- FTSE 100 ends nearly 30 points higher
- US stock indices mixed in morning trade
- Banks provide some support in London
4.50pm: Monday positive at close
The FTSE 100 index closed higher on Monday supported by strength in banking issues as well as cautious morning gains by US blue chips as investors await more US earnings and the outcome of this week’s Federal Reserve policy meeting, with a 75 basis point US interest rate hike expected on Wednesday.
At the close, the UK blue-chip index was up 29.93 points, or 0.4% at 7,306.30, just below the afternoon peak of 7,309.65 and well above the session low of 7,242.90.
In New York, around London’s close, the Dow Jones Industrial Average was ahead 88.05 points, or 0.3% at 31,987, while the broader S&P 500 index added 0.2%, but the Nasdaq Composite fell 0.3% ahead of more big tech earnings this week from the likes of Alphabet, Amazon, Apple and Microsoft.
Joshua Mahony, senior market analyst at online trading platform IG said: “Recent risk-on moves appear to be on thin ice as markets gear up for another bout of earnings and a crucial Fed rate decision. As we have seen with the ECB and BoC, central banks are happy to push rates faster than most expect, with governors seeking to act swiftly before recessionary pressures kick in. Thus, while markets currently attribute a mere 10% chance of a 100-basis point move, recession expectations do raise the possibility that Powell opts to front-run future hikes to the benefit of the dollar.”
But Mahoney noted: “UK banking stocks are enjoying a welcome boost today, despite the looming earnings risk that could soon see such gains eroded later in the week. With the Fed expected to raise rates by 75-100 basis points on Wednesday, we are set for a timely reminder that banking margins will continue to improve as we move throughout this year. However, while banking stocks typically benefit from higher rates as they often come against a strong economic backdrop, financial stocks are at risk given the looming recession that is widely anticipated.”
3.50pm FTSE 100 heads to close in positive territory, US markets volatile
The FTSE 100 index headed towards the market close in positive territory but off session highs with US markets in a volatile mood in early trading.
At 3.45pm, the UK blue chip index was up 23 points at 7,299, with the broader FTSE 250 index down 8 points at 19,816.
Earlier, the FTSE 100 had steadily pushed higher through the day, after a weak start, briefly topping 7,300 after the positive open in the US.
But US markets were in choppy mood with the Dow Jones Industrials Average fluctuating strongly, and other main indices lower.
With a busy week of corporate and economic news on both sides of the pond the mood is likely to remain volatile.
3.20pm: FTSE 100 breaks 7,300, pushes to session highs
FTSE 100 pushed to session highs, breaking 7,300, as US markets made a strong start to trading recouping most of the losses on Friday.
At 3.14pm the FTSE 100 traded 30 points higher at 7,305 with the broader FTSE 250 index up 48 points at 19,872. In the US, the DJIA hovered around the 32,000 mark, up 90 points.
Less positive news came from the CBI which urged the new UK Prime Minister to act immediately and announce a permanent tax break to boost capital spending when the Government’s current scheme ends next year.
The call came as the business lobby group reported the latest CBI Industrial Trends survey which painted a downbeat picture of the UK manufacturing sector.
It showed that growth in UK factories’ order books and output has slowed to its weakest in 18 months as cost pressures, supply bottlenecks and softer demand hit British industry.
This is the third quarter in a row that the CBI has found business optimism falling with a net balance of +6 of firms reporting a rise in output over the last three months, down from +19 in April, as demand eased at home and abroad.
Anna Leach, CBI Deputy Chief Economist, said: “The manufacturing sector has been an economic bright spot in recent months, but output and orders have softened amid ongoing cost pressures, supply challenges and a generalised weakening in economic conditions both in the UK and globally.”
Despite the slowdown, the CBI said there had been solid growth in factory jobs and welcomed evidence of a pickup in investment intentions.
2.45pm: FTSE 100 positive as US markets open slightly higher
FTSE 100 held in positive territory after the US markets opened slightly higher on Monday as investors awaited the Fed’s interest rate hike decision due Wednesday while the earnings season continues.
At 2.45pm, the lead index was trading 13 points higher at 7,289.
Just after the open, the Dow Jones Industrial Average had added 23 points at 31,922 points, while the S&P 500 was up 6 points at 3,967 points and the tech-heavy Nasdaq Composite was up 9 points at 11,843 points.
OANDA senior market analyst Craig Erlam noted that it had been a quiet start to what otherwise would have been a lively week in financial markets, with the focus on the Fed’s Wednesday meeting and big tech earnings.
“Stock markets are modestly in the green, with a fair amount of straw clutching at play once more,” Erlam said. “Earnings not being as bad as feared, the Fed only hiking by 75 basis points and China putting together a plan in the hope of averting the next wave of the property crisis is among the reasons being given for stock markets rising. It all seems a bit desperate.”
12.40pm: FTSE 100 steady holding gains
FTSE 100 held steady in early afternoon trading awaiting the US open, with US stocks seen starting higher.
12.05pm: US stocks seen opening higher
The UK's lead index was trading 17 points higher at 7,293 at lunchtime.
US stocks were expected to open higher on Monday ahead of the Federal Reserve’s latest interest rate verdict on Wednesday with investors also keeping a watchful eye on more corporate earnings through the week.
Futures for the Dow Jones Industrial Average were trading 0.4% higher pre-market, while those for the broader S&P 500 index were 0.3% higher, and futures for the tech-laden Nasdaq-100 were up 0.5%.
For investors and traders alike, the big question is whether this week will bring the last of the 75 basis point interest rate hikes for the world’s biggest economy.
“There are some indications in terms of economic data and also oil prices that we have seen a peak in inflation in the US, and if this holds true, then it is highly likely that the Fed will slow down its dice roll,” said Naeem Aslam, chief market analyst at avatrade.com.
“If, in the upcoming meeting, we do get a hint that the Fed is going to slow down the process of the interest rate hike, we are likely to see a strong rally in the equity markets, especially for the tech stocks as they are massively cheap,” he added.
Against this backdrop, investors are standing ready to scrutinize the Fed’s rate verdict and accompanying statement after the two-day FOMC meeting.
With inflation running at a level not seen in over 40 years, the Fed has a tough task at hand.
It has been raising interest rates steadily and aggressively through the year to rein in price pressures but those hikes are also likely to dampen economic growth, raising fears that the US will slide into recession.
That aside, the US quarterly earnings season continues to unfold and will have a bearing on market direction.
“This week features a raft of heavyweight US second-quarter earnings from tech heavyweights, which could drive volatility on stock markets in addition to the FOMC (Federal Open Market Committee),” said Jeffrey Halley, senior market analyst at OANDA.
Tech heavyweights Alphabet and Microsoft both announce earnings on Tuesday while Meta comes into focus on Wednesday and Apple’s results are due on Thursday.
In energy markets, WTI crude oil futures were 1.0% higher at $95.64 a barrel, while Brent crude futures were up 1.1 % at $104.30.
11.05am: FTSE 100 holds gains, SThree shares surge after trading update
FTSE 100 held its gains after recovering from a weak start.
At 11.00am, the lead index was 16 points higher at 7,293.
The broader FTSE250 also pushed higher, gaining 6 points at 19,831.
International recruiter, SThree, pleased the market with a strong set of 1H results.
The company has benefited from strong hiring demand, wage inflation and increased fee rates reflecting high demand for staff and a short supply of candidates.
Net fees were up 23% year on year in the second quarter, with growth driven across all key regions and disciplines, said chief executive Timo Lehne.
Profit before tax for the 12 months to 30 November are now expected to be at least 5% ahead of the market consensus of £66.2mn.
Broker Liberum was impressed, reiterating its buy rating with a 675p share price. It said a CY22 estimated EV/EBIT of 6.3x is too cheap for the long-term growth on offer.
Shares in SThree were 7.5% higher at 395p at 11.00am.
10.25am: FTSE 100 reverses early losses, Premier Foods higher after spicy deal
FTSE 100 pushed into positive territory after opening lower. By 10.25 the lead index was 20 points higher at 7,297.
Index heavyweight sectors mining and oil recovered earlier losses to help to blue chip index push higher.
The broader FTSE 250 index also advanced up 10 points 19,835.
Premier Foods rose 4.2% to 117.20p after announcing the £43.8m acquisition of The Spice Tailor which it said would add to earnings from year one.
The company said it would add £17.3m to revenues in FY22/23.
Ferrexpo surged 14.7% to 147.30p following an upgrade by Credit Suisse. The broker upgraded its rating to outperform with a target price of 250p.
9.35am: Vesuvius spurts higher
FTSE 100 remained down but was off its lows from earlier in the session.
The leading index was 15 points lower at 7261 with the broader FTSE 250 down 68 points at 19,756.
Shares in British engineered ceramics group, Vesuvius, surged 7% after a positive trading update.
The company expects 1H results to be well ahead of expectations guiding analyst forecasts higher.
Peel Hunt analyst, Harry Philips, maintained his buy rating and a 500p target price.
He thinks the stock looks cheap on just 7.3x 2023 PE with a 6.8% yield.
“The strength of Vesuvius’s market position in steel flow controls and foundries, which are process critical, provides it with a pricing profile that remains under-recognised in our view” Phillps said.
8.50am: FTSE 100 down 11 points
FTSE 100 recovered some of its early losses after a weak open.
The leading index was trading 11 points lower at 7,264 despite falls in oil and mining stocks.
Shares in both oil majors BP and Shell were lower while mining stocks were also weaker on concerns over economic growth.
The broader FTSE 250 index was 64 points lower at 19,760.
A busy week of corporate news and economic news lies ahead with the FOMC meeting on Wednesday adding spice to the mix.
Shares in easyJet slumped 6% in early trading after rival RyanAir cautioned that the market remained fragile despite posting a first-quarter profit.
Profits at the Irish carrier were still well below levels seen before the pandemic.
Allegra Dawes, senior analyst at research firm Third Bridge commented “Ryanair is leading its peers in the recovery from COVID and plans to operate its summer 2022 at a capacity 15% higher than 2019 levels.
Our experts estimate revenue for this summer could be 20% higher than in 2019.”
“The international travel recovery remains fragile due to a worldwide pilot shortage and the problem with labour strikes.
However, our experts say that Ryanair has been more successful than others in coping with the crisis because it didn’t significantly reduce its workforce during the pandemic.”
7.20am: FTSE 100 opens down 20 points
FTSE 100 opened lower on Monday following weak performances in Asia overnight and in the US on Friday.
The leading UK index was in a cautious mood down 20 points at 7,256 in early trading.
Investors have plenty to digest in the week ahead with a plethora of corporate announcements expected together with some key economic data.
The Federal Reserve also meets on Wednesday with Deutsche Bank expecting the FOMC to raise interest rates by 75bps (0.75%).
Richard Hunter, Head of Markets at interactive investor, said “Investors start the week with some trepidation, ahead of the latest Federal Reserve decision and a barrage of corporate earnings on both sides of the pond.”
Meanwhile, Hargreaves Lansdown said its latest survey showed that confidence in UK economic growth has fallen 15% compared to last month.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said: “This is indicative of the multiple issues surrounding the UK’s next economic steps, with added political turmoil doing little to quell nerves."
"Top of mind is of course inflation and the diverging ways in which this can be dealt with. An over-zealous hand could see UK productivity falter further, but a soft approach could see inflation get its own way for longer.
"Together with broader recessionary fears being kicked up, it’s disheartening, but by no means surprising, to hear people are struggling to see a clear road ahead," she added.
Vodafone meanwhile kicked off the busy week with a first-quarter trading update (read more).
Revenues rose by 1.6% to €11.3bn, but hopes of an M&A deal alongside the numbers did not materialise though is working on something in its towers business said Nick Read, chief executive.
Shares in the telecom giant were little changed after the news at 128.3p.
6.50am: FTSE 100 tipped for dull start as Asia slips
FTSE 100 was seen opening lower and giving back some of last week’s gains after weak performances in Asia overnight.
Financial spread betting firms are predicting an opening fall of around 35 points today and ahead of a mass of corporate and economic news due this week.
Vodafone has started the ball rolling with a trading update.
First quarter revenues rose by 1.6% to €11.3bn, with call revenues up by 2.5%.
European growth supported by an acceleration in the UK boosted the number said the telecoms giant, though Germany was weak again.
Hopes of an M&A deal alongside the numbers did not materialise, but it is working on something said Nick Read, chief executive,
"Our near-term focus on our operational and portfolio priorities remains unchanged.
"We've made good progress towards stabilising our commercial performance in Germany, and we continue to actively pursue opportunities with Vantage Towers and to strengthen our market positions in Europe."