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London open: Stocks edge down ahead of OPEC meeting, services data
London stocks fell in early trade on Wednesday, taking their cue from a downbeat session on Wall Street as investors eyed an OPEC+ meeting and the latest reading on the UK services sector.
At 0825 BST, the FTSE 100 was down 0.4% at 7,382.74.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “There are jitters flowing through the oil market today, ahead of an OPEC+ meeting which is expected to bear little fruit when it comes to changing current output mandates. This feeds into anxieties about constrained supply which consumers and wholesalers are very well-versed in at this point.
“The interesting flipside is that anxieties about a petering of demand seem to be winning in the battle of sentiment. Very real questions about the health of the global economy mean demand for oil and gas could be in for a contraction that’s so sharp, the supply concerns are void.”
On the macroeconomic front, all eyes will be on the S&P Global/CIPS services PMI for July due at 0930 BST, which is expected to have eased to 53.3 from 54.3 the month before.
In equity markets, British Gas owner Centrica slid after a downgrade to ‘neutral’ at Citi, while Kingfisher was knocked lower by a downgrade to ‘sell’ at Societe Generale.
Hiscox tumbled after the insurer said it swung to an interim loss despite a strong underwriting performance.
Hill & Smith was also weaker despite reporting a jump in first-half profit and revenue as it took pricing actions to recover input cost inflation.
On the upside, house builder Taylor Wimpey gained after saying it expects full-year profits to be at the upper end of forecasts as it reported a rise in interim earnings, driven by strong selling prices.
Engine maker Rolls-Royce was also up as it said the Spanish government had approved the sale of its ITP Aero subsidiary to a consortium of investors led by Bain Capital Private Equity.
Avast shares rocketed after the Competition and Markets Authority provisionally cleared its $8.6bn acquisition by NortonLifeLock.
BAE Systems was boosted by an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan Cazenove, while Virgin Money was lifted by an upgrade to ‘outperform’ at Macquarie.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Taylor Wimpey Plc | +4.29% | +5.15 | 125.20 |
| 2 |  |
Rolls-royce Holdings Plc | +3.09% | +2.71 | 90.51 |
| 3 |  |
Tui Ag | +3.03% | +4.00 | 136.05 |
| 4 |  |
Flutter Entertainment Plc | +2.61% | +212.00 | 8,330.00 |
| 5 |  |
International Consolidated Airlines Group S.a. | +2.36% | +2.74 | 118.98 |
| 6 |  |
Bae Systems Plc | +2.22% | +17.80 | 820.00 |
| 7 |  |
Standard Chartered Plc | +1.89% | +11.00 | 594.00 |
| 8 |  |
Persimmon Plc | +1.78% | +32.50 | 1,857.50 |
| 9 |  |
Carnival Plc | +1.59% | +10.80 | 689.80 |
| 10 |  |
Bp Plc | +1.52% | +6.15 | 409.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hiscox Ltd | -4.25% | -37.20 | 838.60 |
| 2 |  |
Fresnillo Plc | -3.00% | -21.40 | 691.00 |
| 3 |  |
Croda International Plc | -2.94% | -218.00 | 7,202.00 |
| 4 |  |
Kingfisher Plc | -2.81% | -7.00 | 242.40 |
| 5 |  |
Centrica Plc | -2.80% | -2.50 | 86.64 |
| 6 |  |
Gsk Plc | -2.28% | -38.60 | 1,656.40 |
| 7 |  |
Sainsbury (j) Plc | -1.72% | -3.80 | 216.90 |
| 8 |  |
Itv Plc | -1.64% | -1.18 | 70.60 |
| 9 |  |
Astrazeneca Plc | -1.63% | -176.00 | 10,604.00 |
| 10 |  |
Smith & Nephew Plc | -1.23% | -12.50 | 1,006.00 |
US close: Stocks take a dip on Pelosi’s Taiwan trip
Wall Street stocks closed below the line on Tuesday, amid heightened tensions between the US and China as House Speaker Nancy Pelosi touched down in Taiwan.
At the close, the Dow Jones Industrial Average was down 1.23%, as the S&P 500 lost 0.67% to 4,091.19 and the Nasdaq Composite was off 0.16% at 12,348.76.
The Dow closed 402.23 points lower on Tuesday, extending the losses it recorded in the previous session on Monday.
“US markets are leading the losses today, as fears around a potential military escalation with China bring risk-off sentiment back into play,” said IG senior market analyst Joshua Mahony.
“While we are still to hear from the remaining 36% of the S&P 500 that are yet to report, the reaction to a largely better-than-expected earnings season has mostly been priced in by this point.”
Mahony said that as a result, the week had seen markets shift focus to the risk posed by the fact that Nancy Pelosi landed in Taipei earlier in the day, despite Chinese government warnings.
“Sharp volatility for dollar-offshore renminbi highlights market uncertainty over how the trip will play out, but ultimately it is likely that this current posturing will soon blow over despite a short-term rise in tensions.”
Tuesday’s primary focus was news that Californian Democrat Pelosi had landed in Taiwan, to reportedly spend the night in the country.
Chinese officials spent recent days threatening to take action if she went ahead with the visit, which would be the first by a House Speaker since Newt Gingrich landed in 1997.
Beijing’s foreign ministry spokesman Zhao Lijian warned the United States that China was “standing by” and the Chinese People’s Liberation Army will “never sit idly by”.
He said China would take “resolute responses and strong countermeasures” to defend its sovereignty and “territorial integrity”.
On the economic front, US job openings fell by 605,000 month-on-month to 10.7m in June, the lowest reading in nine months and below market expectations of 11.0m, according to the Bureau of Labor Statistics.
That was driven by large decreases in retail trade, wholesale trade, and state and local government education.
Quits remained unchanged at 2.8%.
In the corporate space, brewer Molson Coors was 10.46% flatter after it reported a drop in quarterly profits, despite a fifth consecutive period of net sales growth.
On the upside, ride-hailing and takeaway-pedalling platform Uber Technologies surged 18.9% after it topped analyst expectations on revenue.
Wednesday newspaper round-up: Petrol prices, Robinhood, Cazoo
Petrol prices at the pumps are not falling fast enough and in line with wholesale price drops, according to the RAC. Over the last eight weeks, the average price paid for unleaded by drivers across the UK has only dropped by 9p a litre- all of which came off in July – despite wholesale petrol prices falling by 20p in the same time period. – Guardian
Robinhood, the trading platform that gained notoriety for allowing amateur stock investors to play the market, is laying off nearly a quarter of its staff – citing economic conditions and the crash of the cryptocurrency market. The news it was slashing 23% of its staff came as the company posted a 44% decline in revenues on slumping trading activity, in a surprise earnings report that came one day earlier than scheduled, and sent the company’s shares down more than 3% in extended trading. – Guardian
Airbnb has unveiled record bookings as the travel industry recovers from the pandemic and hosts scramble to sign up. The holiday rental firm said it is “in the midst of our strongest peak travel season yet” and July 4 was its highest single day revenue ever. The US company expects to deliver record revenue and profits in its third quarter, ending in September. – Telegraph
Two American law firms have leap-frogged “magic circle” competition to become the highest earning practices in the City as US lawyers continue to flex their muscles in London. Figures published today show that Latham & Watkins, which has its headquarters in Los Angeles, has seen revenue from advice on corporate deals at its Square Mile office rocket by nearly 170 per cent in two years to a current annual figure of £270 million. – The Times
Cazoo has launched a strategic review of its operations in mainland Europe just months after the heavily lossmaking online car retailer launched a big expansion in the region. The company posted record revenues and sales in the second quarter on the back of strong UK growth, but said its focus must be on preserving cash after losses more than doubled. – The Times
