Stocks in London ended in the red on Tuesday, as cautious sentiment prevailed following hot eurozone inflation figures.
The FTSE 100 index ended down 45.56 points, 0.6%, at 8,121.20. The FTSE 250 fell 27.61 points, 0.1%, at 20,194.47, while the AIM All-Share slipped 0.81 of a point at 764.37.
The Cboe UK 100 fell 0.7% to 808.01, the Cboe UK 250 declined 0.5% to 17575.03, and the Cboe Small Companies closed little changed at 16,918.39.
In European equities on Tuesday, the CAC 40 in Paris fell 0.3%, while the DAX 40 in Frankfurt slipped 0.8%.
In Europe, investors weighed latest inflation figures and ongoing uncertainty over the outcome of the election in France on Sunday.
According to Eurostat, annual consumer price inflation in the single currency bloc eased to 2.5% in June, from 2.6% in May. The figure landed in line with FXStreet cited consensus. On a monthly basis, consumer prices rose 0.2% in June from May. They had risen at the same pace in May from April.
Core inflation was hotter-than-expected, however. The yearly core inflation rate was steady at 2.9%, but had been expected to ease to 2.8%.
‘Nothing in these figures would make the ECB cut again in July, and we think it’ll be eagerly awaiting data over the summer before seriously debating a next rate cut in September,’ analysts at ING commented.
Supporting this view, ECB President Christine Lagarde told a central banking conference in Sintra, Portugal, the central bank doesn’t yet have sufficient evidence that inflation threats have passed.
‘We are still facing several uncertainties regarding future inflation, especially in terms of how the nexus of profits, wages and productivity will evolve and whether the economy will be hit by new supply-side shocks,’ Lagarde said.
Speaking at the same conference, Federal Reserve Chair Jerome Powell said the latest economic data suggest inflation is getting back on a downward path, but added officials would like to see more evidence before lowering interest rates.
‘Because the US economy is strong and the labor market is strong, we have the ability to take our time and get this right,’ Powell said, adding ‘that‘s what we’re planning to do.’
The strength of the economy was reflected in robust job vacancy figures, reported on Tuesday.
On the last business day of May, the number of job openings was 8.1 million, up from a revised 7.9 million in April, according to data from the Bureau of Labor Statistics. The figure beat the FXStreet consensus for a drop to 7.9 million.
April’s figure was revised down by 140,000.
In New York, the Dow Jones Industrial Average was little changed. The S&P 500 was up 0.2% while the Nasdaq Composite was 0.3% higher.
In London, markets continue to gear up for the UK general election on Thursday.
Prime Minister Rishi Sunak insisted the outcome of the election is not a ‘foregone conclusion’ and that he was ‘feeling energised’ with two days of campaigning to go.
Nonetheless, Labour’s opinion poll lead over the Tories has hovered around the 20-point mark for most of the election campaign and the Tory strategy has shifted towards preventing bleeding votes to Reform UK and the Liberal Democrats, and saving as many MPs as possible to form an effective opposition.
The pound was quoted at $1.2678 late Tuesday afternoon, up from $1.2639 at the time of the London equities close Monday. The euro firmed at $1.0735, up from $1.0723. Against the yen, the dollar was trading at JP¥161.54, down from JP¥161.58.
In France, far-right leader Marine Le Pen said her Rassemblement National party will seek allies in parliament to secure an outright majority and form a government if the election results leave it short of the required number of seats.
It marks a change from RN’s previous position that it would only take the premiership and reins of government if voters gave it an outright majority of 289 out of 577 votes.
‘We want to govern, to be extremely clear. And if we are a few deputies short of the majority...we will go see others and say: are you ready to participate with us?’ Le Pen told France Inter Radio.
Candidates in France face a Tuesday deadline to register for the run-off round, of as President Emmanuel Macron’s centrist camp and a left-wing alliance scramble to prevent the far-right from taking power.
In London’s FTSE 100, Sainsbury fell 2.9% after strong food trading was overshadowed by a drop in sales at Argos.
For the 16 weeks to 22 June 2024, its first-quarter, total sales 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%. The like-for-like measure also excludes fuel.
Away from grocery, the picture was less bullish for the firm. General Merchandise & Clothing sales were down 4.3%. Argos sales fell 6.2%.
3i enjoyed better fortunes, rising 2.0%, helped by positive comments from Citi.
The broker raised its share price target for 3i to 3,800 pence per share from 2,650p.
In the FTSE 250, Quilter fell 3.6% after Deutsche Bank downgraded to ’sell’ from ’hold’ ahead of first half results on August 7.
The broker expects the dividend to be held flat, which is below current consensus.
On AIM, Shoe Zone plunged 12% after it cut profit guidance for the second time in three months blaming rising shipping costs and weak spring sales.
As a result, the shoe retailer now expects adjusted pretax profit for the financial year ending October 2 to be not less than £10.0 million.
In May, it had lowered its profit forecast to £13.8 million from £15.2 million. In financial 2023, the company reported pretax profit of £16.2 million.
Nanoco slumped 26% after it warned delayed receipt of an order would see sales fall short of consensus forecasts
Nanoco said the delay was for a further production order for its first generation sensing products. This is no longer expected in financial 2024.
The company said it is working with the customer to understand ‘the range of possible outcomes and any potential impact on Nanoco beyond the end of the financial year’.
Sales are expected to be marginally below consensus forecasts and adjusted earnings towards the lower end of expectations.
Brent oil was quoted at $86.99 a barrel late Tuesday afternoon, up from $86.18 late Monday. Gold fetched $2,327.03 an ounce, down slightly from $2,327.85.
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