FTSE 100 and European markets fall, US up as retail sales data pushes higher

Lucy Harley-McKeown
Updated
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The FTSE 100 and European stocks were trading lower on Tuesday for a second session, as confidence eluded the market. US stocks rose, meanwhile, following positive retail sales data and remarks from Federal Reserve chair Jerome Powell on Monday that signalled the central bank is nearing the time when it can start cutting interest rates.

  • The FTSE 100 (^FTSE) fell 0.2% by the end of the session, while the DAX (^GDAXI) pulled back 0.4%. The CAC (^FCHI) in Paris was 0.6% lower.

  • The pan-European STOXX 600 (^STOXX) fell 0.3%.

  • London listed grocery and warehousing tech company Ocado (OCDO.L) is one of the winners so far today, up as much as 17% after the opening bell after it raised its cashflow targets — losses at the company narrowed by £153m for the first half of the year. It closed about 5.5% higher.

  • In the US, the Dow (^DJI) rose 0.5%, the S&P 500 (^GSPC) was up 1.5% and the Nasdaq (^IXIC) headed 0.1% into the green.

  • US retail sales, excluding the impact of a cyberattack on auto dealerships, rose in June by the most in three months. The uptick suggests resilient consumer spending as Q2 rounds to a close. Retail purchases excluding motor vehicles, not adjusted for inflation, rose 0.4% last month.

  • Comments from the Fed also bolstered sentiment. "We didn't gain any additional confidence in the first quarter, but the three readings in the second quarter, including the one from last week, do add somewhat to confidence" inflation is moving toward the Fed's 2% target," Powell said during an interview at the Economic Club of Washington on Monday.

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    Growth worries bring jitters to European stocks and oil

    Axel Rudolph, Senior Market Analyst at online trading platform IG explains:

    "Concerns over weakening demand from China led to a second day of falling retail and mining sector stocks in the UK and Europe as German investor morale worsened for the first time in a year. On the other side of the Atlantic the S&P 500 and Dow hit fresh record highs despite slowing retail sales as the core metric rose the most since April of last year, pointing to robust consumer spending. An around 95% probability of a September Fed rate cut also contributed to the buoyant mood."

    "The crude oil price dropped for a third consecutive day, by around 1.5%, to its lowest level in three weeks as the Chinese economy slows down. Gold and silver prices both gained around a percentage point."

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    Revolut in talks with Tiger for $500m share deal

    Tech investor Tiger is in talks with banking app Revolut to lead a new investment round, according to a report by Sky News.

    Tiger is an existing Revout investor, having led the company's $800m primary funding round in 2021. In this round, the fintech is hoping for a valuation of between $40bn and $45bn, according to the report.

    Revolut didn't respond to a request for comment, while Tiger declined to comment.

    The firm said it had 6.8 million UK customers in 2023, but is yet to clinch a banking license on home turf.

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    How US stocks are faring at the open

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    UK antitrust watchdog probes Microsoft's Inflection hiring spree

    The UK's Competition and Markets Authority said on Tuesday it has begun an investigation into Microsoft's hiring from Inflection AI, as scrutiny of the burgeoning sector ramps up.

    The deadline for a phase one decision on Microsoft's practices is set for 11 September.

    The moves come after Microsoft joined a $1.3bn funding round for Inflection and later paid $650m to hire the start-up’s chief executive Mustafa Suleyman alongside other people from the business. It also struck a licensing deal for its technology.

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    Read Yahoo Finance's take on Trump's new running mate here.

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    Two BoE rate cuts this year?

    Bloomberg is reporting today that traders are now pricing in two 25bps, or one 50bps rate cut by the end of the year by the Bank of England (BoE), with the potential for that cut to come in one fell swoop later in the year.

    Although bets are partially on a 50bps cut in November, the Bank hasn't hinted such a thing might be on the cards. Bloomberg says there's still uncertainty in the path ahead.

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    Stocks to watch at the US opening bell: Apple

    From Yahoo Finance UK's Pedro Goncalves:

    Apple (AAPL) shares rose to a record high during Monday's trading session and were the number one trending ticker in pre-market trading after Morgan Stanley designated the stock as a "top pick" due to the company's artificial intelligence (AI) push to boost device sales.

    The iPhone maker last month unveiled Apple Intelligence, in a bid to lure customers to upgrade their devices to be able to use the new technology. The move came as Apple was seen as lagging behind Alphabet's (GOOG) Google and Microsoft-backed (MSFT) OpenAI in the AI race.

    "Apple Intelligence is a clear catalyst to boost iPhone and iPad shipments," Morgan Stanley analysts said.

    They added that Apple could sell nearly 500 million iPhones over the next two years. The investment bank previously expected Apple to sell between 230 million and 235 million iPhones annually over the next two years and raised its price target to $273 from $216 based on the new projections.

    The stock has an average rating of "buy" with a median price target of $217, and has outperformed the S&P 500 index this year, according to London Stock Exchange data.

    Apple stock has risen more than 26% year to date and over 8% in the last month.

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    Computer scientist Craig Wright faces potential perjury prosecution over Bitcoin claims

    Computer scientist Craig Wright — who lost in court defending the claim he is Satoshi Nakamoto, the pseudonymous creator of Bitcoin — is now being referred to the Crown Prosecution Service to consider fresh claims of perjury and forgery.

    Wright had been battling with the Crypto Open Patent Alliance (Copa), a non-profit group that claimed he committed “forgery on an industrial scale” to support a “brazen lie” that he was Satoshi.

    The argument led to a five week trial, from which Mr Justice Mellor ruled Wright is not behind the pseudonym and did not write the Bitcoin White Paper.

    The CPS will consider whether criminal charges will now be brought over the claims.

    The news came as the cryptocurrency rallied 1%. The digital asset has been volatile in recent days amid political uncertainty in the US, heading higher amid increasing odds that Donald Trump will be re-elected president.

    With PA reporting

  • Lucy Harley-McKeown

    Germany's ZEW data release

    Flash ZEW data showing:

    • Germany ZEW Survey Expectations Jun: 41.8 (est 41.0; prev 47.5)

    • ZEW Survey Current Expectation Jun: -68.9 (est -74.8; prev -73.8)

    The ZEW is a sentiment indicator created out of a monthly Financial Market Survey.

    And here's what the DAX is doing:

  • Lucy Harley-McKeown

    ... And the stocks at the bottom of the index

    Data: Hargreaves Lansdown
    Data: Hargreaves Lansdown

    Miners are taking a hit today as worries about China's economic growth reverberate around the world.

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    Top gainers in the FTSE this morning

    Data: Hargreaves Lansdown
    Data: Hargreaves Lansdown
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    How US stocks are faring ahead of the open

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    Stocks to watch: Rio Tinto

    Mining firm Rio Tinto’s (RIO.L) London-listed shares fell after it reported second-quarter iron ore shipments below analyst estimates.

    Iron ore production from the group’s Pilbara assets in Western Australia came in at 79.5 million tonnes, 2% lower than the same period.

    Rio said productivity gains offset ore depletion but that production and shipping in the quarter were impacted by a train collision in mid-May, which resulted in around six days of lost rail capacity and full stockpiles at some mines.

    The firm's report comes as hopes for more stimulus in China have helped iron ore prices rebound recently after weak demand from the country's construction sector led to a dull first half.

    "The (Chinese) government has provided additional measures for the property market to destock the large inventory overhang," Rio said on Tuesday.

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    Burberry continues lower

    The share price of luxury clothes company Burberry (BRBY.L) is continuing to lose steam on Tuesday after the news of its leadership shakeup broke on Monday.

    It's currently the biggest faller in the FTSE 100 (^FTSE), down 2.7% as of 9am London time.

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    Overnight in the US

    Overnight, US stock indexes closed higher as bets mount for a summer rate cut by the Federal Reserve.

    Fed Chair Jay Powell gave another signal Monday that the central bank is nearing the time when it can start cutting rates while emphasizing that he wants to stay in his job until his term is up in May 2026.

    Powell cited a recent turnaround in inflation readings following hotter-than-expected data in the first quarter, including the release last Thursday of encouraging numbers from the Consumer Price Index for the month of June.

    The Dow (^DJI) closed 0.5% higher, while the S&P 500 (^GSPC) rose 0.3% and the Nasdaq (^IXIC) was up 0.4%.

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    Tuesday trade in Asia

    Stocks across China are lower again today, falling for a second session following a warning shot on growth in the form of a GDP reading. GDP growth missed economists' expectations for the second quarter sending markets lower on Monday, too.

    China is one of the world's growth engines so shaky numbers can spook investors.

    The Hang Seng (^HSI) in Hong Kong closed 1.5% lower, while the SSE Composite (000001.SS) fell 0.1%.

    It was more positive in Japan, with the Nikkei (^N225) finishing 0.2% in the green. In recent days the Nikkei has pulled back from all-time highs of 42,000 points.

  • Lucy Harley-McKeown

    Good morning!

    Hi again! I'm Lucy Harley-McKeown. It's Tuesday and FTSE 100 futures point to more profit taking for London's premier index when markets open shortly.

    This morning: Germany's ZEW index reading

    Later: US retail sales and Canada's CPI

    Let's get to it.

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