European equities endured an underwhelming trading session on Tuesday, while stock market investors will be hoping results from Nvidia will provide some impetus later.
The stock comes into the third-quarter earnings on the back of a monstrous rise so far this year. Tepid numbers after the closing bell in New York on Tuesday could hurt it, however.
There is also the release of minutes from the Federal Reserve’s most recent meeting to come at 1900 GMT.
The FTSE 100 index closed down 14.37 points, 0.2%, at 7,481.99. The FTSE 250 lost 251.42 points, 1.4%, at 18,347.63, and the AIM All-Share fell 5.64 points, 0.8%, at 716.31.
The Cboe UK 100 ended down 0.2% at 746.55, the Cboe UK 250 lost 1.3% at 15,890.58, though the Cboe Small Companies added 0.2% to 13,535.73.
In European equities, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended marginally lower.
The Dow Jones Industrial Average was down 0.3% in New York, the S&P 500 fell 0.4% and the Nasdaq Composite shed 0.8%.
Indices in New York were hurt by tepid new US home sales data as well as weaker activity data from the Chicago Fed.
Sales of existing homes in the US slipped more than anticipated in October to a new 13-year low, according to industry data released Tuesday, on stubbornly low inventory and high mortgage rates.
Meanwhile, the Chicago Fed National Activity Index fell to negative 0.49 points in October, from minus 0.02 in September.
On the corporate front, there was a mixed bag of results from New York-listed retailers.
Clothing retailer American Eagle Outfitters set out an underwhelming fourth-quarter outlook, sending its shares lower, while department store chain Kohl’s reported a net sales decline.
Impressing, however, was Dick’s Sporting Goods, Its stock was up 5.0%. Fellow athleisure retailer JD Sports climbed 4.0% in London in a positive read-across.
Nvidia releases third-quarter results after the closing bell in New York.
‘Fasten your seatbelts,’ Swissquote analyst Ipek Ozkardeskaya advised.
‘The company will attempt to beat its own prediction of $16 billion sales in the [third quarter], up from $13.50 billion a quarter earlier and around $10 billion more than the [third quarter] of last year. Even though the S&P 500 CEOs cut down their mentions of AI in earnings call, the gap between the demand and supply for Nvidia chips is comfortably large to allow the company to grow at desired pace,’ Ozkardeskaya added.
Ahead of the results, the stock traded 1.6% lower in New York.
Also still to come, minutes from the Fed’s latest meeting are released at 1900 GMT.
At its meeting at the start of November, the Federal Reserve left interest rates unchanged. In a widely expected move, the central bank unanimously agreed to hold the key federal funds rate in a target range between 5.25%-5.50%, a 22-year-high, where it has been since July.
But since then, Chair Jerome Powell warned the central bank would hike again if need be. Favourable US inflation data followed, however. It showed a slowdown in the annual rate to 3.2% in October from 3.7% in September, restoring hope that the Fed has already enacted its last hike of the cycle.
The dollar largely struggled ahead of the release, though the pound was in decent shape ahead of Wednesday’s autumn statement announcement from UK Chancellor Jeremy Hunt.
Hawkish words from Bank of England Governor Andrew Bailey supported sterling.
Lloyds Bank analysts commented: ‘Bailey has already strongly cautioned against expecting early rate cuts and last night even said that interest rates may have to rise again if there were to be signs of inflation persistence.’
Sterling was quoted at $1.2531 late Tuesday afternoon, higher than $1.2497 at the London equities close on Monday. The euro traded at $1.0926, down from $1.0942. Against the yen, the dollar was quoted at JP¥147.91, down versus JP¥148.32.
The weaker dollar gave gold a boost. The yellow metal and the buck often move in opposite directions. Gold was quoted at $1,999.42 an ounce late Tuesday afternoon, higher than $1,974.08 late Monday.
‘Gold prices resumed their climb and opened with a positive performance today which could help extend gains for a second week. However, the market could find some resistance near last month’s peak. Gold has been recovering consistently since the beginning of October while monetary policy expectations shifted and bets on another interest rate hike abated,’ XS.com analyst Mohamad Ibrahim commented.
‘However, new economic data releases as well as the publication of the Federal Reserve’s November meeting minutes later today could alter traders’ view on monetary policy and could impact the trajectory of gold prices. The release of real estate, job market, and PMI data this week could fuel some volatility as well.’
Among London-listed large-caps, Admiral closed 2.7%, one of the best performers. Citi raised the insurer to ’buy’.
Elsewhere, Workspace Group shed 7.2%. It reported a swing to a half-year loss, as robust interest rates hurt property valuations, though rental income improved.
The flexible workspace provider said it swung to a pretax loss of £147.9 million for the six months to September 30, from profit of £35.8 million a year prior.
The London-based firm was hurt by a £170.8 million negative fair value move in investment properties, compared to a £8.1 million gain a year earlier.
Net rental income rose 8.7% year-on-year, however, to £61.0 million from £56.1 million. It helped trading profit, which does not factor in fair value moves, improve 11% to £49.4 million from £44.7 million.
Capita shot up 7.3%. The outsourcer announced that around 900 jobs in its 50,000 workforce are at risk of redundancy, as it ramps up its cost-cutting drive.
It said it will begin to conduct employee consultation programmes. Capita expects to deliver cost savings of around £60 million on an annualised basis from the first quarter of next year, with £27 million in exceptional costs related to the job cuts to be recognised this year.
Brent oil was trading at $81.74 a barrel late Tuesday afternoon, lower than $82.78 at the London equities close on Monday.
In Wednesday’s economic calendar, UK Chancellor Hunt delivers his autumn statement address around 1230 GMT. Elsewhere, there is eurozone consumer confidence data at 1500 GMT.
The local corporate calendar has third-quarter results from DIY retailer Kingfisher and full-year numbers from enterprise software firm Sage Group.
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