FTSE 100 today: London set to open soft amid US political uncertainty

FTSE 100 today: London set to open soft amid US political uncertainty

Moving markets today: Asian stocks mixed; US dollar rises on Trump-win expectations, China Q2 growth weaker than expected; Netflix and major banks lead Q2 earnings week

Asian markets showed varied responses to news of an attempted assassination targeting Trump. The US dollar strengthened, while S&P 500 futures remained stable. Bitcoin surged to $60,000 in the midst of these developments. Japan’s markets remained closed due to a public holiday. Oil prices continued to decrease as the dollar strengthened in the aftermath of the Trump attack. Meanwhile, gold prices saw a slight decline as the dollar remained robust. Investors are now focusing on statements from Federal Reserve officials and upcoming economic data to gauge the direction of US interest rates. China reported a second-quarter GDP growth of 4.7 per cent year-on-year, which fell short of expectations. Swati Dhingra, a member of the Bank of England’s interest rate committee, indicated that a sharp increase in inflation in the UK was unlikely and recommended lowering borrowing costs. In the UK, a survey by Rightmove revealed a decrease in asking prices for homes this month, as potential buyers anticipated potential interest rate cuts by the Bank of England. This week, China hosts the Third Plenum in Beijing, focusing on key policy discussions. Meanwhile, the State Opening of Parliament in the UK marks the unveiling of legislative plans by the new Labour government after a 14-year hiatus. In the US, major companies such as Goldman Sachs, BlackRock, Bank of America, Morgan Stanley, Netflix, and Taiwan Semiconductor Manufacturing are set to release their second-quarter earnings reports. Economic attention also turns to the European Central Bank’s upcoming rate decision and inflation updates expected from Britain and Japan. The FTSE 100 closed higher on Friday, with futures indicating a weak start for Monday’s trading session.

Here are five key takeaways for your day.

China’s Q2 GDP grows 4.7 per cent year-on-year

China’s economy expanded by 4.7 per cent year-on-year in the second quarter, according to official data released on Monday, falling short of economists’ expectations despite efforts to boost domestic demand amidst a prolonged property downturn. 

Economists had anticipated a 5.1 per cent growth rate, slightly lower than the 5.3 per cent recorded in the previous quarter. Quarter-on-quarter, GDP grew by 0.7 per cent from April to June, below the expected 1.1 per cent increase and a decline from the revised 1.5 per cent growth seen in the preceding quarter.

Furthermore, in recent developments, new home prices in China experienced their most significant drop in nearly nine years during June. Property investment across the country declined by 10.1 per cent in the first half of 2024 compared to the same period last year, matching the downturn observed from January to May.

This suggests that the real estate sector continues to face challenges despite efforts from policymakers to bolster it. On Monday, China’s central bank maintained its medium-term lending rate unchanged as expected, while renewing maturing medium-term loans.

Dhingra urges BOE to lower interest rates now

Swati Dhingra, a member of the Bank of England’s interest rate committee, stated that a sharp rise in inflation in Britain is unlikely and recommended that the central bank lower borrowing costs.

“Now is the time to start normalising (interest rates) so we can then finally stop squeezing living standards the way we have been to try and get inflation down,” Dhingra told The Rest is Money podcast in an interview broadcast on Monday, Reuters reported.

UK home prices drop: Rightmove

According to a survey by Rightmove, asking prices for British homes dropped this month as some buyers wait for the Bank of England to lower interest rates. The average asking price for homes listed between June 9 and July 6 was £373,493, which is 0.4 per cent less than the previous month but 0.4 per cent higher than a year ago.

In other news, the new Labour government announced plans to introduce strict rules on government spending and to strengthen the role of the official budget watchdog in its upcoming legislative agenda.

What’s to watch this week

This week, China’s focus is on the Third Plenum, held from Monday to Thursday in Beijing.

In the UK, the highlight is the State Opening of Parliament, where the new Labour government will unveil its legislative plans for the first time in 14 years.

The second-quarter earnings season is ramping up, especially in the US, with many companies set to report. This week, a number of notable companies are set to announce their earnings, including Goldman Sachs, BlackRock, Bank of America, Morgan Stanley, Netflix, and Taiwan Semiconductor Manufacturing.

Key economic updates are also on the horizon, including the European Central Bank’s rate decision, which is expected to stay the same but might offer hints about future changes, along with inflation data from Britain and Japan.

Asian stocks mixed, US dollar gains on Trump victory expectations

Former President Donald Trump was shot in the ear during a campaign rally in Pennsylvania on Saturday, which the FBI is treating as an assassination attempt.

Australian and South Korean stocks saw positive movements, contrasting with Hong Kong futures pointing to a potential early decline at the market open.

Australian bond yields showed a slight decrease, while Bitcoin surged past $60,000 following recent market developments.

In specific indices, Hong Kong’s Hang Seng index dropped 0.4 per cent, whereas China’s CSI 300 index rose 0.16 per cent after the release of economic data. South Korea’s Kospi index dipped 0.11 per cent, and the smaller Kosdaq index fell 0.24 per cent.

Australia’s S&P/ASX 200 continued its upward trend for the third consecutive day, rising 0.79 per cent to reach a new all-time high, making it the sole major Asian benchmark in positive territory.

Japan’s markets remained closed due to a public holiday. Futures for the S&P 500 and Nasdaq showed marginal gains, while EURO STOXX 50 futures also edged upwards.

Meanwhile, in the UK, the FTSE 100 climbed 0.36 per cent on Friday, but futures indicated a weaker start to Monday’s trading with a 0.21 per cent decline to 8,259.0 points.

In commodity markets, gold held steady at $2,408 per ounce, just shy of last week’s peak at $2,424. Oil prices rebounded slightly after Friday’s decline amidst progress towards a ceasefire between Israel and Hamas.

Brent crude rose by eight cents to $85.11 per barrel, while US crude also increased by eight cents to $82.29 per barrel.