- FTSE 100 down a single point
- Miners under pressure
- Ex-dividends help weaken market
4:50pm: FTSE 100 ends lower, US stocks higher midday
The FTSE 100 finished the day on a down note, slipping a single point, or 0.01%, to 7,628, as disappointing results from some big miners offset optimistic outlooks from the airline sector.
“Stock markets are pushing higher again on Thursday, with the Nasdaq this time taking part after Tesla reported strong numbers for the first quarter,” OANDA senior market analyst Craig Erlam said.
“The doom and gloom following Netflix's earnings report didn't last long in another sign of investor resilience to bouts of negativity,” Erlam added.
Notably movers included shares of Antofagasta PLC (LSE:ANTO), which slid nearly 8% after the Chilean miner revealed that its first-quarter copper production fell 24% year over year.
3.49pm: Market loses nearly all its gains as Anglo and Antofagasta fall
Leading shares remain - just about - in the green heading into the close, as a positive performance from airline-related stocks outweighs a fall in mining shares and a handful of ex-dividends.
The FTSE 100 is up 3.95 points at 7633.17, off its low of 7596 but also below the high of 7656.
British Airways owner International Consolidated Airlines Group (LSE:IAG) is the biggest riser, climbing 8.24% after United Airlines said it expected to return to profit this year.
The potential recovery in the airline industry has also helped engine maker Rolls-Royce Holdings PLC (LSE:RR.) put on 4.05%.
In the mid-caps Wizz Air Holdings PLC (AIM:WIZZ) is up 6.33% and easyJet PLC (LSE:EZJ) has added 5.67%.
But miners are lower after a number of poor production reports.
Anglo American PLC (LSE:AAL) has lost 8.9% while Antofagasta PLC (LSE:ANTO) has fallen 7%, with its shares also going ex-dividend.
Michael Hewson, chief market analyst at CMC Markets UK, said: "It’s been another positive session for European equity markets, with the FTSE100 once again lagging the wider market due to weakness in basic resources.
"Anglo American and Antofagasta have followed Rio Tinto yesterday with disappointing first quarter production reports. A drought in Northern Chile affected production at Antofagasta’s copper mine there, while gold production fell 35%. The stock is also trading ex-dividend which isn’t helping either. Anglo American raised its costs guidance, as well as cutting its production guidance for iron ore, platinum, and coal."
Also going ex-div were Glencore PLC (LSE:GLEN), down 4.47%, Legal & General Group PLC (LSE:LGEN), 4.25% lower and BAE Systems PLC (LSE:BA.), off 2.83%.
3.07pm: Tesla earnings help lift US markets
US indices started in the green on Thursday, with the Nasdaq also recovering from weakness after shares of Netflix Inc (NASDAQ:NFLX) toppled following disappointing first-quarter subscriber numbers.
In New York, the Dow Jones Industrial Average gained 290 points, or 0.83%, in early trade to 35,451, while the broader S&P 500 added 51 points, or 1.15%, to 4,510.
The tech-laden Nasdaq rose 254 points, or 1.89%, to stand at 14,707.
After Wednesday's close, Tesla Inc (NASDAQ:TSLA) reported another record quarter, sending its shares more than 11% higher. Shares in United Airlines Holdings Inc (NASDAQ:UAL) also rose more than 11% after it forecast a profit for 2022 as the airline industry normalizes following coronavirus (COVID-19).
“With the earnings season in full swing and in full focus, investors are reacting to the differing fortunes of companies battling inflationary pressures and a changing interest rate environment," commented Richard Hunter, head of markets at interactive investor. "Meanwhile the intentions of the Federal Reserve also remain core to investors’ current caution. The “Beige Book” summary of recent economic conditions pointed to a moderately recovering economy, despite the pressures of high inflation and labour shortages in many sectors."
Meanwhile the FTSE 100 also remains positive, up 14.77 points or 0.19% at 7643.99.
British Airways owner International Consolidated Airlines Group (LSE:IAG) is the biggest riser, up 8.24% in the wake of the United Airlines results.
2.34pm: Pricing pressures versus purchasing power
Monetary policy needs to keep inflation expectations anchored, says Bank of England policymaker Catherine Mann in a speech.
She added: "By doing so now, less tightening will be required later, when demand may still be weak."
Mann - who voted (unsuccessfully) for a 50 basis point rise in rates in February and a 25 basis point increase in May - said: "The key balance of uncertainties is between near-term inflationary pressures that are becoming embedded in domestic expectations and realisations on the one hand, and on the other what is projected to be a dramatic deterioration in the real purchasing power of people’s incomes in the near and medium term.
"The challenge is to deploy monetary policy tools to short-circuit the inflationary expectations dynamic now, so as to prevent inflation from remaining above target for longer, and by doing so to moderate the hit to purchasing power later on."
Catherine L Mann talks about the impact of recent economic shocks and the uncertainties around them. Then she sets out her views on what this means for her monetary policy strategy in the past months and going forward. https://t.co/MqXChOoLG7 pic.twitter.com/YEMxxgmNJ6
— Bank of England (@bankofengland) April 21, 2022
2.08pm: US rate hikes expected
Investors are waiting for the comments by central bankers at the IMF meeting in Washington later today to judge how they intend to deal with surging inflation.
But as far as the US goes, the Federal Reserve is widely expected to hike rates at its next meeting.
Brian Rose, senior US economist at UBS Global Wealth Management, said: "“With inflation already so far above their 2% target, this leaves little choice for the Fed. Markets are, appropriately in our view, fully pricing in a 50-basis-point rate hike at the FOMC meeting on 4 May. This would be the first 50bps hike since May 2000. We also expect at least one more 50bps hike at the following meeting on 15 June.”
1.46pm: US jobless claims slip by less than forecast
US weekly jobless claims have come in higher than expected.
The number of Americans seeking unemployment benefit for the first time last week was 184,000, a 2,000 decrease from the previous figure of 186,000, itself revised up by 1,000.
Analysts had been expecting a bigger fall to around 177,000.
Unemployment Insurance Weekly Claims
Initial claims were 184,000 for the week ending 4/16 (-2,000).
Insured unemployment was 1,417,000 for the week ending 4/9 (-58,000).https://t.co/ys7Eg5LKAW
— U.S. Department of Labor (@USDOL) April 21, 2022
The three main US indices are still expected to open higher, which has put a little life into the UK market.
The FTSE 100 is now up 19 points or 0.25% at 7648.22.
But it is still being outperformed by Europe, with Germany's Dax up 1.43% and France's Cac climbing 1.87%.
11.50am: US investors positive but wary
US stocks are expected to open slightly higher on Thursday ahead of further earnings releases from corporate America, though the mood will remain cautious as investors brace for further market volatility, exacerbated by Russia's testing of a new nuclear-capable intercontinental ballistic missile.
Analysts said investors will also be keeping a close watch on comments from Federal Reserve Chairman Jerome Powell, who is scheduled to appear at a debate on the global economy hosted by the International Monetary Fund, alongside European Central Bank President Christine Lagarde and the IMF’s managing director Kristalina Georgieva..
Futures for the Dow Jones Industrial Average gained 0.58% in Thursday’s pre-market trading, while those for the broader S&P 500 index were up 0.73%. Contracts for the tech-heavy Nasdaq 100 added 1.03%, rebounding from losses triggered by Netflix’s tumble yesterday.
In after-hours trading on Wednesday, shares of Tesla Inc (NASDAQ:TSLA) rose 5% after it shrugged aside supply chain issues and pandemic restrictions to report a seven-fold jump in net profit of US$3.3 billion in the first quarter and set a higher production target for the year.
On the contrary, shares of the world’s largest streaming company Netflix Inc (NASDAQ:NFLX) lost over 35% on Wednesday after its subscriber numbers slumped unexpectedly in the first quarter.
Since the release of disappointing results from big banks, investors have been anxious to see which companies have been able to weather rampant inflation and if American households can continue to balance their budgets against soaring prices, analysts said.
“Even though the sell-off of 35% (in Netflix shares) seems gigantic, we have already witnessed a 20%-30% fall or jump after the big tech results,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “The size of the reaction hints at how prices are (inflated) due to cheap liquidity and easy financial conditions of the pandemic months and the potential losses for other tech companies on the back of soft earnings announcements in the weeks to come."
With the Federal Reserve expected to act relatively swiftly to tame inflation, the outlook for tech companies will remain unfavourable, she added.
Ozkardeskaya said while there has not been any major switching of funds from tech to safe-haven stocks, companies that are unable to pass on the cost of higher prices to customers are likely to suffer more than those that can.
Elsewhere, oil prices were a little higher, reflecting supply-side concerns as Russia’s oil production show signs of falling. Benchmark Brent crude futures were up 1.01% at US$107.88 a barrel, while WTI was 0.71% higher at US$102.92 a barrel.
Back in the UK, and the positive start on Wall Street has given a slight lift to the FTSE 100, which is now up 5.38 points at 7634.6.
11.22am: Housing transactions climb month on month in March
The UK housing market remains strong, according to the latest government figures.
Residential transactions in March were up 18.2% from February to 110,990, albeit 36.2% lower than the same time last year when the stamp duty holiday was due to end before being extended.
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “Home sales continue to inhabit a parallel world to all the economic indicators, with March transactions up almost a fifth on February.
“Home moves are down year on year, but only because of a rush to buy in March last year caused by the impending end of the popular stamp duty holiday.
“The industry continues to see a lack of properties on the market, which is pushing up prices across the board.
“Demand remains high, and the market looks likely to keep moving upwards as it continues to ignore all the uncertainty in the rest of the economy.”
10.42am: Bad start to the year for commodity companies
The FTSE 100 remains in negative territory, just, as the weakness in the mining sector continues to weigh on the market.
The leading index is currently down 5.15 points at 7624.07 but it is off its worst levels, having earlier fallen as low as 7596.
Antofagasta PLC (LSE:ANTO) is off 7.03% after a disappointing production update, as well as its shares going ex-dividend.
Anglo American PLC (LSE:AAL) also added to the sector's gloom and is down 6.83%.
Russ Mould, investment director at AJ Bell, said: “It’s been a bad start to the year operationally for the big mining companies and their latest updates have served to act as a drag on the FTSE 100. Hot on the heels of Rio Tinto’s disappointing update was Anglo American flagging a tough first quarter and guiding for an increase in costs.
“Commodity producers have enjoyed soaring prices in the past year but their moment in the sun might be coming to an end. The key question now is whether commodity prices are close to their peak for this cycle as a reduction in selling prices together with rising costs will put a squeeze on profit margins.
“Shareholders in Anglo American can’t really grumble about its latest trading update as they’ve enjoyed a 24% share price gain over the past 12 months, more than double the FTSE 100’s 10.4% gain. But the news might make them think about banking some of the profits.
“The cracks in the latest round of trading updates from the sector are a reminder that mining operations don’t always run smoothly, commodity prices rarely go up in a straight line on a sustained basis, and earnings are volatile.
“Antofagasta was also in the same boat as Anglo American, with a difficult first three months of 2022 and it delivered news that spending will be at the top end of previous guidance. These negative factors were compounded by its shares trading without the right to the next dividend."
10.31am: European pricing pressures continue
Eurozone inflation has come in slightly lower than expected in March, but is still at a record high thanks to soaring energy prices.
The euro area annual inflation rate was 7.4% last month, according to Eurostat, up from 5.9% in February and just below the initial estimate of 7.5%. A year earlier, the rate was 1.3%.
Analysts believe the April figure, due at the end of next week, could see a further increase to 8%.
Annual inflation for the whole of the European Union was 7.8% in March, up from 6.2% in February. A year earlier, the rate was 1.7%.
Euro area annual #inflation up to 7.4% in March https://t.co/vUlSPGckq4 pic.twitter.com/B0RHufUgpK
— EU_Eurostat (@EU_Eurostat) April 21, 2022
9.49am: Footsie off the worst
Leading shares have recovered much of their early losses and are now only marginally in the red.
The FTSE 100 is now down just 4.43 points at 7624.33 despite the continuing weakness in the mining sector.
It has been helped by a positive performance from Rentokil Initial PLC (LSE:RTO).
The pest control and hygiene company is up 2.69% after it said first quarter revenues had grown by 1.8% to £722mln, or 12.3% when excluding the extraordinary contribution from COVID-19-related disinfection revenues in the previous year.
It has also managed to pass on higher costs to its customers.
It said: "Total price increases achieved in the first quarter have entirely offset input cost inflation in the quarter, and we remain confident that we will be able to continue to counter rising inflation through annual price increases during the course of the year.
Steve Clayton, fund manager of the HL Select UK Growth Shares fund, which holds a 3.1% position in Rentokil Initial, said: “This statement shows why Rentokil deserves a premium rating in the stock market. So many other companies are struggling with the impact of inflationary pressures, but Rentokil’s customers value the services they provide so highly that the group can raise its own prices to cover its higher input costs, preserving its own margins in the process."
Also heading higher is British Airways owner International Consolidated Airlines Group (LSE:IAG), up 5.01% after a positive update from US group United Airlines, which issued record revenue guidance for the June quarter.
9.05am: Ex-divs add to downbeat performance
As usual on a Thursday, a number of companies have seen their shares quoted without the right to the latest dividend.
The ex-divs are helping to put more pressure on a market already trying to cope with weakness in the mining sector.
They include Antofagasta PLC (LSE:ANTO), down 8.47% and also hit by a disappointing production report, Glencore PLC (LSE:GLEN), off 4.67%, Legal & General Group PLC (LSE:LGEN) 5.26% lower and BAE Systems PLC (LSE:BA.), losing 2.54%.
8.16am: Miners undermine market
Leading shares are in contrary mood, defying expectations of a bright opening.
The FTSE 100 is down 23.2 points or 0.31% at 7605.92 shortly after the start of trading.
Richard Hunter, head of markets at interactive investor, said: "The index has fallen slightly behind as some further pressure on the miners combined with a number of stocks going ex-dividend, but still remains ahead by 3% in the year to date in a continuing display of outperformance relative to many of its global peers.”
Anglo American PLC (LSE:AAL) is down 5.7% after it lowered its annual production guidance after first quarter output fell by 10%.
Meanwhile Antofagasta PLC (LSE:ANTO) has fallen 7.2% as it said copper production in the first three months of the year dropped by 24%, partly due to a continued drought in Chile, although it left full year guidance unchanged.
The miner's shares have also gone ex-dividend.
BHP Ltd has also cut its copper production target for this year due to problems at its Escondida mine in Chile.
Markets are likely to remain cautious ahead of the Washington comments from the central bank trinity of Federal Reserve Jerome Powell, ECB head Christine Lagarde and Bank of England governor Andrew Bailey.
On Bailey, Michael Hewson of CMC Markets said: "Sterling traders will be looking for clues from Bank of England governor Andrew Bailey on the central banks intentions at its May meeting when some form of rate hike is expected, although the extent of any move remains uncertain, whether it be 25bps or 50bps.
"Traders would still be well advised to exercise some caution with respect to any comments Bailey might make given that in previous instances Bank of England guidance has been about as reliable as a chocolate teapot."
Last year the Bank appeared to be hinting at a rate rise in November but in the event, nothing happened until December.
The pound is currently marginally higher against the dollar, up 0.08% at US$1.3079.
6.50am: Footsie called higher despite mixed US and Asian markets
The FTSE 100 was being called higher pre-open after a mixed day both on Wall Street and across Asia.
Financial spread betters were pencilling in a rise of around 20 points for Footsie from Wednesday’s close of 7,629, up 28.
News yesterday was dominated by Netflix’s 35% share price slump after its first loss of subscribers for a decade.
That hurt Nasdaq, which dropped more than 1%, but Tesla’s update last night was much more reassuring for tech fans.
Elon Musk’s electric vehicle maker posted record profits of US$3.3bn as deliveries rose by 68%.
The company added it is on track to hand over 1.3mln units this year, around a 60% increase.
Supply chains were an issue said Musk, but higher prices were offsetting this.
Jeffrey Halley senior market analyst in Oanda’s Asia Pacific office noted: "Tesla blew its Q1 results out of the water after the markets closed, sending its share price 5% higher.”
“It also triggered another $23bn of awards into Elon Musk’s bank account apparently, so I guess he can tweet that “50% of funding is achieved” vis-à-vis his Twitter bid.”
Today’s news turns back towards macro matters with US Federal Reserve chair Jerome Powell, ECB President Christine Lagarde and Bank of England governor Andrew Bailey all scheduled to speak in Washington.
Inflation, geopolitics and interest rates look certain to be the focus of all three.
UK company news is relatively light, with online retail platform THG or the Hut likely to garner most headlines after its nose dive over the past year (read more)
6.50am: Early Markets - Asia / Australia
Asian shares were mixed on Thursday as China's CNOOC Ltd saw its stock surge as much as 44% in its Shanghai debut in defiance of overall weakness in the Chinese market.
The Shanghai Composite declined 1.68% while Hong Kong’s Hang Seng index tumbled 1.8%.
Japan's Nikkei 225 surged 1.23% and South Korea’s Kospi gained 0.51%.
Australia’s S&P/ASX200 closed 0.3% higher in a session led by industrials and real estate stocks.