Yahoo Finance FTSE 100 Live 27 June: Stocks slip; Bank of England eyes asset prices
London’s main stock index slipped in closing trade, as dollar earners and companies trading without further rights rot dividend payments fell.
Meanwhile. the Bank of England’s latest Financial Stability Report has revealed the watchdog remains on alert over high asset prices.
The retail sector was in focus after results by Halfords, Currys and Watches of Switzerland.
The City has also heard from outsourcing firm Serco, which upgraded its profit guidance.
With key US inflation data due tomorrow, traders were also getting ready to tune into signals for signs on the timing of a rate cut from the Federal Reserve.
FTSE 100 Live Thursday
Moonpig shares jump on profits boost
Halfords profits hit by cycling weakness
Currys upbeat amid AI potential
FTSE 100 down in closing trade
16:42 , Michael Hunter
London’s main stock market index was lower in closing trade, with major names earning their revenue abroad lower and stocks trading without further rights to their dividend payments also falling.
The FTSE 100 ended down 45 points at 8180.28, a fall of 0.6%.
Burberry was the biggest single faller after the luxury fashion house went ex-div. Its shares fell 61p to just over 900p.
GSK took a hit from a recommended age restriction on one of its vaccines in the US. It finished 72p weaker at 1528p.
Hopes that the multi-billion bid for packaging maker DS Smith was back on followed the demise of a different offer for its would-be owner, International Paper. That helped the London-listed firm’s stock to the top of the leaderboard, with a 55p rise to 424p.
Wall Street investors reboot tech hardware stocks
15:53 , Michael Hunter
Fears that the makers of microchips have become overvalued on global stock markets deepened in New York today, with some of the biggest names in the sector hit by a sell off.
It started after an industry bellwether, Micron Technology, stoked disappointment by not lifting its outlook by as much as some had hoped after quarterly earnings beat forecasts.
Micron itself fell 6%. NVIDIA, the biggest name in the sector, which recently hit a market value of $3 trillion, fell 1.8%. Arm Holdings lost almost 2%.
London-listed dollar earners take a hit as US currency slips and sterling rises
15:08 , Michael Hunter
Some major dollar earners came under pressure on London’s stock market index in afternoon trade, with the US currency under pressure and the pound stronger and firmly established above $1.26.
British American Tobacco was down 72p at 2439p. Hikma Pharmaceuticals fell 33p to 1884p. Anglo American eased 41p to 2487p.
Burberry, the luxury fashion house was the biggest single faller, not least because its shares were also trading without further rights to their dividend payment. The stock was down 52p at 910p. ,
New York stocks make steady start after run of economic data
14:42
Wall Street stock markets are making a steady start to the trading day, as investors assess a run of closely watched economic barometers for insight into the timing of a US interest rate cut.
The S&P 500 opened up a couple of points to 5479.85. And the tech-heavy Nasdaq composite over came pressure from a lacklustre reaction to earnings news in the chip-making sector to tick up 42 points to 17851.45.
The wider gains came after US economic growth for the first quarter came in slightly higher than expected, at 1.4%, rather than the 1.3% forecast. Jobless claims also met forecasts.
Attention is now turning to the Federal Reserve’s preferred measure of inflation, the so-called Core PCE Price Index, due tomorrow and expected to come in at 2.6%.
Japan watching yen falls with "sense of urgency"
14:29 , Simon English
Top Japanese officials are considering an intervention to prop up the yen after seeing it fall to a 38-year low against the dollar.
Finance minister Shunichi Suzuki says authorities are watching the currency markets with a “sense of urgency”.
The Tokyo government is warning that high interest rates in the United States and Europe are hurting the yen, and risking economic damage.
In a monthly report, a cabinet office official flagged that “fluctuations” in the markets should be watched closely.
The report says: “The Japanese economy is recovering at a moderate pace, although it recently appears to be pausing. The economy could face downside risks from the effects of continued high interest rate levels in the United States and Europe. Full attentions should be given to fluctuations in the financial and capital markets.”
The yen has weakened to 160.88 against the dollar, the lowest since 1986.
Currency experts think if it keeps going to 165, the Bank of Japan will intervene.
“Rapid, one-sided moves are undesirable. In particular, we’re deeply concerned about the effect on the economy,” Suzuki said.
“We are watching moves with a high sense of urgency, analysing the factors behind the moves, and will take necessary actions.”
Economists think the US Federal Reserve will cut rates more slowly than previously expected.
Japan last intervened to support its currency in April after it hit a 34-year low, buying up a record 9.788 trillion yen ($62.2bn).
Authorities also stepped into the foreign exchange market three times in 2022.
The yen has lost more than one-third of its value since early 2021.
Investors have sold off the currency partly due to the huge gap between US and Japanese interest rates.
Japan has held rates at 0.1% for some time. That is far lower than any other major economy.
DS Smith keeps top place on FTSE 100 leaderboard as prospects improve for bid to go through
13:45 , Michael Hunter
Shares in FTSE 100 packaging maker DS Smith were firmly sealed in place at the top of the index in afternoon trade, as hopes that the multi-billion pound bid for it from International Paper of the US would go through.
The American firm had itself become a target from Brazilian pulp maker Suzano,
That rival deal was seen as likely to undermine the tie-up between IP and DS Smith.
With the hurdle to the agreed, £5.8 billion approach removed, DS Smith’s shares were up over 10% at 406p, a rise of 39p.
International Paper’s bid is valued at around 415p per share.
Wall Street stocks set to slip in opening trade amid tech pressure
13:17 , Michael Hunter
New York’s stock markets are on course to slip at the open according to futures trade, with high valuations in the tech sector facing a test after a lukewarm reaction to earnings and forward guidance from an industry bellwether.
Micron Technology shares were taking a hit in pre-market trade amid disappointment it did not overhaul its expectations for the year ahead after beating guidance for its quarterly earnings.
The reaction broadened, and caught other chip stocks, including NVIDIA and Arm Holdings.
Overall, the tech-heavy Nasdaq index looked set to drop by over 30 points at the open. The broader S&P 500 was on course to lose around 8 points according to futures trade.
Direction for the rest of the week looked likely to depend on inflation data. The measure most favoured by tthe Federal Reserve, Core PCE, is due.
David Morrison, senior analyst at Trade Nation, said:
“Core PCE has been unchanged for three consecutive months now. Despite this, it remains at a three year low, and has dropped significantly from its peak of 5.6% in February 2022.
“Consensus forecast is for a drop to 2.6%. If so, that should be enough to trigger a knee-jerk rally across equity markets, initially at least.
“But if it were to come in much hotter, that could jeopardise the market’s expectation for two interest rate cuts this year. And that wouldn’t be positive for risk assets.”
Bank of England eyes high asset prices in latest Financial Stability Report
12:28 , Michael Hunter
The Bank of England’s latest Financial Stability Report is out and it says that with high asset prices, especially on stock and bond markets, the risk of a “sharp correction” remains.
Threadneedle Street’s watchdogs have been growling at similar risk for a while. And the BOE said today that the overall threats to the system “are broadly unchanged since Q1” today.
But it also pointed out:
“The prices of many assets such as shares and bonds remain high relative to historical norms, and some have continued to rise. This suggests that investors in financial markets are continuing to expect the economy to recover and inflation to fall.
“They are placing less weight on risks, such as geopolitical developments or continued high inflation, that might cause weaker growth or interest rates to stay higher than expected.”
With its own Monetary Policy Committee expected to cut rates in late summer, attention is likely to remain on relatively high stock prices, while UK government debt yields face a test from whatever happens after the upcoming general election.
And then there are similar but wider risks worldwide.
“There is policy uncertainty associated with elections set to take place globally. This could make the global economic outlook less certain and lead to financial market volatility”, the BOE warned.
But it also said UK businesses and households had “remained resilient” to higher interest rates and that the banking system “is strong enough ... even if the economy does worse than expected.”
GSK hits the bottom of the FTSE 100 after US vaccine ruling
11:35
Shares in drugmaker GSK are taking the biggest tumble on the FTSE 100 in late-morning trade, after US regulators advised that a vaccine it makes should be subject to age restrictions.
The advice covers its blockbuster Arexvy drug for respiratory syncytial virus, or RSV. It says that for the age group of 60 to 74 years, the vaccine should only be given to those at severe risk of infection.
Arexvy was cleared last June for use by people aged between 50 and 59, having previously been restricted to the over 60s. The latest age restriction, recommended by the US Centers for Disease Control and Prevention, comes as a blow to hopes that the GSK treatment would be used more widely.
GSK’s shares fell by over 5%. or 81p, to 1518p.
FTSE 100 packaging firms advance, FTSE 250's Serco higher
10:25 , Graeme Evans
Packaging firms have surged in the FTSE 100, with DS Smith up 6% or 23.4p to 391.8p after it emerged its American merger partner International Paper is no longer a takeover target for Brazil’s Suzano.
Mondi, which previously tabled a bid for DS Smith, rose 4% or 66p to 1544p.
Elsewhere in the top flight, distribution services firm Bunzl rose 54p to 3092p after upgrading its full-year guidance on the back of an improved margin performance.
It was joined on the risers board by safety technology conglomerate Halma, which lifted another 25p to a fresh two-year high of 2705p after announcing the acquisition of a Portugal-based fire detection company.
The FTSE 100 fell 9.76 points to 8215.57 as the handover from Wednesday’s strong showing by US technology stocks was offset by selling in Asia markets.
The read-across from H&M’s June sales figures also impacted sentiment, leading to a decline of 3% or 77p to 2477p for Primark owner Associated British Foods.
Burberry and British American Tobacco also fell 32.2p to 929.6p and 55p to 2456p respectively after their shares were marked ex-dividend.
The FTSE 250 index rose 10.64 points to 20,308.74, aided by the strong results-day performances of Watches of Switzerland and Moonpig.
They were joined by outsourcing firm Serco, which surged 11.8p to 184.6p after forecasting half-year earnings £10 million higher than City forecasts at £140 million. It credited productivity gains for the positive surprise.
Moonpig shares jump on profits boost
09:50 , Simon Hunt
Moonpig shares jumped as much 10% today after the greetings card maker wowed shareholders with a hike in profits.
The Farringdon-based business posted a 6.6% rise in growth to £341 million for the year to end April, while pre-tax profits rocketed by a third to £46.4 million. The firm said it expected mid-high single digit growth in the year ahead.
CEO Nickyl Raithatha said Moonpig’s subscription scheme had exceeded expectations, passing the milestone of half a million members within one year, while investments in new AI technologies had created a more personalised experience for customers.
Retailers struggle in FTSE 100, Watches of Switzerland and Moonpig surge
08:32 , Graeme Evans
Retail stocks are under pressure in the FTSE 100 index after Europe’s H&M reported second quarter figures short of expectations.
The read-across to Primark owner Associated British Foods left its shares down 70p to 2454p with Next 54p cheaper at 9090p.
The FTSE 100 index dropped 8.47 points to 8216.86, with Burberry shares the biggest faller after a decline of 3% or 30.3p to 931.5p
Bunzl shares rose 22p to 3060p and FTSE 250-listed Serco added 5% or 8.5p to 181.6p after the outsourcing firms lifted their full-year guidance.
On the results front, Watches of Switzerland jumped 8% or 31.4p to 430.8p, Currys fell 5.25p to 70.8p, Halfords lost 0.6p to 135.4p and Moonpig rose 9% or 14.8p to 173.6p.
FTSE 100 seen higher but Asia markets struggle, Amazon hits $2 trillion
07:40 , Graeme Evans
Amazon provided the highlight of yesterday’s robust Wall Street session as the market value of the tech giant rose above $2 trillion for the first time.
The landmark followed a 4% rise for its shares as the S&P 500 index finished slightly higher and the Nasdaq rose another 0.5%.
In contrast, Asia markets have endured a tough session after yesterday’s Australian inflation reading prompted investors to revise expectations on interest rate cuts.
The Hang Seng index in Hong Kong lost 2%, while the Nikkei 225 declined 0.8%. The fall came as the yen closed at its lowest level since 1986.
London’s FTSE 100 index is forecast to open 13 points higher at 8239 after closing 0.3% lower in yesterday’s session.
Brent Crude is at $85.20 a barrel after a surprise rise in US crude stockpiles pushed the benchmark lower yesterday. The pound stands at $1.264.
Halfords annual profit down 8% as cycling and tyres markets 'remain depressed'
07:30 , Michael Hunter
Cycling and car accessories retailer Halfords reported a drop in annual profit today, and said some of its markets were struggling to return to levels seen before the pandemic.
The 80-plus strong chain said a fall in volumes in cycling and consumer tyres markets was worse than expected, leaving them “depressed” prepared to pre-Covid levels.
And it warned that a fall in spending on “big ticket” items such as bike and touring meant it expected volumes to drop in 2025 after the trend went “even further” in the last financial year.
It meant “the Cycling Market consolidated at a faster rate than expected”, the firm said.
Overall, it reported a drop of nearly a fifth in underlying profit before tax of £36.1m for the year to 29 March.
It also said:
“Elevated cost inflation continued to be a significant headwind, increasing the cost base by approximately £37m in FY24 and bringing cumulative cost inflation to c. £120m in the last three years.”
Its Autocentres business fared better, with revenues up almost a fifth and earnings hitting £13.8 million, up by £10.7 million.
Graham Stapleton, CEO, called it a “year of strategic and operational progress”, adding: “While the short-term outlook remains challenging, we continue to build a unique, digitally-enabled, omni-channel business, which is well positioned for profitable growth”.
Currys profits up as it eyes AI boost
07:24 , Simon English
Electrical retailer Currys today said it is looking to AI as the most exciting new product cycle since the tablet in 2010.
Chief executive Alex Baldock added: “With our partnerships, scale and expert colleagues to demystify AI, we're best-placed to benefit.”
The firm today reported signs of decent consumer confidence in year end profits of £188 million, up 10%.
It is gaining market share, albeit in a declining market.
Currys has recently disposed of its Greece business
Baldock added: “"Our performance continues to strengthen. We've kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we're stronger financially.”
Sales in the UK and Ireland fell 2% to £4.97 billion.
Recap: Yesterday's top headlines
06:38 , Simon Hunt
Good morning from the Standard City desk.
What’s the greater offence, placing a bet on when a general election will be held on the back of insider information, or betting on yourself to lose in that same election?
In the City, the view is clear. The first is very naughty, and if you get caught, you lose your job and go to prison.
The second is just business as normal, what’s the fuss?
Kevin Craig, suspended by Labour yesterday as its candidate for Central Suffolk and North Ipswich, says he placed the bet a few weeks ago when “I thought I would never win this seat”.
That’s not an insider information trade, that’s a financial and emotional hedge, like betting England will lose a football match even though you are desperate for them to win.
This is what City investors do all the time. Say they invest £10 million into Vodafone shares, convinced its shares will jump.
They might also place a smaller £1 million bet on Vodafone shares crashing. That way if bet number one is wrong, bet number two will cover off most of the losses; like an insurance policy.
That bet will be placed for the investor by a broker, Morgan Stanley, perhaps. In these instances we can see that the difference between Morgan Stanley and Paddy Power is operationally small. They do the same thing.
