The fall out from Federal Reserve chair Jerome Powell’s speech at Jackson Hole continues to be felt as US markets fall further.
Powell said on Friday that getting back to price stability would “likely require maintaining a restrictive policy stance for some time.”
The dollar strengthened following the comments, leaving the pound trading at $1.17 for its lowest point since March 2020.
FTSE 100 Live Tuesday
Decra acquires Med-Pharmex in $260 million deal
Powell speech spurs rate rise expectations
Prepare for a bonfire of the bankers
FTSE 100 fails to hold its gains as investors dump mining stocks
15:36 , Michael Hunter
The heavily-weighted mining sector took lumps out of London’s FTSE 100 in afternoon trade, which failed to hold gains from earlier in the session helped by a recovery for retail stocks and among banks.
There were six big names from the mining and commodities trading sector on the list of the main UK stock index’s biggest decliners. Endeavour Mining slumped 5.6% to 1682p and Chilean copper producer Antofagasta was down 4% at 1126p. Anglo American fell 3.8% to 2811p and Glencore was down 2.5% at 486p.
Among the more bouyant retailers were Kingfisher, the owner of B&Q, up 2.3% at 236p. JD Sports rose 2.1% to 112p. Barclays made the best gain among banks, up 1.5% at 165p.
Overall, the FTSE 100 fell 54 points to 7373.5, a slip of 0.7% as it returned from a long weekend and Wall Street stock markets also fell back as the US trading day developed, with worries about the extent and pace of Federal Reserve rate rises returning to the fore in New York.
New York stocks bounce higher as sell-off from rate hike signal fades
14:50 , Michael Hunter
The S&P 500 held steady in opening trade as the sell-off sparked by signs of aggressive moves to tighten monetary policy at the Federal Reserve late last week lost momentum.
Wall Street’s broad stock index was flat at 4029.70 with attention turning toward consumer confidence and job openings data due later in the session and away from the lingering impact of the chairman of the Federal Reserve’s hawkish words on rate hikes at the Jackson Hole gathering of central bankers.
Best Buy shares up in US pre-market trade after sales shrink by less than expected
14:18 , Michael Hunter
Best Buy, the US electronics retailer, is in demand in pre-market New York trade after it reported a narrower-than-expected decline in quarterly sales.
The Main Street staple also stood by its full-year forecasts as it filed a $12.1 billion loss for the second quarter, marginally better than the $12.6 billion cited in consensus Wall Street forecasts, as demand for devices continued to drift down from the highs seen during Covid lockdowns.
Its stock was marked up 1.6% in pre-market trade.
Musk summons Twitter whistleblower as court battle intensifies
13:05 , Simon Hunt
Elon Musk has summoned a Twitter whistleblower to court, seeking company communications over alleged spam and security issues as he seeks to bolster his artillery in a protracted legal battle with the social media giant.
Peiter Zatko, Twitter’s former head of security, alleged the firm has cybersecurity policies that expose it to hacking and disinformation by state aggressors. The allegations were made as part of whistleblower submissions to US government agencies.
Musk abandoned his $44 billion Twitter takeover offer after accusing the firm of misrepresenting the number of fake accounts on its platform. Twitter has said these accounts represent less than 5% of overall users.
Toyota could lose crown as world’s biggest carmaker after failing to meet production target
12:22 , Simon Hunt
Toyota risks losing its title as the world’s biggest carmaker after the company said it failed to meet its production targets for the fourth consecutive month as it battles supply chain disruption and a global chip shortage.
The Japan-based carmaker produced just over 700,000 cars worldwide in July, significantly short of its 800,000 target and an 8.6% drop on production of 773,000 in July last year, led by a 28% fall in domestic production.
The decline in production has sparked concerns the company will have to lower its annual target of making 9.7 million vehicles.
Volkswagen, the world’s second biggest carmaker, delivered 8.9 million cars to customers in 2021. Tesla, the world’s most valuable carmaker, made around 1 million cars in 2021, but has ambitions to scale up production to 20 million cars by the end of the decade.
Gas tankers buoy shipbuilder profits
11:56 , Simon Hunt
London shipping broker Braemar has reported “huge interest” in long-term charters of tankers for liquified natural gas as demand for the commodity “soaked up all available tonnage” with energy markets in flux after Vladimir Putin’s invasion of Ukraine.
The company, headquartered on the Strand, acts as an intermediary between ship owners and cargo line operators as well as oil majors seeking clarity on transport costs.
The industry benefits when there is demand for longer-term hires locking in higher rates, with increased demand for moving LNG to markets previously supplied by piped Russian gas making it one of the winners from the energy crisis.
AstraZeneca hails heart disease breakthrough after patient trials
11:22 , Simon Hunt
British pharma giant AstraZeneca said its Farxiga drug significantly lowers death in patients who have already suffered heart failure in a major breakthrough for people with heart disease.
The announcement follows a trial of the drug in over 11,000 patients with heart conditions which found its use leads to a 14% drop in the risk of death and a 29% drop in the rate of hospitalisations compared with using a placebo.
The Cambridge-based company first developed the drug as a treatment for type-2 diabetes in partnership with US pharma company Bristol Myers Squibb. It was approved for medical use by the European Union drugs regulator in 2012.
Dechra acquires Med-Pharmex in $260 million deal
10:57 , Simon Hunt
FTSE 100 veterinary drugs group Dechra has acquired veterinary pharmaceutical manufacturer Med-Pharmex in a $260 million (£222 million) deal.
Dechra said the deal provides further product scale to its US operations, with plans to make its own products using Med-Pharmex’s manufacturing facilities.
California-based Med-Pharmex employs 130 people and produces treatments and medicines for livestock and pets, including Ivermectin, a dewormer treatment for horses.
Last year, the US drug regulator clarified that Ivermectin was harmful to humans amid concerns it was being used to treat coronavirus infections.
Dechra said the deal would be funded from existing debt facilities. It shares grew 1.8% to 3,500p this morning.
Banks and oil stocks lead FTSE 100 rally
09:59 , Graeme Evans
An unexpected bounce for the FTSE 100 index was fuelled by BP and Shell today as traders returned from the long weekend with Brent crude back near $105 a barrel.
Speculation over further supply tightness as oil cartel OPEC and its allies mull potential output cuts caused Monday’s price spike, having been at $90 less than a fortnight ago.
London’s oil majors jumped 2%, with BP up 10.95p at 468.75p and Shell ahead by 52p at 2386p, to help the FTSE 100 index overcome a weak handover from Wall Street and improve 0.7% or 54.91 points to 7482.22.
Banks were also higher amid expectations of further margin-boosting interest rate hikes by the Federal Reserve and other “hawkish” central banks. HSBC rallied 12.8p to 535.8p and Barclays rose 4.7p to 166.8p.
Other blue-chip risers included bottling business Coca-Cola HBC, which jumped 62p to 2042p after analysts at Barclays upped their target to 2,600p.
Bunzl fell 139p to 2976p, despite the supplier of essential items for retailers and other key industries upping full-year margins guidance. The decline reflected profit-taking after a big jump for shares since June.
The FTSE 250 index surged 0.8% or 154.03 points to 19,323.75, led by Aston Martin Lagonda with a rise of 25.5p to 451.1p and including a 4% rise for Royal Mail amid ongoing speculation over stake-building by Czech billionaire Daniel Kretinsky.
There was no BP-style bounce for the UK’s Harbour Energy, despite talk that PM frontrunner Liz Truss wants to grant more North Sea drilling licences in order to boost energy security. Shares were 1.1p higher at 493.2p, having rallied from 298.5p in July.
On AIM, Revolution Beauty was 0.3p lower at 17.2p after it confirmed annual results won’t be published in time to avoid a suspension of shares from Thursday.
Prepare for a bonfire of the bankers
09:36 , Simon English
BANKERS returning to town after a good summer and a bank holiday can be forgiven for having less than a spring in their step.
Some of them surely know their jobs are at risk.
First some statistics: Refinitiv says that fees to banks from floats, takeovers and other market activity are down to $3.2 billion so far this year, compared to $5.6 billion at the same point in 2021.
During peak Covid, investment banks had (too) much to do. Nearly all clients needed their advice, their money-raising skill, and their connections.
The bankers did well.
Now many clients are sitting on their hands while they see how bad the energy crisis and likely recession turn out to be.
Which means at the moment there is less trade for the lads in shirt sleeves and cufflinks (they are still mostly men).
The chattier bankers, and those who have seen it all before, think there is good reason to worry.
One, going through the post Covid what-am-I-doing-with-my-life panic is blunt. “One way or another, I won’t be here at Christmas”, he says.
That’s just one guy. What else do we know? Well we know that Goldman Sachs has already said it will cut 5% of staff this year, a resumption of a strategy it had before the pandemic.
Since it employs about 45,000 people, that’s more than 2000 for the chop. Where Goldman goes, others follow.
Credit Suisse, which as usual has self-inflicted problems of its own, hasn’t officially made decisions on job cuts, but is open about needing big cost savings, and staff are the biggest expense.
Outside the City, no one cries for financial job losses. Bonfire of The Bankers type headlines are not written in sympathy.
It seems likely we will see a few of them before the year is out.
BP and Shell drive FTSE 100 resilience
08:39 , Graeme Evans
London shares have made a stronger-than-expected start to the week, with the FTSE 100 index up 0.4% or 34.13 points to 7461.44.
BP and Shell drove the top flight improvement, rising by 2% after Monday’s speculation over OPEC+ production cuts led to Brent crude futures trading above $104 a barrel.
Other commodity prices moved in the opposite direction to leave miners including Anglo American and Antofagasta more than 2% lower.
Distribution and services business Bunzl led the FTSE 100 fallers board, sliding by 6% or 204p to 2911p even though its interim results included an upgrade to full-year guidance.
The FTSE 250 index improved 44.65 points to 19,214.37, with Virgin Money and Aston Martin Lagonda 3% higher.
FTSE 100 lower after Wall Street fall
07:55 , Graeme Evans
The Nasdaq fell 1% and the S&P 500 dropped 0.7% last night as traders reacted to Federal Reserve chair Jerome Powell’s determination to bring down inflation even if higher interest rates trigger a recession.
Michael Hewson, chief market analyst at CMC Markets, said: “Powell’s message couldn’t have been any clearer that the Fed will keep going until the job is done.
“The pity being it took so long for investors to take notice, as stock markets dropped and bond yields spiked higher.”
With financial markets now braced for another 0.75% increase in US interest rates next month, the dollar hit a new 20 year high against a basket of major currencies.
The pound also slipped below 1.17 for the first time since March 2020 at one point yesterday as concerns about the UK economy took its toll.
The FTSE 100 index closed 0.7% lower after Powell’s speech on Friday, leaving the top flight down 1.6% over the week.
CMC expects a decline of 12 points at 7,415 as traders catch up on Wall Street developments after the bank holiday, whereas markets on the continent are poised to find positive territory.