8.44am: Retail sales edge higher due to warm weather and Euros
Britain saw retail sales rise ahead of its three-month average during July, but slowed when compared to 2023's rises.
Sales for last month increased by 0.5% when compared with 2023, and against a growth of 1.5% a year prior, new data from the British Retail Consortium found.
This lift was above the 0.3% average rise seen in the last three months, highlighting the help from events like the Euros final and Taylor Swifts tour as well as a spell of warm weather.
"A busy summer of televised sport has played a beneficial role in increasing TV, mobile and tablet sales over the last two months, but there’s little evidence of other big ticket purchases taking place," said Linda Ellett at KPMG.
Helen Dickinson, chief executive of BRC added: "The late arrival of British sunshine led to a better month for summer clothing and health & beauty products as shoppers prepared for days out with friends and holidays away.
"However, as consumers spent on holidays and entertainment, sales of indoor goods, such as furniture and household appliances, were squeezed out. This left non-food once again in negative growth, particularly for in-store sales."
In the three months to July, food sales lifted by 2.6% year-on-year, compared to growth in 2023 of 8.4%, with the 2024 figure below the 12-month average of 5.3%.
8.23am: FTSE 100 opens higher as markets rebound
The FTSE 100 has opened around 40 points higher, bringing it back above the 8,000 mark and offering a slight bit of hope for investors after yesterday's hammering.
Inthe world of mid caps, the FTSE 250 lifted 1% to 20,429.
Other countries have also seen stock markets go green today, including those in Asia.
Japan's Nikkei 225, a day after its second worst session in history, lifted close to 10%, still leaving it 9% down week-on-week, but showing investors there is still strength in its index.
South Korea's KOSPI, which saw circuit breakers interrupt trading on Monday after falling too low, lifted by around 3.3% or 80 points to 2,522.
India's Nifty 50, one of the most resilent indexes yesterday, rose 0.6%, while Tawian saw its lead index lift 3.4% as TSMC rose 8%.
Back in Europe, France's Cac 40 opened 1.3% lower, and Germany's Dax started the day 0.5% higher.
The Stoxx600, a index covering companies across Europe, was down 1.5% at the time of writing.
7.56am: IHG sees revenue surge despite China weakness
In company news, Holiday Inn owner InterContinental Hotels Group PLC reported an acceleration in revenue growth in the past quarter as improvement in North America helped offset worsening declines in China.
Revenue per available room (revPAR) increase by 3.0% in the first half of 2024, with 3.2% growth in the second quarter improving from a 2.6% reduction in the first.
Total revenue was up 7% to $1.1 billion as the group opened roughly 126 new hotels to take its global estate to 6,430.
Operating profit climbed 12% to $535 million, though reported pre-tax profit fell 17% to $472 million.
The interim dividend was hiked 10% to 53.2¢ and the previously declared $800 million share buyback programme for 2024 was said to be 47% completed as at 30 June.
7.34am: Water companies face fines
While the FTSE 100 looks to forget about the 160-point slide yesterday, some companies wish Tuesday never came.
Three water companies are close to being hit with fines by Ofwat after it was found they had made serious failings, including with their treatment of sewage.
Reaching a combined record fine of £168 million, the water regulator is proposing to issue a £104 million penalty for Thames Water, the debt-ridden group which has neared collapse in recent times.
Also likely to receive fines is Yorkshire Water, £47 million, and Northumbria Water, £17 million.
It follows an investigation by Ofwat into the how the companies manage their sewage and wider networks, with the regulator now moving into a consulation period before confriming the amount for the fines.
The regulator's chief executive David Black said: "Ofwat has uncovered a catalogue of failure by Thames Water, Yorkshire Water and Northumbrian Water in how they ran their sewage works and this resulted in excessive spills from storm overflows.
"Our investigation has shown how they routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends."
7.15am: FTSE to open higher
London stocks are set to start the week close to 85 points higher, as the FTSE 100 looks to stage a recovery after one of its worst sessions this year on Monday.
Markets across the world tumbled lower on Monday, with the Nasdaq falling by around 3.5% territory following a July jobs report that raised concerns about a potential recession and the Federal Reserve's extended high interest rates.
Today, attention will turn to some midcap companies with IHG, Domino's and Abrdn all reporting.
Domino's as previously cautioned about tough comparables, and the master franchise in the UK warned the start of second-quarter trading had been slower than a year earlier in an update in May.