European stocks opened in the red on Tuesday, with eyes on eurozone inflation data, a US labour market report, and words from central bankers at a conference in Portugal.
The FTSE 100 index traded 51.69 points lower, 0.6%, at 8,115.07. The FTSE 250 fell 75.96 points, 0.4%, at 20,146.12, and the AIM All-Share was down 1.67 points, 0.2%, at 763.51.
The Cboe UK 100 was down 0.8% at 807.43, the Cboe UK 250 fell 0.7% at 17,531.52, and the Cboe Small Companies was down 0.2% at 16,893.92.
In European equities on Monday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was 0.5% lower.
Eurozone inflation data for June is released at 1000 BST, putting the spotlight on the European Central Bank.
Analysts at ING commented: ‘Consensus for today’s eurozone-wide prints are 2.5% for headline and 2.8% for core. That is probably not enough to trigger a major repricing in rate expectations, but could soften the hawkish pushback by European Central Bank officials in Sintra. [ECB President Christine] Lagarde will deliver remarks today in the panel with [Federal Reserve Chair Jerome] Powell after she said the ECB needs more to assess inflation uncertainty in her opening remarks yesterday.’
ING sees some risk of a ‘dovish tilt’ from Powell, who also speaks in Portugal on Tuesday.
‘There has been a tendency from Powell to be a bit more optimistic than the FOMC consensus on disinflation, and we think there are some downside risks for the dollar ahead of today’s speech,’ ING analysts added.
Elsewhere, the Dutch bank said the US job openings and labour turnover survey at 1500 BST has ‘decent market-moving potential’. The data comes ahead of Friday’s nonfarm payrolls, and Wednesday’s pre-cursor ADP jobs report.
In China on Tuesday, the Shanghai Composite closed 0.1% higher, while the Hang Seng in Hong Kong was up 0.2%. Tokyo’s Nikkei 225 ended 1.1% higher, though Sydney’s S&P/ASX 200 ended down 0.4%.
The pound was quoted at $1.2620 early Tuesday, down from $1.2639 at the time of the London equities close on Monday. The euro faded to $1.0717 from $1.0723. Against the yen, the dollar was trading at JP¥161.66, up from JP¥161.58.
In New York overnight, the Dow Jones Industrial Average rose 0.1%, the S&P 500 added 0.3% and the Nasdaq Composite shot up 0.8%.
Brent oil was quoted at $86.63 a barrel early Tuesday, rising from $86.18 at the time of the London equities close on Monday.
‘In energy, crude oil started the week strong ahead of the July 4th holiday in the US, which [the American Automobile Association] predicts will see a record number of drivers, and Hurricane Beryl, which is not expected to impact operations in the Gulf of Mexico immediately but could cause disruptions later in the week,’ Swissquote analyst Ipek Ozkardeskaya commented.
Hurricane Beryl has strengthened into a top-level category 5 storm after it swept across several islands in the southeastern Caribbean, dumping heavy rain and unleashing devastating winds.
Beryl is now the earliest category 5 storm in the Atlantic on record and has developed into a ‘potentially catastrophic’ hurricane, the US National Hurricane Center said.
Tracking oil prices higher, BP and Shell rose 1.0% and 0.3%, among the best FTSE 100-listed performers.
On the decline, Sainsbury’s fell 2.5% as it reported a growth slowdown. However, it noted it made the biggest market share strides in the grocery industry in recent weeks.
The supermarket chain said total sales in the 16 weeks to June 22, its first quarter, rose 4.2% on-year. Grocery sales alone rose 4.8%. Sainsbury’s said total retail sales, excluding fuel, rose 2.6%, while like-for-like sales climbed 3.0%. Like-for-like sales growth eased from 4.8% in the fourth-quarter.
Away from grocery, the picture was less bullish for the firm. General Merchandise & Clothing sales were down 4.3%. Argos sales fell 6.2%.
Edison analyst Russell Pointon commented: ‘Sainsbury’s Q1 trading update reveals a 2.6% rise in total retail sales, demonstrating its strong market presence, against a very tough comparative. The effects of reducing inflation are apparent in slowing like-for-like growth in every quarter since Q124. The quarter’s success is highlighted by Sainsbury’s achieving the largest market share among grocers, driven by a 4.8% increase in grocery sales. Notably, their summer innovation in food has spurred a 10% growth, with the introduction of over 400 new products.’
Wizz Air fell 3.0%, as it reported a decline in passenger numbers in June, with the budget carrier noted some aircraft were ‘grounded due to GTF engine inspections’. The GTF engine is made by manufacturer Pratt & Whitney, whose customers include plane maker Airbus.
Wizz Air said June capacity rose 0.4% on-year to 5.8 million seats. Passenger numbers fell 0.2% to 5.3 million. Its load factor shrank to 91.7% from 92.2% a year earlier. On a rolling 12-month basis, however, capacity was 14% higher, passengers numbers up 15% and the load factor improved to 90.1% from 89.4%. For the whole of the first-quarter of its financial year, seat capacity rose 0.7% year-on-year, with passenger numbers up 0.5%, Wizz Air said. Wizz Air’s financial year runs to March.
‘Airbus updated the market on its revised manufacturing output on 25 June 2024. While the airline’s long-term growth plan remains unchanged, Wizz anticipates that this could impact the scheduled fleet program in the coming years, as previously indicated,’ Wizz Air added.
Retailer Shoe Zone warned on profit, as it cautioned it is still grappling with ‘cost pressures associated with container prices’. The stock slumped 15%.
Shoe Zone, which said the cost climb is due to a fall in the supply of shipping vessels and the continuation of a reroute away from the Suez Canal, now expects adjusted pretax profit for the year to October 2 of ‘not less than £10.0 million’. In May, it had lowered its profit forecast to £13.8 million from £15.2 million.
Gold was quoted at $2,325.12 an ounce early Tuesday, down slightly from $2,327.85 at the time of the London equities close Monday.
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