- FTSE 100 gains 17 points
- Investors eye rates announcements
- BP boosted by results
4.50pm: FTSE in the green
The FTSE 100 turned around to finish higher in a shortened week that's expected to be dominated by central bank monetary policy announcements.
The blue-chip index gained 17 points, or 0.22% to 7,561, after trading as low as 7,476 around midday.
Chris Beauchamp, chief market analyst at online trading platform IG, said this week's action-packed calendar - including the US Federal Reserve and Bank of England rates announcements - will probably hold both buyers and sellers in check for the time being.
The BoE is expected to raise interest rates to their highest level since 2009 on Thursday, a day after the Fed also increases borrowing costs by an expected 50 basis points.
“Investors might have been forgiven for hoping that yesterday’s late bounce in the US presaged further gains for stock markets today. But that has not been the case, and with the Fed’s rate hike edging closer a definite sense of nervousness pervades stocks," Beauchamp added.
3.35pm: US job vacancies at new high
US job vacancies have hit a new record, as companies struggle to find workers.
Ahead of Friday's widely watched non-farm payroll numbers, the latest JOLTS or job openings report shows a record 11.5mln vacancies at the end of March.
Michael Hewson at CMC Markets said: "Despite rising prices, as well as interest rates, there’s been little sign of the jobs market slowing down which is a good thing given that the first thing to go when businesses start to struggle is headcount.
"The first sign that this is changing, would be a decline in job openings, as well as a rise in unemployment levels. For now, this isn’t happening as we look ahead to Friday’s April payrolls report."
Meanwhile US orders for manufactured goods jumped by 2.2% in March, compared to a 0.1% rise in February.
????#Economic data: US Factory Orders (Mar) actual: 2.2%, expectd: 1.2%, previous: -0.5%. Clearly, US factory order numbers have started to indicate a stronger outlook for the US economy. Watch the Euro/dollar forex pair.
71% of Retail CFD accounts lose money. pic.twitter.com/a4apn4B8gk
— AvaTrade (@AvaTrade) May 3, 2022
2.57pm: Fed in focus for investors
US indices started mixed and muted on Tuesday as traders await the closely eyed Federal Reserve meeting this week, where the central bank is widely expected to hike interest rates.
The Dow Jones Industrial Average added nearly 61 points in New York at 33,122.
The S&P 500 gained nearly seven points at 4,162.
The technology heavy Nasdaq index, however, shed around 25 points to stand at 12,510.
The Fed is widely expected to announce that it is lifting its benchmark short-term interest rate by half-a percentage point, which is the sharpest rate hike since 2000 to combat ballooning inflation in the US and around the world.
The rate -setting meeting begins today and concludes tomorrow.
Back in the UK the FTSE 100 is currently down 19.31 points or 0.26% at 7525.24.
1.05pm: Fitch cuts growth forecast for China after lockdowns
More bad news as far as the Chinese economy is concerned, in the wake of disappointing manufacturing data for April.
Credit rating agency Fitch has cut its growth forecasts for China for 2022 from 4.8% to 4.3%, mainly due to the lockdowns which have been introduced to fight the continued spread of COVID-19.
???????? China 2022 Growth Forecast Cut Amid Covid-19 Outbreaks
???? Fitch Ratings has cut its forecast for China’s 2022 GDP growth to 4.3%, from 4.8%.
???? Revised its 2023 growth forecast slightly higher to 5.2%, from 5.1%.https://t.co/yEzTDpPuCS
— Michael Goodwell (@MichaelGoodwell) May 3, 2022
Fitch said: "Policies adopted by the authorities since mid-March to contain the spread of the Omicron strain of COVID-19 have led to an extended lockdown in the important commercial hub of Shanghai, and a rise in public health and mobility restrictions across China (A+/Stable) more broadly.
"Spillover to economic activity from COVID-19 pandemic-related disruption became apparent in March, with retail sales falling by 3.5%, the first year on year decline since mid-2020. Selected sub-components contracted even more severely; for example, catering was down by 15.6% year on year.
"Other areas of activity, including industrial production and fixed-asset investment, also slowed noticeably, as health and movement controls disrupted domestic supply chains and labour availability."
This has not helped the mining companies, which are lower on concerns of a drop in demand from the world's second largest economy.
Glencore PLC (LSE:GLEN) is down 3.79%, Antofagasta PLC (LSE:ANTO) has fallen 3.58% and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) has lost 3.37%.
Also heading lower is property group SEGRO PLC (LSE:SGRO).
Its shares are down 8.31% to 1231p after a downgrade from analysts at Kepler Cheuvreux.
Overall the FTSE 100 remains weak although it is off its worst levels, down 36.53 points or 0.48% at 7508.02.
11.50am: Prospect of more monetary tightening spooks investors
US stocks are expected to open down as investors assess the implications of a worldwide wave of monetary tightening to combat rising inflation.
Futures for the Dow Jones Industrial Average fell 0.1% in Tuesday pre-market trading, while those for the broader S&P 500 index declined 0.05% and the Nasdaq eased back 0.08%.
After dipping further into the red during the afternoon on Monday, US stocks rallied just before the close to finish the day higher.
The Dow gained 0.26% to 33,062 points, while the S&P 500 ended 0.57% up at 4,155 points and the Nasdaq finished the day up 1.63% at 12,536 points.
The US Federal Reserve is expected to raise interest rates by 50 basis points when it winds up its two-day rate-setting meeting tomorrow. Benchmark US Treasury yields topped 3% as investors braced themselves for the sharpest rate hike since 2000.
“This is a big week in terms of monetary policies as we are going to hear from the Bank of England and the Federal Reserve and of course, the US NFP (non-farm payrolls) data is also due on Friday,” commented Naeem Aslam, chief market analyst at AvaTrade.
In addition to this, Aslam said investors continue to monitor the ongoing conflict between Russia and Ukraine.
“In the coming days, the EU will issue more comprehensive guidelines on what firms may and cannot do under EU sanctions regulations to respond to Russia's requests to pay for gas in Rubles,” Aslam continued. “There have also been reports that Germany, the biggest economy of the Eurozone, may actually back an embargo against Russian oil and if that does take place, we could see significant volatility creeping into the markets.”
Aslam said the VIX index, which measures volatility, continues to trade well above the 30 mark. This level indicates greater volatility and suggests traders are in no mood to back riskier assets.
Back in the UK, the FTSE 100 is close to the day's low, down 62.06 points or 0.82% at 7482.49.
10.47am: Airlines lifted by Wizz Air update
British Airways owner International Consolidated Airlines Group (LSE:IAG) is leading the blue chip risers after a positive update from Wizz Air Holdings PLC (AIM:WIZZ).
IAG is up 2.86% while Wizz has climbed 4.03% after the budget airline said air travel continued to recover from the pandemic and it carried over 3.62mln passengers in April, a surge of 542% on the same month last year,
Meanwhile M&G PLC (LSE:MNG) is 2.57% better at 219.7p after analysts at HSBC moved their rating from hold to buy and raised their price target from 220p to 260p.
None of this has proved much help to the FTSE 100, which remains in the red and is now down 27.4 points or 0.36% at 7517.15.
Miners continue to weigh on the leading index after the weaker than expected manufacturing data from China, with Glencore PLC (LSE:GLEN) down 3.2% and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) 2.45% lower.
9.38am: UK manufacturing improves but concerns grow
UK factories performed better than expected in April.
The S&P Global/CIPS manufacturing PMI came in at 55.8, up from 55.2 in March and better than forecasts of a figure of 55.3.
The start of the second quarter saw a mild growth acceleration in the UK manufacturing sector, said S&P. The rate of expansion in output improved from March's five-month low, leading to a further solid increase in staffing levels.
It was also the 23rd successive month of expansion.
UK S&P Global/CIPS Manufacturing PMI Apr F: 55.8 (est 55.3; prev 55.2)
— LiveSquawk (@LiveSquawk) May 3, 2022
But new order growth slipped to its weakest in the current 15-month upturn, said S&P, stymied by lower intakes of new export business and the impact on demand from rising selling prices.
Weaker foreign demand reflected subdued conditions in overseas markets, the war in Ukraine and transportation issues.
Lacklustre demand from the EU was linked to longer delivery times, customs checks and higher shipping costs post-Brexit.
And there were further signs of pain caused by surging prices.
Input costs rose at the second-strongest pace in the survey history. Around 85% of companies registered an increase in purchase prices, while there were no reports of a decrease (a survey first). The rate of inflation at consumer goods producers hit a series-record high.
Overall confidence dropped to a 16 month low.
April data for the UK’s manufacturing sector pointed to a quicker expansion with the #PMI at 55.8 (Mar: 55.2). Inflationary pressures intensified, however, amid rising fuel, material and transportation costs. Read more: https://t.co/0IHh2h7Y3R pic.twitter.com/qbWu3mvfLx
— IHS Markit PMI™ (@IHSMarkitPMI) May 3, 2022
Rob Dobson, director at S&P Global, said: “The improved expansion of output at manufacturers, while positive in itself, failed to mask the continued headwinds buffeting the sector at the start of the second quarter. New business growth near-stalled as a slowdown in the domestic market was accompanied by a further deterioration in export orders.
“Manufacturers and their clients are struggling as lockdowns in China and the Ukraine war exacerbate stretched global supply chains, the inflationary picture worsens and geopolitical tensions rise.
"Specific to the UK, Brexit represents an additional headwind, notably via lost EU customers, increased paperwork, customs checks and border delays. Business optimism has fallen to a 16-month low as companies become more cautious about the future outlook
“The inflationary situation is getting increasingly fraught. Input costs rose to the second-greatest extent in the 30-year survey history, leading to a record increase in factory gate selling prices. Around 85% of manufacturers reported higher purchasing costs, compared to no reports of a decrease, with several firms simply noting that 'everything' was up in price. Worryingly, consumer goods producers reported record increases in both output charges and input costs, which is likely to further constrain household spending and reinforce the cost-of-living crisis.”
9.22am: HSBC shares shrug off break-up calls
Shares in HSBC Holdings PLC (LSE:HSBA) are edging higher as the bank faces calls for a break-up from a major investor.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "HSBC shareholders are pretty sanguine today about the calls for the bank to be split up and its Asia business hived into a separate entity with shares rising.
"The bank’s stated determination to continue its pivot to Asia while also spanning the world, appears to have reassured shareholders that there won’t be an immediate change of course following demands from the bank’s largest shareholder, the Chinese insurance giant Ping An.
"If anything the demand for a more intense focus on Asia under a separate entity, is a vote of confidence in the steps management have already taken to boost growth by selling its French retail operation, and the US mass market business and ploughing the capital being released into historically stronger performing regions in Asia.
"But there is a risk surging covid cases in China could take their toll with the bank already having experienced reduced equity market activity, wealth management slowdowns and closed branches after outbreaks in Hong Kong. China’s beleaguered real estate sector is also a continuing headwind for the bank, which a separate Asia focused entity would be particularly susceptible to."
HSBC is up 0.58% to 504.2p.
Overall the market remains in the doldrums, with the FTSE 100 down 18.48 points or 0.24% at 7526.07.
AJ Bell investment director Russ Mould said: "“After the UK dozed through the drama of flash-crash Monday on the markets, the FTSE 100 certainly remained half-asleep on Tuesday when UK stock trading reopened after the bank holiday...
“Metal producers and pharmaceuticals acted as a drag on the index, with the former extending losses seen after the recent quarterly updates from mining sector – most of whom reported operational challenges.
“Markets are particularly worried about lockdown in China and how fast US interest rates might go up."
9.00am: Citi's flash crash error
Citigroup has put its hands up to a flash crash in markets on early on Monday..
With activity fairly quiet due to public holidays in much of the world, a sudden plunge in a number of markets came as a shock and caused trading to be briefly halted.
Nordic stocks were hardest hit but they were not alone.
The US banking giant admitted responsibility late on Monday, saying: "This morning one of our traders made an error when inputting a transaction. Within minutes, we identified the error and corrected it."
8.17am: Miners undermine market after disappointing data from China
As the shortened but busy trading week gets underway, leading shares have fallen back in early trading.
Ahead of the UK manufacturing data for April, the FTSE 100 is down 27.39 points or 0.36% at 7517.16.
With eurozone factory output growth stalling thanks to shortages and price rises exacerbated by Russia's invasion of Ukraine, UK manufacturing is also expect to show a decline in activity.
Meanwhile the weaker than expected manufacturing report from China has undermined the mining sector, with Glencore PLC (LSE:GLEN) down 2.38% and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) 2.35% lower.
Among the risers BP PLC (LSE:BP.) is 1.81% better after the oil giant more than doubled its first quarter underlying profits to US$6.245bn and unveiled a US$2.5bn share buyback.
But it has also taken a charge of US$25.5bn to cover its exit from Russia, although this has not stopped renewed calls for a windfall tax on the company and its peers.
6.50am: Volatile week expected
The FTSE 100 is predicted to extend its gains for a fourth successive session ahead of a big week of central bank action in the first week of May.
Earlier this morning the Reserve Bank of Australia made its first interest hike in over 10 years, from 0.1% to 0.35%, also raising its inflation forecasts and reducing GDP forecasts as it reacts to inflation. The Aussie dollar was sent sharply higher.
It's expected to be a volatile week in markets, with tomorrow the US Federal Reserve is expected to hike rates by 50 basis points and on Thursday the Bank of England is expected to make an increase of half that size.
Today, London’s blue-chip index is set to follow US market increases overnight rather than mimic the falls in Europe yesterday, with a 53-point advance envisaged by spread-betters, with the Footsie having finished last week at 7,544.55.
Tech stocks led Wall Street higher, with the Nasdaq Composite index climbing 1.6%, followed by the S&P 500 with a 0.6% rise and the Dow Jones up 0.3%.
But Asian and European markets both got off to a poor start to the month, on the back of China purchasing managers’ index (PMI) data showing that economic activity in April fell back by more than expected.
China’s non-manufacturing PMI index fell to its lowest since February 2020, when the country was locked down in the first reaction to the Covid-19 outbreak, with the manufacturing PMI also dropping.
“It is clear that the disruptions caused by the Chinese government's lockdown measures in trying to combat the Omicron variant are having a drastic effect on economic activity,” said market analyst Michael Hewson at CMC Markets.
“With little sign that the Chinese government is willing to admit its zero-Covid strategy is doomed to fail, as reports grow that Beijing could follow Shanghai into lockdown, the prospect of any significant improvement here looks slim.”
Manufacturing PMI data is due out for the UK today, with activity expected to have slowed to 55.3 in April from 55.5 in March.
6.50am: Early Markets - Asia / Australia
Several markets in the Asia Pacific are closed for a holiday on Tuesday, including China, Japan, Singapore and India.
South Korea’s Kospi slipped 0.07% while Hong Kong’s Hang Seng index gained 0.13%.
Australia’s S&P/ASX200 fell 0.42% after RBA Governor Philip Lowe signalled a sharp increase in the RBA’s inflation forecast, noting that ‘the central forecast for 2022 is for headline inflation of around 6% and underlying inflation of around 4 ¾ %.