Stocks in Europe started lower on Thursday, with the FTSE 100 falling for a fourth consecutive day following hawkish Federal Reserve Minutes.
The FTSE 100 index opened down 57.06 points, 0.8%, at 7,385.04. The FTSE 250 was down 118.41 points, 0.8%, at 18,274.92, and the AIM All-Share was down 5.01 points, 0.7%, at 747.36.
The Cboe UK 100 was down 0.8% at 736.54, the Cboe UK 250 was down 0.6% at 15,997.77, and the Cboe Small Companies was up 0.1% at 13,719.25.
In European equities on Thursday, the CAC 40 in Paris was down 1.4%, while the DAX 40 in Frankfurt was down 0.8%.
Federal Reserve officials signalled they plan to resume interest rate rises believing more tightening is required to tame inflation in the world’s largest economy.
‘Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate,’ minutes from the June meeting of the Federal Open Market Committee showed.
The minutes showed officials had mostly felt it appropriate to hold the target range steady in June to allow further assessment of additional information
‘Chair Jerome Powell emphasised the unanimous decision and the necessity of at least two more rate increases. Market expectations have adjusted accordingly,’ noted RMB Markets analysts.
The dollar was mixed against major currencies in early exchanges in Europe.
Sterling was quoted at $1.2705 early Thursday, lower than $1.2718 at the London equities close on Wednesday. The euro traded at $1.0862, down from $1.0876. Against the yen, the dollar was quoted at JP¥143.88, down from JP¥144.53.
US Treasury Secretary Janet Yellen will arrive in China on Thursday in a bid to inject stability into fraught ties between the world’s two biggest economies. The top US official is expected to meet with Chinese counterparts and representatives from major American companies during a visit that will run through July 9.
‘Persistent geopolitical tensions, ongoing concerns about US-China decoupling, domestic regulation, and China’s internal growth challenges continue to support the pessimistic arguments about China’s risk markets,’ said SPI Asset Management’s Stephen Innes.
In China on Thursday, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong was 2.9% lower in late dealings.
In Japan, the Nikkei 225 index in Tokyo closed down 1.7%. The S&P/ASX 200 in Sydney closed down 1.2%.
Gold was quoted at $1,920.30 an ounce early Thursday, lower than $1,924.40 on Wednesday. Brent oil was trading at $76.48 a barrel, edging lower than $76.54.
In the FTSE 100, United Utilities and Severn Trent up 2.8% and 1.8% respectively. The water utilities were edging up, having seen double digit percentage falls over the past month amid the crisis at Thames Water.
abrdn fell 2.2% in early trading
The Edinburgh-based investor and asset manager said it is targeting mid-single-digit compound annual growth rate in total customer base over the next five years, but said its outlook in 2023 is ‘subdued’ due to market conditions.
In the FTSE 250, electronics retailer Currys plunged 12% as it reported a ‘very mixed year’, and paid no final dividend.
In the financial year ended April 29, its annual adjusted pretax profit came in at the top end of guidance, but on a statutory basis, it swung to a pretax loss of £450 million from £126 million profit. Revenue fell 6.2% to £9.51 billion from £10.14 billion.
Currys said it is planning cut capital expenditure 25%, and expects net exceptional costs of around £50 million, due to additional property costs and restructuring. Trading at the start of the year has been consistent with its expectations, the company said.
On AIM, Jet2 fell 11%.
The leisure travel group reported a strong year of trading, as well as the departure of its executive chair. In the 12 months to March 31, revenue jumped multiplied year-on-year to £5.03 billion from £1.2 billion, and was also 40% ahead of financial 2020. It swung to a pretax profit of £371.0 million from a loss of £388.8 million a year before, also more than doubling profit from financial 2020. It declared a final dividend of 8.0 pence, having paid nothing a year before.
‘We continue to believe that the end-to-end package holiday is a resilient and popular product, particularly during difficult economic times,’ the firm said. It noted margins are holding up despite higher costs, thanks to robust pricing for its package holidays and flight-only products.
In addition, Jet2 announced Executive Chair Philip Meeson will step down from the board. ‘Philip bought the business in 1983, when it was a small cargo airline and distribution company serving the Channel Islands. The company subsequently listed in November 1988,’ Jet2 said. Meeson will move to non-executive chair later this year, and remain in the role until a successor is appointed.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.4%, the S&P 500 down 0.2% and the Nasdaq Composite 0.2%.
Meta had closed up 2.9%, adding 1.0% in after-hours trading.
More than 10 million people have signed up to Threads, Meta’s rival to Twitter, within the first few hours of its launch, the Facebook parent’s CEO Mark Zuckerberg said.
Threads is the biggest challenger yet to Elon Musk-owned Twitter, which has seen a series of potential competitors emerge but not yet replace one of social media’s most iconic companies, despite its epic struggles.
The app went live on Apple and Android app stores in 100 countries at 2300 GMT on Wednesday, and will run with no ads for now. It will not be available in the EU because of regulatory concerns, a source close to the company said.
AJ Bell’s Danni Hewson commented: ‘Other would-be competitors have failed to make major inroads despite users’ obvious love-hate relationship with Twitter and moves by Elon Musk to put a price tag on just about every aspect of the platform.
‘Threads is different. It has the potential to be a major disrupter because it already has millions of potential users glued to Instagram and Facebook and one easy click from adding an extra check in point to their daily habits.’
Still to come in the economic calendar, there’s UK construction purchasing managers’ index print at 0930 BST and EU retail trade data at 1000 BST. The US weekly jobless claims report will be published at 1330 BST.
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