London’s blue-chips remained in the red, but off early lows, as investors await US data, tech earnings and a trio of central bank interest rate calls.
The FTSE 100 index traded down 18.36 points, or 0.2%, at 8,273.99 on Tuesday. But the FTSE 250 rose 190.83 points, 0.9%, at 21,442.90, while the AIM All-Share fell just 0.22 of a point to 777.10.
The Cboe UK 100 was down 0.3% at 826.07, the Cboe UK 250 added 1.1% to 18,778.43, and the Cboe Small Companies rose 0.1% to 17,350.23.
The CAC 40 in Paris and Frankfurt’s DAX 40 rose 0.5% higher.
In New York, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite are all called 0.2% higher.
On Wednesday, the Bank of Japan and US Federal Reserve announce interest rate decisions. The Bank of England follows on Thursday.
The pound was quoted at $1.2859 early Tuesday afternoon, rising from $1.2847 at the time of the London equities close on Monday. The euro stood at $1.0834, climbing from $1.0819. Against the yen, the dollar was trading at JP¥154.79, up from JP¥153.91.
Ebury analyst Matthew Ryan expects the BoE to enact a 25 basis point cut this week, which could ‘trigger’ a pound decline.
‘We expect the MPC to deliver a 25 basis point cut on Thursday, albeit the vote on rates appears almost too close to call, and could be evenly split between the hawks and doves. On balance, we think that we‘ve seen enough progress on inflation for those members that were close to voting for a cut in June to shift their allegiance in favour of the doves. There is, however, a high degree of uncertainty surrounding this view, particularly given the lack of communications from MPC members since the June meeting, in part due to the blackout period surrounding the general election,’ the analyst commented.
‘In our view, the August meeting provides an ideal opportunity for the first rate reduction, as the MPC will have the luxury of the quarterly monetary policy report and press conference in order to explain their decision in greater detail. Swap markets are gradually coming around to this view, and are now assigning around a 60% chance of a cut. As this is not yet fully priced in, an immediate rate reduction would likely trigger some downside in the pound, albeit an upbeat set of communications, particularly a sizeable upward revision to the GDP forecasts, could limit the extent of any sell-off.’
A slew of data from the eurozone put the European Central Bank under the spotlight. The rate of consumer price inflation cooled this month, data showed, ahead of numbers from the whole of the eurozone on Wednesday.
Scope Markets analyst Joshua Mahony commented: ‘However, the early signs from the German regional inflation data provided less grounds for optimism, with North Rhine, Westphalia, Saxony, Baden Wuerttemberg, Brandenburg, and Hesse all seeing inflation rise or remain flat.
‘The trajectory of the German economy remains a concern for Europe,’ Mahony added. ‘Fortunately, things are more stable for the eurozone as a whole, with the latest GDP figure beating expectations to post a second consecutive 0.3% reading in Q2.’
The German economy shrunk 0.1% quarter-on-quarter in the three months to the end of June. It had been expected to grow by 0.1%, according to FXStreet cited consensus.
There is a German inflation reading at 1300 BST.
In London, Diageo gave back 7.0%. Sales in the year to June 30 fell 1.3% from $27.89 billion from $28.27 billion. Pretax profit fell 3.3% to $5.46 billion from $5.64 billion.
‘While fiscal 24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves,’ CEO Debra Crew said.
‘Fiscal 24 was impacted by materially weaker performance in [Latin America & Caribbean]. Excluding LAC, organic net sales grew 1.8%, driven by resilient growth in our Africa, Asia Pacific and Europe regions. This offset the decline in North America, which was attributable to a cautious consumer environment and the impact of lapping inventory replenishment in the prior year.’
In the new financial year, Diageo said the ‘consumer environment continues to be challenging’.
Also declining, miners Glencore, Anglo American and Rio Tinto lost 3.1%, 2.2% and 1.5%.
Barr, Switzerland-based Glencore said copper production fell 5% to 462,600 tonnes for the first six months of 2024 from 488,000 tonnes a year earlier.
Steelmaking coal output was down 8% to 3.4 million tonnes from 3.70 million tonnes. Ferrochrome production for the first half slumped 16% to 599,000 tonnes from 717,000 tonnes.
Gold was flat at 369,000 ounces, while silver was 3% lower at 9,117 ounces from 9,446 ounces.
Glencore Chief Executive Officer Gary Nagle said 2024 is expected to be a year of two halves, whereby the tracking of its year-to-date production versus guidance is expected to be caught up during the second half of the year.
Standard Chartered rose 6.2% as it announced its largest ever buyback, alongside improved earnings.
‘We produced a strong set of results for the first half of the year, demonstrating the value of our franchise as a cross-border corporate and investment bank and a leading wealth manager for affluent clients. We generated double-digit income growth, with positive momentum continuing into the second quarter, and with continued discipline in managing our expenses,’ said Chief Executive Officer Bill Winters.
A $1.5 billion buyback starts ‘imminently’, it said. The firm reaffirmed its previous guidance for 2024 as a whole, except for income guidance, which was upgraded.
Operating income is expected to increase above 7% in 2024, while net interest income is expected to be between $10 billion and $10.25 billion.
In February, Standard Chartered had guided for operating income to increase between 5% and 7% in the period from 2024 to 2026, and around the top of this range in 2024.
Elsewhere in London, industrial inkjet manufacturer Xaar expects to report a decline in half-year revenue, as it grapples with ‘challenging market conditions’.
Revenue for the six months to June 30 is expected to have declined 16% to £29 million from £34.5 million. It noted trading was in line with expectations. Xaar reports half-year earnings on September 18.
The stock fell 8.1%.
Brent oil was quoted at $78.89 a barrel early Tuesday afternoon, declining from $79.80 at the time of the London equities close Monday. Gold rose to $2,388.31 an ounce from $2,377.22.
Still to come on Tuesday is a US consumer confidence reading at 1500 BST and the latest job openings and labour turnover survey at the same time.
‘The job opening Jolts data are expected to correct back to the eight million level after the unexpected spike to 8.14 million last month. Remember that the Jolts data have been representing the excess demand for labour and a lower figure would confirm the Fed’s view that the labour market is coming back into better balance. Also in focus is July consumer confidence data, which is expected to dip lower,’ analysts at ING commented.
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