Stock prices in London opened higher on Tuesday, as major markets across the globe staged a mild comeback.
The FTSE 100 index opened up 16.72 points, 0.2%, at 7,274.54. The FTSE 250 was up 83.84 points, 0.5%, at 17,982.83, and the AIM All-Share was 1.20 points, 0.2%, at 730.41.
The Cboe UK 100 was up 0.2% at 725.08, the Cboe UK 250 was up 0.3% at 15,771.38, and the Cboe Small Companies was up 0.2% at 12,794.75.
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt both were up 0.6%.
In the UK, official data revealed government borrowing continued to climb last month, but at a slower pace than forecast.
According to the Office for National Statistics, public sector net borrowing, excluding public sector banks, reached £4.3 billion in July. This was £3.4 billion more than July 2022, but less than the £6.0 billion forecast by the Office for Budgetary Responsibility.
At £2.579 trillion, the total debt pile was provisionally estimated to have been around 98.5% of the UK’s annual gross domestic product in July.
Back in July, ONS had said the UK government’s debt pile had surpassed the country’s economic output in June at 100.8% of annual GDP. It was the first time this had happened since 1961. However, June’s figure was revised down 99.5%, given that the latest GDP estimates for the second quarter were £32.5 billion higher than previous estimates.
‘With borrowing still undershooting official forecasts, there seems bound to be continued speculation of tax cuts in next year’s budget. However, that will also be dependent on the broader economic picture,’ Lloyds Bank considered.
Meanwhile, US Treasury yields rose to multi-year highs, as investors fret about inflation. The main focus this week continues to be on Jackson Hole, the Kansas City Fed’s annual symposium, attended by top central bankers from around the world.
The chair of the Federal Reserve, Jerome Powell, will address the conference on Friday and investors will be on the alert for the language surrounding the future path of interest rates.
The dollar was weaker in early exchanges in Europe.
Sterling was quoted at $1.2791 early Tuesday, higher than $1.2732 at the London equities close on Monday. The euro traded at $1.0923, higher than $1.0887. Against the yen, the dollar was quoted at JP¥145.85, down versus JP¥146.31.
Despite the rising bond yields, there was a mostly strong performance of US equities, led by a tech rally.
Wall Street ended mixed on Monday, with the Dow Jones Industrial Average down 0.1%, the S&P 500 up 0.7% and the tech-heavy Nasdaq Composite up 1.6%.
Nvidia, one of the biggest winners in this year’s artificial intelligence tech stock rally, rose 8.5%. It will release its interim results on Wednesday.
There is also a new entrant looking to capitalise on the excitement around AI.
Late Monday, Arm, a computer chip company and unit of Japan’s SoftBank, filed preliminary papers for a public stock listing in New York, without releasing details on the size of the offering.
Arm plans a public offering of American depository shares, while the number of shares and the price range for the proposed offering have yet to be determined, the company said in a press release.
Arm has been seen as a potentially significant player in artificial intelligence, highlighting the hot technology in its prospectus.
‘As the world moves increasingly towards artificial intelligence and machine learning-enabled computing, Arm will be central to this transition,’ said the filing.
SoftBank shares rose 1.4% in Tokyo, while the wider Nikkei 225 index closed up 0.9%. In China, the Shanghai Composite closed up 0.9%, while the Hang Seng index in Hong Kong was up 1.2%. The S&P/ASX 200 in Sydney closed up 0.1%.
In the FTSE 100, RS Group was the top performer, up 2.9%. The industrial and electronics products distributor got a boost from the strong performance in the US tech sector. Scottish Mortgage Investment Trust also added 1.0%, benefitting from its tech holdings.
CRH added 1.5% as JPMorgan raised its price target.
In the midcaps, John Wood Group rose 3.1%.
In the first half of 2023, the engineering and consulting business said revenue climbed 17% year-on-year $2.99 billion from $2.56 billion. Pretax loss narrowed to $26.0 million from $30.5 million. The firm expects revenue growth to continue, but at a slower rate, reaching around $6 billion in 2023 overall. This would be up from $5.44 billion in the previous year.
Meanwhile, Crest Nicholson continued its downward trajectory, having closed down 8.2% on Monday. The housebuilder’s shares were down 2.4% as UBS slashed its price target by 24%. The firm had cut its annual outlook on Monday, triggering a sell-off in the housebuilding sector.
On AIM, Plexus jumped 28%.
The oil and gas engineering services firm said the value of a major contract has increased to around £8 million from the around £5 million figure it had announced back in March. The contract is for a specialised project application of its wellhead equipment and sealing technology, POS-GRIP ‘HG’.
Gold was quoted at $1,898.84 an ounce early Tuesday, higher than $1,888.81 on Monday. Brent oil was trading at $84.41 a barrel, edging down from $84.98.
Still to come on Tuesday’s economic calendar, there’s US existing homes sales data at 1500 BST.
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