Yahoo Finance LIVE: Wall Street mixed while FTSE falls as UK recession fears return
A look at how the major markets are performing on Tuesday
Wall street opened mixed while the FTSE 100 and European stocks closed lower on Tuesday afternoon as investors digested new data showing falling UK house prices and weak manufacturing output.
Nationwide reported that house prices fell 3.8% in the year to July 2023, its biggest annual drop in 14 years, while manufacturers also suffered their worst month of the year.
FTSE 100 and European stocks
The FTSE 100 (^FTSE) ended the session in the red, down 0.43% to 7,665.42 points, while the CAC 40 (^FCHI) in Paris fell 1.23% to 7,404.88 points. In Germany, the DAX (^GDAXI) declined by 1.19% to 16,265.27 points.
Investors were also keeping across the latest financial results, including from HSBC (HSBA.L), BP (BP.L) and Diageo (DGE.L), ahead of more big earnings releases this week.
The British bank’s net profit more than doubled to $18.1bn (£14.1bn) in the six months to the end of June — a big jump from the $9bn reported for the same period a year earlier.
HSBC announced a second interim dividend of $0.10 per share, and a further share buyback of up to $2bn.
Oil company BP posted a near 70% year-on-year drop in second-quarter profits due to weaker commodity prices. However, it boosted its dividend by 10% to 7.27 cents per ordinary share for the second quarter and said it would repurchase $1.5bn of its shares over the next three months.
Meanwhile, spirits giant Diageo beat its full-year sales forecasts as customers continued to buy alcohol despite the high prices. The company said organic net sales rose 6.5% in the year to June 30.
Read more: UK house prices fall at fastest rate since 2009
US and Asia
US stocks were mixed on Tuesday with the Dow Jones (^DJI) up 0.19% to 35,618.80 points, the S&P 500 (^GSPC) down 0.24% to 4,577.92 points, and the tech-heavy NASDAQ (^IXIC) also in the red, falling 0.55% to 14,264.26.
“The earnings season has provided more upside surprises than expected so far, albeit against a fairly low level of expectations. It is estimated that with around half of the current season now complete, around 80% of companies have beaten analyst expectations, even to the level of the mega-cap technology shares which have been major contributors to excess Nasdaq gains this year. A further test to this optimism will come later in the week as both Apple and Amazon provide their latest trading updates,” Richard Hunter, head of markets at Interactive Investor, said.
The non-farm payrolls figure on Friday will also provide a key indication in the latest state of play in what has been a resilient labour market.
“The consensus is that 200,000 jobs will have been added in July, which compares with a number of 209,000 in June, although equal attention will be given to both the unemployment rate as well as the level of wage growth,” he added.
In Asia, the markets were mixed overnight. Tokyo’s Nikkei 225 (^N225) rose 0.92% to close at 33,476.58 points, while the Hang Seng (^HSI) in Hong Kong lost 0.76% to 19,928.54. In mainland China, the Shanghai Composite (000001.SS) also declined, by 0.13% to 3,286.25 points.
Pound
In currencies, the pound to dollar exchange rate (GBPUSD=X) was trading down at 1.28, meaning £1 will get you $1.28. Meanwhile the pound to euro exchange rate (GBPEUR=X) was at 1.16.
Oil prices
In commodities, oil prices reversed gains in early trade as investors digested economic data from China after the country’s manufacturing sector showed another contraction in July.
US crude oil, or West Texas Intermediate (CL=F), lost 0.34% to trade at $81.52 a barrel, while Brent crude (BZ=F) fell 0.06% to $85.51 a barrel.
Economic data
The Caixin China General Manufacturing PMI came in at 49.2 in July — 1.3 points lower than the June reading. It was the first time in three months that Chinese manufacturing conditions contracted, indicating a weakening sector.
In Australia, the Reserve Bank of Australia (RBA) left interest rates on hold for a second consecutive month, remaining at 4.1%, in line with better inflation data.
The RBA's governor, Philip Lowe, recently noted that further tightening "will depend upon how the economy and inflation evolve".
Read more: Trending tickers: BP | HSBC | Greggs | Diageo
In Germany, the unemployment rate decreased to 5.6% in July from 5.7% in June this year. The number of unemployed people decreased by 4000 to 2.604 million people in July 2023, following an upwardly revised 30,000 increase in June.
Other economic data due this week includes the US ADP employment report for July on Wednesday with the private payroll survey expected to show an increase of 210,000 jobs, compared to 497,000 in June.
US EIA crude oil inventories (w/e 28 July) will also be released on Wednesday.
On Thursday, China Caixin services PMI data for July will be released with the index expected to fall to 52 from 53.9.
Bank of England rate decision
The Bank of England (BoE) will also announce its latest interest rate decision on Thursday. Rates are expected to rise 25bps as the Bank seeks to bring inflation under control.
Matthew Ryan, head of market strategy at financial services firm Ebury, said: “Sterling reacted surprisingly well to the poor PMIs of business activity published last week. However, a gap is developing between these business surveys and actual economic data, which continues to show resilience and is consistent with a tight labour market and plenty of consumer firepower.
Read more: Bank of England likely to raise interest rates to new high
“Expectations for the Bank of England meeting this week have cooled ever since the recent positive surprise on inflation, although markets are still pricing in a small chance of a 50bp hike, with the certainty that we will get at least a 25bp one. As usual, the key to the reaction in the pound will be the voting pattern among MPC members," he added.
Thursday will also see the release of US initial jobless claims for the week ending 29 July, with claims expected to rise to 225,000.
On Friday, US non-farm payrolls data for July and Canada's employment data for July will be released.
Watch: MD, JetBlue, Starbucks earnings, manufacturing data: What to watch Tuesday
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