Stock prices in London opened softly in the green on Thursday as investors remained cautious ahead of upcoming US GDP data.
The FTSE 100 index opened up just 4.00 points at 8,347.85. The FTSE 250 was down 11.24 points, or 0.1%, at 21,055.63, and the AIM All-Share was up 1.74 points, or 0.2%, at 772.04.
The Cboe UK 100 was up slightly at 834.44, the Cboe UK 250 was down a little at 18,563.12, and the Cboe Small Companies was unchanged at 17,007.56.
Reflecting on the underwhelming performance of equities this week, analysts at ING explained that it has been something of a ‘consolidative week for FX markets’.
Attention now, however, shifts to economic data.
‘The US economy is expected to have grown 2.8% in Q2, double the number printed in Q1, but the price pressures are expected to have eased. And despite the strong looking Q2 GDP figure, the growth in the Q3 has likely slowed to 2%, according to Atlanta Fed‘s GDP Now forecast,’ said Swissquote Bank’s Ipek Ozkardeskaya.
‘Therefore, even a figure in line with expectations may not discourage the Fed doves, if the price pressures continue to show further progress. In Europe, tomorrow’s figures are expected to confirm a further slowdown in inflation – combined with the sluggish economic data from the old continent – could reinforce the expectations that the European Central Bank could cut more than the 50 basis point cut baked in the market prices.’
Meanwhile, the Resolution Foundation has warned of a ‘weak’ living standards outlook for middle-income households in the UK, should ministers press ahead with benefit cuts set by the previous Conservative administration.
Alex Clegg, an economist at the think tank, said that the Bank of England and Office for Budget Responsibility forecasts show that most income growth before 2030 is expected in this year alone.
Incomes are expected to grow by 3% in 2024 to 2025, but annual median income growth for non-pensioner households is forecast to tumble to 0.4% between 2024 to 2025 and 2029 to 2030. This would leave annual average income growth over the whole Parliament at 0.8% – or £1,400 per household.
In European equities on Thursday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.1%.
The pound was quoted at $1.3217 early on Thursday in London, compared to $1.3204 at the equities close on Wednesday. The euro stood at $1.1124, against $1.1128. Against the yen, the dollar was trading at JP¥144.65, up compared to JP¥144.38.
‘The Bank of England’s broad sterling index is back to challenge the July high at around 84.65. These mark the highest levels since the Brexit vote in June 2016,’ said ING’s Chris Turner.
‘Driving sterling higher has been the malaise both in the eurozone and now emerging in the US, too, combined with the BoE’s reticence to signal a full-blooded easing cycle. Warmer relations with Europe might have helped, but this is harder to quantify.’
In the FTSE 100, GSK was up 0.8%.
The pharmaceutical firm has received approval from the European Commission for Arexvy, its respiratory syncytial virus vaccine, for adults aged 50 to 59. The vaccine immunises patients to prevent lower respiratory tract disease, which is caused by respiratory syncytial virus.
It has been approved in Europe for adults over 60 since June last year. The news follows approval in the US, with other countries - including Japan - expected to grant permission later this year.
In the FTSE 250, Grafton Group was down 0.1%.
For the six months ended June 30, the firm reported pretax profit of £71.7 million, down 23% from £93.6 million a year prior. Operating profit was £71.3 million, down 24% from £94.3 million.
Revenue fell 4.4% to £1.14 billion from £1.19 billion the year before. Nevertheless, Grafton upped its interim dividend by 5.0% to 10.5 pence from 10p.
Chief Executive Officer Eric Born said: ‘Whilst uncertainties remain in the short term, our medium-term outlook remains positive, supported by strong demand fundamentals, not least in the demand for new housing as markets normalise and consumer confidence improves. At this point in the year, with the important Autumn trading season yet to come, we continue to anticipate delivering adjusted operating profit for 2024 in line with analysts’ expectations.’
In Asia on Thursday, the Nikkei 225 index in Tokyo was down 9.23 points. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed down 0.3%
According to the Australian Bureau of Statistics, total new capital expenditure fell 2.2% in the quarter from March to June, compared to a 1.0% rise in the quarter from December to March. On an annual basis, total new capital expenditure was up 0.3% compared to the June quarter the previous year.
Businesses also revised their expected capex spend for 2024-25 to be up by 10.3% since their last estimate.
‘The manufacturing industry are expecting a major rise next year, with several large industrial projects ramping up investment,’ said Robert Ewing, ABS head of business statistics.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.4% at 41.091,42, the S&P 500 down 0.6% at 5,592.18 points, and the Nasdaq Composite down 1.1% at 17.556.03.
In politics, US Vice President Kamala Harris sets her sights on a swing state, as she heads to Georgia on the next leg of the campaign trail.
Riding on the momentum from her star turn in Chicago last week, Harris and her running mate Tim Walz are hitting a battleground that they believe is in play since she replaced Joe Biden as the party’s nominee.
After Biden flipped Georgia in 2020 for the first time in three decades, ‘we’re seizing on the energy and putting in the work to win again in 2024,’ Harris’s campaign said.
Further abroad, Top White House aide Jake Sullivan raised the importance of stability in the Taiwan Strait and South China Sea while planning more direct military talks in a rare one-on-one with a senior Chinese army official on Thursday.
Sullivan arrived in Beijing on Tuesday, the first US national security advisor to visit China since 2016, for three days of talks with Foreign Minister Wang Yi and other high-ranking officials.
He expressed ‘concerns about (Chinese) support for Russia’s defence industrial base’ – echoing longstanding US claims that Beijing has rejected, the Whitehouse said.
Brent oil was quoted at $77.58 a barrel early in London from $78.91 late Wednesday.
Gold was quoted at $2,516.90 an ounce, up against $2,507.11.
Still to come on Thursday’s economic calendar, there is economic and industrial sentiment data from the eurozone, as well as a consumer confidence print. Later in the day, there is a whole handful of data from the US, including initial jobless claims, personal consumption expenditures, and GDP.
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