FTSE 100 and European equities snap losing streak as US stocks near record highs

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Pest control and hygiene firm Rentokil was one of the best performing stocks in the FTSE 100 (^FTSE) this session on the back of a note from RBC Capital Markets.

Analysts updated their earnings forecasts for forex (-1% to -2%), and expect first-half results to be in line with the market's expectations, "with acceleration of US organic growth through this year".

The stock has also been boosted after activist investor Nelson Peltz amassed a “significant” stake in the company and has “reached out to discuss ideas and initiatives to improve shareholder value”.

Rentokil has been a volatile stock, with the London-listed business struggling in recent years, with its expansion into the US falling flat on softer demand for its products.

Russ Mould, investment director at AJ Bell, said Peltz is likely to facilitate a big shake-up at the business.

"[Rentokil] has struggled in comparison with its US peer Rollins, both in share price terms and financial performance," he says.

"Given Rentokil does have a large chunk of its business across the Atlantic this could include a push to shift its primary listing to the US."

Here's Chris Beauchamp, chief market analyst at online trading platform IG on the moves in US stocks:

“It’s not likely that the Nasdaq 100 can go up indefinitely while other indices slip back, but traders continue to chase momentum in the likes of Nvidia. Small caps continue to be the worst affected in the US, with the Russell 2000 hitting an new six-week low today.”

Citigroup has moved its opinion on European shares from overweight to neutral, instead touting US growth stocks, which got an upgrade.

Analysts said US stocks have a "substantially higher growth tilt relative to Europe".

Shopify got a boost on Friday after an analyst at Evercore ISI said now was the time to buy stock in the e-commerce company with shares down this year but the price is being corrected as it remains in the red during pre-market trading.

Evercore has upgraded the rating of SHOP shares to Outperform, setting a price target of $75. This decision comes after a significant drop in the stock’s value, approximately 30% from its 52-week high.

Outperform at Evercore means “the total forecasted return is expected to be greater than the expected total return of the analyst's coverage sector.”

The analyst wrote in a research note that the recent pullback in the stock provides an attractive entry point. Shares of Shopify have dropped 16% this year.

From Yahoo Finance UK reporter Pedro Goncalves:

Shares in Chipotle were higher in pre-market trading as investors are looking forward to its upcoming 50-to-1 stock split.

Chipotle Mexican Grill announced back in March a stock split with one of the biggest multiples ever: Each current share will be split into 50 new shares.

This means that when markets open on June 26, shareholders will own 50 times as many shares as they did at the close of trading on June 25, but the price of each one will be about one-fiftieth of what it was before.

Chief financial officer and chief administrative officer Jack Hartung said the move would help the company "reward our team members and empower them to have ownership in our company."

The company has been red-hot this year, gaining about 70% since last November. TD Cowen has raised its price target for Chipotle from $3,500 (£2761.32) to $3,600, signalling a potential upside of 10%.

Rowan Street Capital are also optimistic about the fast-food chain prospects.

“The best investment ideas are simple. We have previously written about Chipotle Mexican Grill, Inc. It turned out that this was our best investment idea since starting the fund. The stock is up 10x since we first invested at the end of 2017 (~47% annualized),” their analysts wrote.

Output and orders at the UK's manufacturers have picked up, according to a new survey carried out by industry group Make UK, suggesting companies are finally emerging from a post-Covid slump.

According to the survey, the balance on output increased from +5% in Q1 to +9% in Q2, but is forecast to jump to +30% in the next quarter.

Total orders are following a similar pattern, increasing from +7% in Q1 to +14% in Q2 and then jumping to +32% in the next three months.

Export orders (+10%) exceeded UK orders (+2%) highlighting how the UK continues to depend on global value chains for its success but, the pattern since the pandemic when UK orders have consistently exceeded export orders is forecast to resume in the next quarter at +25% and +24% respectively, Make UK said.

Meanwhile, recruitment mains hot for the sector. Hiring intentions increased from +8% to +26% as companies take on staff to meet the expected increase in demand and better economic outlook.

Business confidence has also risen to equal the highest level recorded since the survey started measuring the indicator in 2014. The only previous occasion it reached the current level was during the immediate post covid rebound. Investment intentions moderated however from +15% to +11%.

Here's Anthony Codling from RBC Capital Markets on the Rightmove house price index today:

Here's how stocks are looking ahead of the open at 2.30pm

The UK housing market has kept pace in June, despite a wobble at the top end of the market, according to real estate platform Rightmove's (RMV.L) latest data.

The average price of property coming to the market dropped by £21 this month to £375,110, as prices in June follow the same seasonal pattern as recent years, remaining flat after reaching a record in May.

Price trends meanwhile have differed across the UK, with the strongest price growth in the less expensive and more northerly regions. Five of the six cheapest areas have reached new price records.

By contrast, the higher-priced East of England and London regions have lagged, with this month’s only regional price falls, Rightmove said.

Rightmove cited pent up demand as one reason for some momentum in the market.

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US stocks finished little changed Friday, with the S&P 500 and Nasdaq logging strong weekly performances as Apple's (AAPL) AI strategy and Elon Musk's pay package win at Tesla (TSLA) took centre stage.

The Dow Jones Industrial Average (^DJI) lost about 0.2%, while the S&P 500 (^GSPC) tipped just below the flatline. The tech-heavy Nasdaq Composite (^IXIC) gained 0.1% to eke out its fifth consecutive record close.

The S&P 500 finished up around 1.5% last week, while the Nasdaq gained more than 3%. The S&P notched record closes for four days in a row, while the Nasdaq pulled off the improbable five straight, boosted by strength in techs.

A surprise cooling in wholesale price pressures gave heart to investors betting on two interest rate cuts this year since the decline is likely to be reflected in the coming PCE inflation reading watched by the Federal Reserve.

But the Fed last week dialled down its projected rate cuts from three to one in 2024, keeping the market guessing and leaving stocks vulnerable to shifts in mood. Strength in technology names has driven broader gains, earning the S&P 500 and the Nasdaq multiple record closes for the week. But the Dow suffered a loss for the week, as questions persist about the breadth of this year's rally.

Stocks were mixed overnight in Asia with heavy selling across Japanese stocks. The Nikkei fell 1.8% in the session as traders looked to the economic environment in across the world, including political uncertainty in France and central bank moves in the US.

Last week, French president Emmanuel Macron announced a snap election after his party lost ground in the European parliamentary polls.

Meanwhile, the US Federal Reserve have put out signals which suggest just one rate cut this year following unemployment and inflation data that suggests the economy is still not on steady enough footing for more than one rate cut.

The Hang Seng (^HSI) in Hong Kong, meanwhile, rose 0.1%, lifted by tech giant Tencent, which was up almost 1.5%

Hello from London. It's a sunny day here, and we'll be looking to various central bank updates from Christine Lagarde at the ECB and Patrick Harker at the US Federal reserve.

Let's get to it.