- FTSE 100 up 1 point at 8,285
- UK flash PMI survey shows services inflation pressures easing
- JD Sports reports improved sales growth in second quarter
- Recruiter Hays heavily impacted by rapid hiring slowdown
4.02pm: FTSE flat, Wall Street in the red
The FTSE 100 is flat with half an hour to go today, while US stocks have fallen into the red.
Both the S&P 500 and Nasdaq are down less than 0.1% though, with the Dow Jones slipping 0.1% and Russell 2000 is sitting 0.3% lower.
US government bond yields ticked up, while the dollar index has now risen 0.45%.
As well as the comments from the Fed's Schmid earlier, US jobless claims were in line with expectations.
US PMI data also showed a decline but less than markets expected, with a composite PMI edging lower to 54.1 from 54.3 in July, showing that the private sector business activity continued at a healthy rate, beating market expectation of 53.5.
The manufacturing PMI slumped to 48 from 49.6, while the services PMI rose to 55.2 from 55.
S&P Global economist Chris Williamson said the survey painted a "solid growth picture" so far in August that "points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears".
There was also fall in selling price inflation to a level that Williams says is close to the pre-pandemic average, which he said "signals a normalization’ of inflation and adds to the case for lower interest rates".
Ryan Brandham at Validus Risk Management, said: “The latest manufacturing data came in softer than expected, while services came in stronger than expected.
"The data represents a slightly mixed result that is consistent with a slowing, but not collapsing, US economy. The case for rate cuts is getting stronger, but perhaps not as strong as the number of cuts implied by current market pricing."
Several commodities dipped on the US dollar comeback, points out analyst Axel Rudolph at IG.
"A rebound in the US dollar from levels last traded in January put pressure on commodities," he says, with gold, silver and copper prices dropped by over a percent while the price of steel fell by around 3.5% and that of wheat by close to 7%.
"On the flip side, the price of oil stabilized and rose by around 1% as some investors squared their positions around the early August lows."
3.25pm: Massive diamond discovered
Canadian mining company Lucara Diamond Corp (TSX:LUC) has recovered a massive 2,492 carat diamond from its Karowe mine in Botswana.
It calls it an "exceptional" stone and provides a photo showing the rough diamond towering over a golf ball for scale.
Lucara says the giant rough diamond was detected by special X-ray transmission (XRT) technology it had installed to make sure it did not miss any high-value diamonds as it processes kimberlite ore at the mine.
It is thought to be the second largest gem-quality diamond after the Cullinan diamond, which weighed about 3,106 carats in rough form when it was found in South Africa in 1905 before being split into around 100 small gems and nine large stones, two of which are now part of Britain's Crown Jewels.
3pm: Some London IPO news
The London Stock Market could welcome a rare IPO before the end of the year, though the company will be known to many AIM investors and may also be pushed back to next year.
Escher Group, a provider of software used by postal companies around the globe, was taken private in 2018 but is working with Singer Capital Markets on a return to a City listing, according to Sky News.
2.51pm: US stocks mostly higher
It's been a mixed start so far for US stocks.
The Nasdaq, as expected, set the early pace and is up 0.2%, with the S&P 500 up 0.1%.
Having started higher, the Dow Jones quickly dropped into the red, while the Russell 2000 is also slightly lower.
All but two of the top 20 stocks in the S&P are in the green, however.
Meanwhile, back in London, the FTSE 100 is up 9 points or 0.1%, while the FTSE 250 is down 27 points or 0.1%.
2.16pm: European earnings review
Almost all of the 417 constituents of the MSCI Europe index of larger companies have reported so far in this earnings season (97% to be precise).
Morgan Stanley (NYSE:MS) says a net 16% of companies have beaten earnings per share forecasts, while on a weighted basis, earnings have come in 3.2% above consensus, with banks, aerospace & defence, semidoncutors and telecoms leading the way.
As for sales, the net skew of beats of 17% is the highest since the start of 2023, equity strategist Regiane Yamanari notes.
Earnings revisions have turned positive in the past two weeks, driven by financials, while commodities are on the downside.
Yamanari and her colleagues have screened for stocks to find dislocations between earning results and price reaction, highlighting "top picks" of Barclays PLC, Intesa Sanpaolo, Publicis, Getlink and Saint-Gobain.
1.48pm: Miners and ex-divs weigh, US futures dip
Despite JD Sports leading the way with a near-8% gain, dragging Frasers and other retailers like M&S and Primark owner AB Foods with it, the FTSE has fallen into the red.
They are being offset by falls from miners such as Glencore and Anglo American, along with ex-dividend stocks including Legal & General and Imperial Brands, down 2.7% and 1.05%.
When a share goes ex-div, any investors buying on that date or after will not receive the most recently declared dividend payment.
US futures have also dropped from earlier levels, though are still positive.
US yields rose after Kansas City Fed Bank president Jeff Schmid, when asked about jobs revisions, said more data is needed before the FOMC cuts rates.
In a CNBC interview, the noted central bank hawk said there had been some cooling in the labour market but it generally remained pretty strong.
"We've got some data sets to come in before September," Schmid said at the sidelines of Jackson Hole, Wyoming, in reference to policy meeting in four weeks' time.
12.52pm: NatWest one of the most popular new investments for international funds
Morgan Stanley (NYSE:MS) reckons UK equities are among the "stand out" investments around at the moment, along with AI stocks and weight-loss drug maker Novo Nordisk (NYSE:NVO).
Strategists at the investment bank noted that international funds increased their exposure to UK stocks across all long-only fund types (ie not hedge funds that take short positions against stocks).
In fact, they note, five of six new additions to the top 35 "conviction overweight" are from the UK: 3i Group PLC (LSE:III), Haleon PLC (LSE:HLN, NYSE:HLN), Ferguson PLC (LSE:FERG), NatWest Group PLC (LSE:NWG) and BAE Systems PLC (LSE:BA.).
In terms of specific UK stocks, "NatWest stands out" with a jump in international fund positioning.
12.14pm: JD Sports the top riser in Europe
Just past midday and like for much of this week, the FTSE 100 is butting its head against a wall of indifference - or maybe there's just a similar amount of buyers as sellers.
The London benchmark is up 12 points or 0.15%, which is shy of the gains across the Channel, with the Paris and Frankfurt indices up 0.2% and 0.3%, while the IBEX 35 in Madrid is up 0.7%.
JD Sports is the top riser in the Euro Stoxx 600, up 9%.
US stocks are also set to head higher, with futures for the tech-powered Nasdaq up 0.3%, while the S&P 500 futures are up 0.2%.
11.38am: Energy firms object to windfall tax changes
More than 40 oil and gas producers and services firms have sent an open letter to the government to object to the confirmed 3% increase to the UK's energy profits levy, aka the windfall tax, which now stands at 78% and has been extended to 2030.
The government has also removed the investment allowance and a reduction in capital allowances, which allowed the companies to offset how much tax they paid.
This "risks thousands of jobs" at companies that are "critical to the UK Government’s industrial strategy and progress towards its net zero targets", the letter from Offshore Energies UK to HM Treasury and Sarah Jones, Minister of State for Industry and Decarbonisation, says.
The firms express "grave concern" and say the plans threaten £200 billion of investment in all forms of domestic energy, including renewables.
"Sufficient investment in the UK energy transition can only happen if we support, not undermine our domestic oil and gas sector," the letter says.
11.10am: Good news for the Bank of England
Economists are giving their thoughts on what August's UK composite PMI means for the Bank of England's next monetary policy committee meeting or two.
The flash PMI data "provides further evidence that some of the recent strength of activity in the first half of this year may have been due to catch-up growth following the mild recession in the second half of last year and GDP growth is slowing towards a more normal rate in Q3", says economist Ashley Webb at Capital Economics.
The small fall in the services output prices "suggests services inflation will continue to grind lower" and is consistent with services inflation continuing to ease from 5.2% in July to around 4.0% in about six months’ time.
"Overall, today’s release probably won’t be enough to trigger a back-to-back interest rate cut in September, but it lends some support to our view that services inflation will continue to fade and rates will be cut from 5.00% now to 4.50% by the end of this year."
The services inflation data "is very good news for the MPC", says Sanjay Raja, chief UK economist at Deutsche Bank.
But, given some of the details in the PMI report, he expects some downward revisions in the final report due at the start of September, and he think UK GDP growth continues to track at "around a 0.4% quartter-on-quarter pace for Q3-24. And we still expect 2024 GDP to expand by 1.2%."
Also on the services inflation details, Peter Arnold, EY's chief UK economist, says, "with a majority on the monetary policy committee now less data-dependent, and signalling a cautious approach to loosening policy going forward, there was nothing in today's data that is likely to alter the MPC's thinking ahead of the September meeting".
10.55am: India hits a six
It was a mixed performance across Asian markets this morning, but Indian shares rose for the sixth session in a row.
The Nifty 50 and Sensex indices both climbed 0.1%, both up close to 3% over the past week and a bit, moving back towards the record highs seen on the first day of the month. The wider Nifty 500 added 0.3%, up 3.4% since last Wednesday.
Technology stocks have led the gains today, following the US session overnight that took confidence from minutes of the Fed meeting, which hinted that a rate cut could be coming in September.
"Markets would breathe a sigh of relief, as these anticipated cuts could prove a significant tailwind for economic growth and boost confidence," a fund manager at SAMCO Mutual Fund told Reuters, with a Fed cut a "pivotal moment" for investors, especially in emerging markets like India.
10.35am: Case builds for another ECB rate cut
Euro zone wage growth slowed last quarter, which could add to the pressure on the European Central Bank cutting rates again next month.
Growth was 3.55% in the second quarter, down from 4.74% in the first.
Economist Andrew Kenningham at Capital Economics says the scale of the fall was largely due to one-off payments made in Germany in March but not repeated in Q2.
"However, the underlying trend in wage inflation is clearly downwards and is a good reason to expect the ECB to cut rates again in September."
10.10am: FTSE leaderboard
The top FTSE 350 riser this morning is an investment trust, the North Atlantic Smaller Companies Investment Trust (LSE:NAS).
This is thanks to a tip in the Questor column in the Telegraph, rating the trust a buy.
"Despite the shares trading 29% below the net asset value of the trust’s investments, shareholders have done well with a ten-year total return including annual dividends of 147.5pc."
Second on the leaderboard is JD Sports Fashion after its improved sales update.
Analysts at Barclays say JD's like-for-like sales improved to 2.4% from a decline of 0.7% in the first quarter, "albeit partly as comps [the comparative figures from a year ago] have softened".
They also find the reiteration of full-year profit guidance "reassuring", albeit they also note there is now a £15 million headwind due to the stronger pound.
10.03am: Pound stretches one-year USD high
The pound topped $1.3127 on the back of the PMI reading, up over 0.2% this morning.
And GBP also made more headway against the euro, now up 0.25% at £0.8497.
The Office for National Statistics has also released its weekly experimental data and analysis on economic activity and social change.
This includes numbers of transactions at Pret A Manger stores, which decreased in seven of the 10 location categories monitored in the week, with the largest decrease seen in Manchester stores, falling by 9% when compared with the previous week.
Job ads at Adzuna increased by 2% when compared with the previous week, but were down 16% on a year ago.
Gas and electricity prices decreased, with the system average price of gas and electricity respectively down 7% and 12% on a year ago, according to data from National Gas Transmission and Elexon.
Average daily flight numbers were broadly unchanged compared with the previous week but up 4% on 2023.
9.52am: UK economy 'solid growth' and easing inflationary pressure
The flash PMI report shows August saw "solid" expansion of the UK private sector, boosted by strong new orders, faster hiring, while inflationary pressures moderated.
Survey respondents noted that more upbeat assessments of the domestic economic outlook had spurred efforts to boost business capacity, the report says.
On inflation, input costs rose at the slowest pace three and a half years, which S&P says was largely down to a "considerable easing" in cost pressures within the service sector, offsetting higher freight and raw material costs in manufacturing.
Chris Williamson, chief economist at S&P Global, says: "August is witnessing a welcome combination of stronger economic growth, improved job creation and lower inflation, according to provisional PMI survey data.
"Both manufacturing and service sectors are reporting solid output growth and increased job gains as business confidence remains elevated by historical standards.
"Although GDP growth looks set to weaken in the third quarter compared to the impressive gains seen in the first half of the year, the PMI is indicative of the economy expanding at a reasonably solid quarterly rate of around 0.3%.
He says the easing inflationary pressures were notabe in the service sector, which has been a key area of concern for the Bank of England.
"The latest survey data therefore help lower the bar for further interest rate cuts, although the still-elevated nature of inflation in the service sector suggests that policymakers will move cautiously."
9.34am: UK economy improving, finds PMI survey
UK economic growth accelerated this month, according to the 'flash' purchasing managers index survey from S&P Global.
The preliminary reading of the UK manufacturing PMI for August rose to 52.5, from 52.1 in July, higher than the 52.2 consensus forecast.
It was a similar story for the larger services sector, where the flash PMI reading came in at 53.3, up from 52.5 and beating the 52.8 estimate.
The flash UK composite PMI for August therefore rose to 53.4 from 52.8, ahead of the 53.0 expected.
9.13am: Dollar risk/reward 'attractive', says Citi
More on the dollar from Citigroup, where FX strategists were looking at the DXY dollar index.
The dollar index remains in the range of the past two years, they noted, and "risk/reward is attractive" to take a USD long position here, they said.
This is "especially as: (1) we head into potentially weaker EU PMI and wage data this week; (2) Powell may not "out dove" what markets are already pricing; (3) "Trump trades" like long USD may get a boost if RFK Jr. drops out and endorses Trump (possibly this week)".
9.09am: GBP hits one-year high against USD
The pound is up 0.1% against the US dollar to above $1.31, its highest level since July last year.
This is despite the US dollar index also strengthening.
Sterling is up 0.1% against the euro too, at £0.8509, not a year's high, though that was seen in late July.
Currency analyst Francesco Pesole at ING says he remains "quite confident about a rebound" in EUR/GBP, and there are "two potential triggers", one today (ECB wage data) and one tomorrow (Bank of England governor Andrew Bailey’s speech in Jackson Hole).
"Markets may be inclined to price out some ECB easing if today’s eurozone wage figures prove sticky again, but PMIs may also have a say in EUR/GBP price action.
"The surveys have been a testament to the growing growth sentiment divergence between the eurozone and the UK, which has helped keep EUR/GBP capped.
"However, markets are clearly more accustomed to negative growth news in the eurozone, whereas a softer PMI read in the UK this morning can have a larger impact on Sonia pricing and the pound."
ING's short-term target is 0.86 in EUR/GBP, expecting a move in favour of the euro leg over the coming weeks.
8.43am: More bad news about the German economy
More bad economic news from Germany, where business activity contracted in August for a second consecutive month and by more than expected.
A preliminary reading of the HCOB purchasing managers index survey showed a reading of 48.5 for August, further into contraction territory from 49.1 in July.
The flash services PMI softened to 51.4 from 52.5 in July, while the manufacturing PMI dropped to 42.1 from 43.2..
8.36am: JD update 'reassuring' says analyst
Today's update from trainers and tracksuits seller JD Sports was "decent" and "reassuring", says analyst Clive Black at Shore Capital, with the shares now up 4% to top the FTSE 100.
This follows a "challenging 12 months or so" in terms of the market backdrop, with "a lot going on" for the customers, suppliers and the company too.
"It was not unreasonable to assert that market confidence in the earnings trajectory of the group took a knock in this time and so we see this update as reassuring," says Black.
However, he notes that the growth figures for the past quarter were helped by softer comparative numbers from last year.
Full-year profit guidance is quite wide and Black says he "would be surprised" to see consensus expectations change much on the back of this update.
8.26am: European markets on front foot
The FTSE is part of a wider positive trend at the open across Europe this morning, adding to the gains yesterday on both sides of the Atlantic.
A 0.2% gain for the London benchmark is bested by a 0.6% rise for the Nasdaq in Frankfurt, while the CAC 40 in Paris is just above flat.
The Euro Stoxx 600 continent-wide index is up 0.18%, with JD Sports third on the risers list.
Top is German ticketing giant CTS Eventim, up 10% after the company upped its earnings guidance after growth accelerated in the second quarter.
Instead of a "moderate" increase in EBITDA that was previously indicated, a "significant" increase is now expected for the full year.
8.09am: FTSE indices mixed
London's blue-chip benchmark has opened higher on Thursday, with the FTSE 100 hopping up 29 points to 8,302.5.
The FTSE 250 is slightly in the red, down 30 points at 21,156.
JD Sports is top of the blue-chip leaderboard, up almost 3% on the back of its half-year update.
Life insurers and other financials are the main fallers, with Investec, Just Group, Legal & General all down between 2.5% and 3%.
7.59am: Serco wins defence contract
Outsourcer Serco Group PLC (LSE:SRP) has won a $320 million (£245 million) contract with the US Army to work on the US Space Force's 'top of the world' base in Greenland.
The contract is to manage the renovation of the back-up electrical plant at the base, running for four years.
7.49am: Hays hit by hiring slowdown
We also have results from recruiter Hays PLC, which says it was heavily impacted by the rapid hiring slowdown.
Net fees in the year to 30 June decreased by 12% on a like-for-like basis while operating profit before exceptional items dropped by 46% year-on-year to £105.1 million.
Chief executive Dirk Hahn acknowledged the “increasingly challenging market conditions” throughout the year in both the permanent and temporary segments...read more here.
7.37am: JD Sports could jump on those results
Analysts and investors had been worried about JD after a warning from Nike in June, so this morning's update could provide a boost - if the margin squeeze has been factored in.
The shares have moved largely sideways this year, after a big fall on the back of a disappointing January update.
7.35am: JD Sports sales up, but margins squeezed
JD Sports Fashion PLC (LSE:JD.) grew organic sales 8.3% in the past quarter or 2.4% on a like-for-like basis, an improvement on the previous three month-period.
This was the second quarter of the sportswear retailer's financial year. Organic growth was 6.4% for the first half, it reported, with LFL sales growth of 0.7% after the soft first quarter.
Chief executive Régis Schultz highlighted double-digit organic sales growth in North America and Europe, supported by further rollout of 85 new JD-branded stores and completion of the acquisition of Nasdaq-listed Hibbett just before the period end.
He said the quarter-on-quarter trading improvement was "driven primarily by the strength of our multi-brand operating model and softer comparatives with the previous year" despite gross margin falling 30 basis points on last year.
7.17am: FTSE 100 heading for more doldrums?
The FTSE 100 is heading for another day in the August doldrums, if futures markets are correct, though results from a few FTSE 250 companies could liven things up.
A seven point decline is being predicted for the London blue-chip index, after it climbed 10 points higher yesterday to close at 8,283.4.
US stocks finished higher overnight, with momentum gained as the session went on, leaving the S&P 500 up 0.4%, the Nasdaq closing 0.6% higher, the Dow Jones up 0.1% and the Russell 2000 adding 1.3%.
This was despite negative revisions to US jobs data from previous months and some dovish minutes from the Federal Reserve’s July policy meeting.
The combination of dovish Fed minutes and the big downside revision to the annual payrolls number also sent the US yields lower and the dollar lower, says analyst Ipek Ozkardeskaya at Swissquote Bank.
"The dollar is oversold at the current levels but the news supportive of the dollar bears keep coming in in a way to keep the bears in charge of the market despite the stretched positioning."
Ozkardeskaya notes that the jobs revisions included the weak US jobs data released three weeks ago that triggered a massive global risk selloff, though yesterday's market’s reaction was quite different.
"The S&P500 and Nasdaq both gained on expectation that the Fed will start cutting the rates, the Russell 2000 outperformed, and no one seemed to care that a bad jobs market was a sign of recession that could hurt company profits – the only place we saw that worry was at crude oil, and even the SPDR’s energy sector eked out a small gain yesterday."
The Fed's Jackson's Hole symposium starts today, which many traders will be watching closely for hints about coming monetary policy.