- FTSE 100 closes just 14 points firmer
- US stocks drift off opening highs
- UK housebuilders lifted by Nationwide report
The FTSE 100 index ended modestly firmer on Tuesday, recovering slightly from Monday’s falls as US stocks held firm but also drifted off their highs, with housebuilders leading the charge in London although travel stocks remained cautious.
At the close, the UK blue-chip index was 14.58 points, or 0.2% higher at 7,087.55, above the session low of 7,071.86 but well below the morning peak of 7,120.77.
On Wall Street by London’s close, the Dow Jones Industrials Average was ahead 84 points, or 0.3% at 34,367, with the broader S&P 500 index ahead 0.1%. while the tech-laden Nasdaq Composite slipped 0.02% having reached fresh all-time highs on Monday.
Joshua Mahony, senior market analyst at IG, a global leader in online trading commented: “Home adbuilders have enjoyed an positive day in the wake of yet another upward move for house prices. With the Nationwide house price index signalling an incredible 16-year high reading of 13.4% in the year to June, margins have clearly improved for the sector. However, the question from here is whether the fading incentive of the stamp duty holiday will bring a contraction in prices or simply a slowdown in activity.”
Mahoney added: “With the pound losing ground against the dollar and euro, we are clearly seeing lasting effects from last week’s dovish Bank of England stance.
“However, the declines seen throughout the airlines sector highlights the fear that the UK is on the cusp of a sharp resurgence in cases, with Sajid Javid apparently willing to let cases surge in a bid to reopen the economy. Hong Kong’s decision to block arrivals from the UK highlights the risk that the UK becomes increasingly isolated should cases continue to rise, with airlines likely to suffer as countries reclassify the UK in response to the recent rise in delta cases.”
4.05pm: Leading shares ahead as they head into the close
With time ticking down to the much hyped England-Germany match in Euro 2020, you get the sense that investors' interest in the market is waning.
The FTSE 100 is now up 23.58 points or 0.33% at 7096.55, almost midway between its high and its low for the day.
With commodity prices flagging, miners are among the fallers. Polymetal International PLC (LON:POLY) is down 2.48% while in the wake of gold recording its worst monthly performance in five years, precious metals miner Fresnillo PLC (LON:FRES) has fallen 1.67%.
And with concerns about COVID-19-related travel restrictions, British Airways owner International Consolidated Airlines PLC (LON:IAG) has lost 2.25%.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Travel and leisure are once again feeling the heat after Spain removed UK visitors off their list for restriction free travel with TUI seeing the largest losses, with Ryanair, easyJet and IAG also lower. Rolls Royce is also underperforming as its target of achieving wide body engine flying hours of 55% of the levels of 2019, starts to look increasingly difficult to hit.
"There appears to be a growing realisation that for all the optimism over the UK’s vaccination progress, the travel sector will never recover properly until the rest of the world gets its act together when it comes to vaccines."
On Wall Street, the Dow Jones Industrial Average is up 0.4%, the S&P 500 has climbed 0.16% and the Nasdaq Composite has edged up 0.03%.
3.05pm: US confidence highest since start of pandemic
More positive signs from the US economy.
June's consumer confidence figure from the Conference Board has come in at 127.3, much higher than the 119 figure expected.
May's figure has been revised upwards from 117.2 to 120.
US CB Consumer Confidence Jun: 127.3 (est 119.0; prev R 120.0)— LiveSquawk (@LiveSquawk) June 29, 2021
- Expectations: 157.7 (prev R 148.7)
- Present Situations: 107.0 (prev R 100.9)
Lynn Franco at the Board said: "Consumer confidence...is currently at its highest level since the onset of the pandemic's first surge in March 2020.
"Consumers' assessment of current conditions improved again, suggesting economic growth has strengthened further in the second quarter...
"While short-term inflation expectations increased, this had little impact on consumers' confidence or purchasing intentions.
"In fact the proportion of consumers planning to purchase homes, automobiles, and major appliances all rose - a sign that consumer spending will continue to support economic growth in the short term."
Consumer Confidence absolutely on a tear.— Joe Weisenthal (@TheStalwart) June 29, 2021
Inflation fearmongering not changing the public's perception that things are getting better and better. pic.twitter.com/DbKayTyM39
2.41pm: Wall Street makes mixed start as momentum stutters
The main indices on Wall Street have made a mixed start to Tuesday’s session as momentum that recently notched record highs began to slow a little.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.49% at 34,452 while the S&P 500 rose 0.16% to 4,297. The Nasdaq was the outlier, falling 0.15% to 14,478.
Sentiment may have been boosted by the resumption of dividend payments by major US banks, although June's US consumer confidence figures due alter could shift the balance.
Back in London, the FTSE 100 was edging higher into late afternoon, rising 39 points to 7,112 at around 2.40pm.
2.15pm: Just Eat in demand
Let's hope this is not an omen.
Surely it is not because investors think we'll all be stuck at home ordering takeaways again if the Delta variant gets out of control.
Or more encouragingly, it is the thought the company will do well out of Euro 2020 and in particular the England-Germany match in a few hours time.
And of course it is the headline sponsor for Love Island which began last night on ITV.
Whatever the case it has helped the FTSE 100 pick up the pace a little.
The leading index is now up 36.53 points or 0.52% at 7109.5.
It is also benefitting from a move higher on Wall Street, with the Dow Jones Industrial Average now tipped to open up 101 points or 0.28%.
12.30pm: US investors await consumer confidence figures
Wall Street is set for a fairly steady start after more record highs on the S&P 500 and Nasdaq Composite on Monday.
The Dow Jones Industrial Average is expected to open 58 points or 0.15% higher, while the other two main indices are flat to marginally negative.
Following last week's news the major banks had successfully passed the Federal Reserve's latest stress tests, many of them have said they will boost their quarterly dividend payments.
Morgan Stanley is the latest, and has seen its shares climb more than 3% in pretrading as a result.
On the data front, there are June's US consumer confidence figures due later (although Friday's non-farm payroll numbers are likely to be the focus of most attention.)
On the confidence data, Michael Hewson at CMC Markets said: "[This] has seen quite a rebound in the last few months, from lows of 88.9 at the beginning of the year to 117.5 in April in the aftermath of the March stimulus payments that arrived on US doormats in April. While the recovery in sentiment has been impressive it is only being intermittently reflected in consumer spending with retail sales underperforming in May, declining 1.3%, though we did see some improvements in March and April of 10.7% and 0.9%.
"Nonetheless while the US economy is improving, sentiment still appears to be fragile, with rising gasoline prices acting as a brake on demand due to supply disruptions, while rising prices in other areas of the economy may well also be affecting demand.
"Expectations are for consumer confidence in June to rise to 119, from 117.2."
Back in the UK and the FTSE 100 seems to be stuck in a holding pattern, up 17.26 points or 0.24% at 7090.23.
11.50am: TUI drops on travel concerns
Holiday firms continue to fall back as the Delta variant looks like curtailing travel plans even more than they already are.
TUI AG (LON:TUI) has dropped 4.53% to 366.7p, Wizz Air Holdings PLC (LON:WIZZ) has fallen 1.37% to 4680p, EasyJet PLC (LON:EZJ) is down 0.89% at 891.6p while British Airways owner International Consolidated Airlines PLC (LON:IAG) has lost 0.51% at 175.5p.
Richard Hunter, head of markets at interactive investor, said: "The travel and airline sectors have come under renewed pressure.
"The Delta variant remains a concern generally, and the UK government’s reticence to open up the travelling floodgates has been mirrored by a reluctance from some countries to welcome UK visitors. As such, and with the Longest Day heralding the onset of summer, it is increasingly difficult to foresee anything like the increase in holiday makers which the industry had been pining for over the season."
Overall the FTSE 100 is up 18.15 points or 0.26% to 7091.12 while the mid-cap FTSE 250 has edged up 0.15% to 22,567.33.
10.38am: Mining shares slip back
A dip in the crude price ahead of the latest OPEC+ meeting, with Brent down 0.6% at $74.23 a barrel, has done little to disturb the oil majors.
But the FTSE 100 remains in positive territory, supported by sterling edging down against the dollar.
The index is up 12.14 points or 0.17% at 7085.11, but well down from the day's peak of 7111.
Chris Beauchamp, chief market analyst at IG,said: " Early gains for the FTSE 100 and other European markets have been walked back, and with month- and quarter-end looming the hunt is on for reasons to cut back on risk.
"Added to that we have the [US non-farm] payrolls report on Friday and a long weekend in the US next Monday, so it feels like June has already been declared over by a significant majority of traders.
"Dollar strength continues to weigh on the euro and sterling, giving a modest boost to indices this side of the pond."
9.48am: Mortgage borrowing beats expectations
More signs of a strong UK housing market with the latest government borrowing figures.
Net mortgage borrowing rebounded to £6.6bn in May from £3bn in April, and well above the expected figure of £4.4bn.
But it was still below the record £11.4bn in March when buyers were snapping up property ahead of the supposed end of the stamp duty holiday (which then turned out to be extended until the end of June and phased out completely by September.)
Mortgage approvals for house purchase were 87,500 in May, up very slightly from 86,900 in April, but lower than the recent peak of 103,200 in November 2020.
UK Net Consumer Credit May: 0.3B (est 0.3B; prev -0.4B)— LiveSquawk (@LiveSquawk) June 29, 2021
UK Consumer Credit (Y/Y) May: -3.2% (prev -5.7%)
UK Net Lending Sec. On Dwellings May: 6.6B (est 4.4B; prev 3.3B)
UK Mortgage Approvals May: 87.5K (est 85.8K; prev 86.9K)
The figures also show that for the first time since August 2020, consumers borrowed more as consumer credit than they paid off in May. Net borrowing was £0.3bn.
But the news has done little for the market, with the FTSE 100 now up just 4.45 points at 7077.42.
9.24am: Banks in demand
The FTSE 100 is holding on to its gains, up 30.41 points or 0.43% at 7103.38.
Barclays PLC (LON:BARC) is leading the way, up 2.62% at 176.02p, while Lloyds Banking Group PLC (LON:LLOY) is up 1.54% at 47.22p. But Anglo American PLC is heading in the other direction, down 1.84% at 2848p.
Russ Mould, investment director at AJ Bell, said: “After yesterday’s disappointing turn, UK stocks have perked up on Tuesday.
“Investors bid up shares in tobacco sellers, banks and telecoms, while there was mixed appetite for miners."
8.53am: Taylor Wimpey and Persimmon gain ground
Housebuilding shares are on the rise after another surge in house prices.
The latest Nationwide report showed prices jumped by 13.4% this month compared to a year ago, the highest level since 2004.
They rose 0.7% from May, bringing the average house price to £245,432, as buyers scrambled to snap up properties ahead of the phasing out of the stamp duty holiday.
!ain McKenzie, chief executive of The Guild of Property Professionals, said: “The 13% price rise compared to last June - the highest since 2004 - looks impressive, but it’s important to remember that this time last year the market was mired in lockdown.
“More noteworthy is the three consecutive months of price rises, and a sign of underlying consumer confidence and strength of the housing market."
The FTSE 100 meanwhile has slipped back from its best levels but is still up 26.33 points or 0.37% at 7099.3.
8.32am: Leading shares revive in early trading
The FTSE 100 got off to a positive start as it recouped some of Monday’s losses.
There were a number of competing pulls on UK stocks, however.
The tech-heavy Nasdaq closed in record territory after Facebook’s antitrust case was dismissed by an American judge.
Elsewhere on Wall Street and across Asia in the early part of Tuesday’s session, the air was one of negativity.
As Richard Hunter, head of markets at Interactive Investor, put it: “Markets remain finely balanced but generally positive ahead of a further raft of factors which are set to dictate the nearer term direction.
“Volatility has dampened, with the approach to both the quarter and half-year end lessening the motivation to take on new positions, and rather to lock in any gains made so far.”
One of the factors mentioned by Hunter that will come into play at the end of the week is US employment data.
Inflationary concerns and America’s US$1.2 trillion punt to get the world’s largest economy kick-started will also have an impact on market sentiment going forward, the analyst added.
British Airways owner IAG (LON:IAG), down 1.4%, felt the pain for a second day in succession amid worries of an EU travel clampdown prompted by the spread of the Covid delta variant here in the UK.
Shares in serviced offices giant IWG (LON:IWG) were well bid early on after the emergence of a £4bn private equity bid approach. The price jumped 7.7% in the early exchanges.
6.50 am: Bounce-back on the cards?
The FTSE 100 is expected to attempt to bounce back on Tuesday but only modestly after a mixed showing by US stocks overnight.
London’s blue chip index was being called five points higher on the IG spread-betting platform, a day after falling 0.9% to 7,072.97.
Wall Street saw tech stocks outperform overnight, led by Facebook after it saw off the Federal Trade Commission’s antitrust complaint over its WhatsApp and Instagram acquisitions.
This gave a boost to the tech-heavy Nasdaq, which rose 1% to breach 14,500, while the S&P 500 closed 0.2% higher. The Dow Jones fell 0.4%, however.
US markets beat their own path overnight, with technology outperforming after Facebook saw off the US FTC's antitrust lawsuit over its purchases.
“The ensuing rally lifted it into the trillion-dollar club as markets gave it a huge ‘like’. That lifted the rest of the tech space,” said market analyst Jeffrey Halley at Oanda.
Ahead of the looming second quarter earnings season, Halley noted that large US banks have signalled juicy dividend increases and increased buybacks after passing the Federal Reserve stress tests.
“Equities aside, other asset classes remain in wait-and-see mode ahead of PMI Thursday and then Friday's US Non-Farm Payrolls which should give the street clarity on their Federal Reserve tapering thinking,” he added.
“Pandemic blues did make their presence felt overnight to a modest degree. US yields eased in sympathy with a potentially uneven global recovery, mixed in with some expectations of the total of the Biden build back better bill. That couldn't budge currency, commodity or precious metals markets, though, which were resolute in their sit-on-hands ahead of Friday mantra.”
On the UK data front, there will be new lending data out this morning, with a quiet City diary otherwise.
Market analyst Michael Hewson at CMC Markets said this is expected to show that mortgage borrowing increased in May by £4.4bn, and up from £3.3bn in April as borrowers look to take advantage of the recent extension to the stamp duty holiday until the end of this month.
“Mortgage approvals appear to have stabilised between 80k and 90k a month with expectations of 85.8k in May,” he said.
“Net consumer credit on the other hand has been more subdued with net repayments every month this year. In fact, over the last 14 months UK consumers have paid down credit balances in 12 of those months, with households depositing an extra £10.7bn in their bank accounts in April. This morning’s credit numbers for May are expected to see the first lending increase since August last year.”
Around the markets
- Pound - flat at 1.3873 against the dollar
- Oil - down 0.3% to US$73.92 per barrel
- Gold - down 0.1% to US$1,778.18 per oz
- Bitcoin - up 0.8% (over 24hrs) to US$34,713.77
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were lower on Tuesday even as the S&P 500 and Nasdaq Composite both closed at record highs overnight on Wall Street.
The Shanghai Composite in China fell 0.76% and Hong Kong’s Hang Seng index slipped 0.77%
In Japan, the Nikkei 225 dipped 0.93% while South Korea’s Kospi declined 0.55%.
Shares in Australia fell, with the S&P/ASX 200 trading 0.17% lower.