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London open: FTSE edges lower; US debt ceiling talks remain in focus
London stocks edged lower in early trade on Wednesday following a downbeat session on Wall Street, as investors continued to keep their eye on US debt ceiling talks.
At 0830 BST, the FTSE 100 was down 0.2% at 7,734.44.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Investors are staying cautious as talks aimed at averting a US default continue, with US Treasury Secretary warning that deep cracks in the financial system would appear if budget agreement is not reached.
“However, there is a small sliver of more optimism with the Republican Speaker of the House of Representatives, Kevin McCarthy, saying that progress can be made by the end of the week.”
In equity markets, credit-checking firm Experian was under the cosh after it reported a 19% drop in full-year pre-tax profit.
London Stock Exchange Group fell after a consortium including Blackstone and Thomson Reuters sold 33m shares in the company in a placing.
British Land slumped after it said the value of its portfolio declined by 12.3% in the year to the end of March as higher interest rates had an impact on property yields.
JD Sports Fashion was in the red even as it said it expects annual profit to pass £1bn after a record result in the year to January 28.
Watches of Switzerland tumbled as it hailed a “strong” full-year performance in line with guidance, with record revenues and profitability, but warned of an expected sales decline in the first quarter.
On the upside, software firm Sage rallied after posting well-received first-half results and upgrading its outlook for full-year recurring revenue growth.
Auction Technology and Bank of Georgia were also up after results.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sage Group Plc | +3.95% | +32.40 | 853.40 |
| 2 |  |
Rolls-royce Holdings Plc | +1.72% | +2.55 | 150.70 |
| 3 |  |
Rio Tinto Plc | +1.53% | +75.00 | 4,991.50 |
| 4 |  |
Easyjet Plc | +1.42% | +7.20 | 513.00 |
| 5 |  |
Glencore Plc | +1.25% | +5.40 | 437.50 |
| 6 |  |
Dcc Plc | +1.11% | +53.00 | 4,838.00 |
| 7 |  |
Standard Chartered Plc | +1.10% | +6.80 | 626.60 |
| 8 |  |
Antofagasta Plc | +0.89% | +12.50 | 1,416.50 |
| 9 |  |
Smith & Nephew Plc | +0.89% | +11.50 | 1,310.50 |
| 10 |  |
Bp Plc | +0.87% | +4.15 | 480.10 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British Land Company Plc | -6.83% | -25.80 | 352.10 |
| 2 |  |
Croda International Plc | -4.73% | -316.00 | 6,364.00 |
| 3 |  |
Experian Plc | -4.56% | -125.00 | 2,615.00 |
| 4 |  |
Ocado Group Plc | -3.33% | -13.80 | 400.40 |
| 5 |  |
Imperial Brands Plc | -2.45% | -45.00 | 1,794.00 |
| 6 |  |
Land Securities Group Plc | -2.17% | -13.80 | 620.80 |
| 7 |  |
Kingfisher Plc | -1.49% | -3.60 | 238.70 |
| 8 |  |
Persimmon Plc | -1.45% | -19.50 | 1,322.00 |
| 9 |  |
Next Plc | -1.45% | -98.00 | 6,644.00 |
| 10 |  |
Intertek Group Plc | -1.25% | -51.00 | 4,038.00 |
US close: Stocks fall on debt ceiling worries, consumer sentiment
Wall Street ended in the red on Tuesday, as stocks fell across the board in response to ongoing uncertainties surrounding the federal debt ceiling.
The Dow Jones Industrial Average closed down 1.01% at 33,012.14, while the S&P 500 fell 0.64% to 4,109.90, and the tech-heavy Nasdaq Composite slipped 0.18% to end the day at 12,343.05.
Investors were closely monitoring the discussions between the White House and Congress as the deadline loomed.
Sentiment was also impacted by disappointing earnings results from the likes of Home Depot.
On the currency front, the dollar was last up 0.05% on sterling to trade at 80.12p, while it weakened slightly by 0.01% against the euro to 90.05 euro cents.
The greenback also managed gains on the yen, advancing 0.02% to change hands at JPY 136.42.
“Comments from House Speaker Kevin McCarthy that there had been no progress on debt ceiling talks in contrast to more recent optimistic comments from Lael Brainard has seen markets drift lower,” said CMC Markets chief market analyst Michael Hewson.
“Sentiment hasn’t been helped by some disappointing first quarter numbers from DIY retailer Home Depot.
“The weak outlook has also put downward pressure on the wider sector with Lowes and Target share prices also under pressure, and Target due to report tomorrow.”
Consumer spending rise comes in below forecasts
On the economic front, consumer spending in the US saw a moderate upturn last month, albeit at a slower rate than initially projected.
According to data from the Department of Commerce, the country saw month-on-month retail sales growth of 0.4%, reaching a total of $686.1bn, falling short of the anticipated 0.7% surge.
“’Control’ retail sales, which feed into the GDP calculation, rose 0.7% in April, more than recouping March’s decline,” noted Oren Klachkin, lead US economist at Oxford Economics.
“Fortunately for Fed officials, they have another month’s worth of economic data – including another CPI inflation and jobs report – released before the June FOMC meeting to decide whether to raise interest rates again.
“While inflation remains far above the 2% objective, we think Fed officials will stand pat next month and let tighter bank lending standards do some of their work for them.”
Meanwhile, America’s industrial sector saw a recovery in production after two consecutive months of stagnation, fuelled by a revival in factory activities.
The Department of Commerce reported a 0.5% month-on-month increase in seasonally adjusted total production, slightly surpassing the consensus estimate of 0.4%.
Home Depot takes a hit, Capital One up on Berkshire investment
In equities, Home Depot shares took a hit, closing 2.15% lower, after the company announced sales that fell significantly short of estimates for the last quarter.
The home improvement retail giant also cut its full-year sales guidance amid slower demand.
Horizon Therapeutics‘ also faced a tough day, plummeting 14.17% on the back of reports that the Federal Trade Commission was considering trying to block its $27.8bn acquisition by biotech firm Amgen.
Amgen shares were also negatively affected, ending the day down 2.42%.
On the upside, Capital One Financial Group‘s stocks rose 2.05%, buoyed by the news of Warren Buffett’s Berkshire Hathaway investing nearly $1bn through the first quarter.
The investment led to Berkshire amassing a 2.6% holding in the credit card and banking provider.
Wednesday newspaper round-up: Crypto trading, Capita, executive pay
Britons have packed away enough possessions to fill Buckingham Palace more than 60 times over as the housing crisis, enduring consumerism and a sentimental reluctance to let go of inanimate objects means self-storage is now on the brink of becoming a £1bn-a-year business. Self-storage units are proving cheaper than renting or buying a bigger home and are springing up alongside new housing developments across the UK, with at least 280 more stores planned between now and 2026 – a more than 10% increase. – Guardian
UK authorities should regulate cryptocurrency trading as a form of gambling rather than a financial service, parliament’s Treasury committee has said after a fresh inquiry into the industry. The government must avoid wasting more taxpayer funds promoting tech innovations such as digital tokens, without demonstrating the clear benefits to the public, MPs said in a report published on Wednesday. – Guardian
Tech companies are in danger of unleashing a rogue artificial intelligence that will cause “significant harm to the world” without urgent intervention by governments, the creator of ChatGPT has admitted. Appearing before US politicians, OpenAI chief executive Sam Altman lauded the new generation of digital chatbots for their potential to “improve nearly every aspect of our lives”. – Telegraph
Britain’s biggest outsourcer has been lambasted for allowing the “unsafe storage of personal data” after it was hit by another data breach. It is understood Capita had placed a “bucket” or database with open source software and information in the cloud, including user guides and notes which are routinely published alongside software releases, but it also contained some personal data belonging to Colchester city council that should not have been there. – The Times
Executive pay in Britain must compete globally to attract talent for the financial sector, the City minister has said. At an event hosted by UK Finance, the industry trade body, in London yesterday, Andrew Griffith said: “Remuneration here needs to be competitive. We need to attract the brightest and best to these shores — the last thing we want to do is drive them away.” – The Times
