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London open: Stocks rise as StanChart, Smurfit rally
London stocks rose in early trade on Thursday, helped along by solid performances from the likes of Standard Chartered and Smurfit Kappa, as investors mulled the latest policy announcement from the Federal Reserve.
At 0930 BST, the FTSE 100 was up 0.6% at 8,165.74 .
Steve Clayton, head of equity funds at Hargreaves Lansdown, said: “The US Federal Reserve met yesterday and held US rates steady. The move was widely expected after recent economic data showed the US struggling still to get the inflation genie back inside the lamp. Speaking to reporters after the meeting, Fed Chair, Jay Powell said he did not know how long it would be before the Fed was confident enough to begin cutting rates.
“Modest gains in US Treasuries suggest this was all that markets were expecting to hear. Rates are still going to come down, but we’ve a way to go first. With economies in the euro zone and UK looking weaker, maybe it will be this side of the Atlantic that takes the first step toward cutting rates?”
Investors were also mulling the latest from the OECD, which cut its UK growth forecast for this year to 0.4% from 0.7% predicted in February, as it cited high taxes and interest rates. Among the G7, only Germany is expected to perform worse, with 0.2% growth projected.
The OECD said UK GDP growth was expected to “remain sluggish” in the face of a “waning drag from past monetary tightening”.
In equity markets, Standard Chartered surged as it backed its full-year guidance and posted better-than-expected first-quarter profits as it continued to benefit from higher interest rates. Pre-tax profit rose 6% to $1.9bn, coming in ahead of expectations of $1.4bn. Net profit increased 5% to $1.22bn, comfortably beating expectations of $798m.
Smurfit Kappa rallied as it hailed a “very strong” first quarter and said box demand has continued to improve, with volume growth in Europe and the Americas.
Oil and gas giant Shell was also in the black as it reported a 15% jump in earnings in the first three months of the year compared with the final quarter of the year, on the back of higher margins from crude and oil products trading. It also unveiled a new $3.5bn share buyback.
Fluid engineering specialist TI Fluid Systems was trading up as it held guidance after first-quarter revenues fell 0.4%, in line with expectations.
On the downside, Relx, Glencore, Inchcape, Senior, Genuit and IWG all fell as they traded without entitlement to the dividend.
Melrose Industries lost ground even as it posted an increase in revenues and backed its guidance for the year.
Hiscox also fell even as it reported a rise in first-quarter written premiums as it benefited from accelerated growth in the retail segment.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | +5.58% | +38.80 | 733.80 |
| 2 |  |
Smurfit Kappa Group Plc | +4.26% | +148.00 | 3,622.00 |
| 3 |  |
Prudential Plc | +2.55% | +18.00 | 723.00 |
| 4 |  |
Taylor Wimpey Plc | +1.91% | +2.50 | 133.05 |
| 5 |  |
International Consolidated Airlines Group S.a. | +1.70% | +2.95 | 176.00 |
| 6 |  |
Sse Plc | +1.49% | +25.00 | 1,697.50 |
| 7 |  |
Coca-cola Hbc Ag | +1.38% | +36.00 | 2,638.00 |
| 8 |  |
Hargreaves Lansdown Plc | +1.36% | +11.00 | 820.40 |
| 9 |  |
Centrica Plc | +1.33% | +1.70 | 129.15 |
| 10 |  |
Barratt Developments Plc | +1.28% | +5.80 | 459.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hiscox Ltd | -4.44% | -54.00 | 1,163.00 |
| 2 |  |
Melrose Industries Plc | -1.87% | -11.60 | 609.60 |
| 3 |  |
Dcc Plc | -1.71% | -95.00 | 5,460.00 |
| 4 |  |
Whitbread Plc | -1.55% | -48.00 | 3,051.00 |
| 5 |  |
Admiral Group Plc | -1.22% | -33.00 | 2,668.00 |
| 6 |  |
Relx Plc | -1.18% | -39.00 | 3,261.00 |
| 7 |  |
Crh Plc | -0.93% | -58.00 | 6,154.00 |
| 8 |  |
3i Group Plc | -0.91% | -26.00 | 2,819.00 |
| 9 |  |
Anglo American Plc | -0.87% | -23.00 | 2,611.50 |
| 10 |  |
Rolls-royce Holdings Plc | -0.86% | -3.50 | 404.00 |
US close: Stocks fall after Fed comments, strong jobs data
US stock markets finished mostly lower on Wednesday after the Federal Reserve highlighted a “lack of further progress” in bringing inflation down to its 2% target, while data showed private job gains were stronger than expected.
America’s central bank stood pat on rates on Wednesday, as expected. However, the Fed refrained from hawkish comment – as some had feared – saying that interest rates are unlikely to rise further to bring down inflation despite stronger-than-expected readings over the past three months.
Stock markets initially jumped following the comments, but gains were quickly erased by the close, with the S&P 500 and Nasdaq dropping 0.3% and the Dow rising just 0.2%.
In its policy statement, the Federal Open Market Committee stated that there had been no additional progress in easing price pressures, and while inflation had slowed over the past year it still remains “elevated”.
“It’s likely to take longer for us to gain confidence that we are on a sustainable path to 2% inflation,” said Fed chair Jerome Powell. Expectations remain however that inflation would still continue to come down this year, he said.
“The statement noted that the risks to achieving its employment and inflation goals have moved toward a better balance over the past year, suggesting that the door is not closed on rate cuts later this year. However, inflation data needs to cooperate,” said Ryan Sweet, chief US economist at Oxford Economics.
Over recent months, financial markets have shifted to discounting just one interest rate cut before the end of 2024, instead of the six that were priced in at the end of 2023.
Labour market in focus
Private sector employment in the US rose more than expected April, according to figures released on Wednesday by the ADP. Employment increased by 192,000 from March, versus expectations for a 180,000 jump. Meanwhile, March’s gain was revised from 184,000 to 208,000.
Meanwhile, the number of US job openings dropped by 3.7% to reach 8.488m last month – their lowest level in more than three years and below the 8.69m consensus estimate. However, the prior month’s level of job openings had been revised up from 8.756m to 8.813m.
Mortgage applications fell 2.3% in the week ended 26 April, according to the Mortgage Bankers Association, extending the two-month-high decline of 2.7% seen in the previous week.
S&P Global’s April manufacturing purchasing managers index stood at 50.0, little changed from the preliminary estimate of 49.9 but down from March’s reading of 51.9. However, the ISM’s manufacturing PMI fell to 49.2 in April, down from 50.3 in March and firmly below market expectations of a flat monthly reading.
Finally, US construction spending fell by 0.2% in March, according to the Census Bureau, following a revised flat reading in February and missing market expectations for a 0.3% increase.
Market movers
Amazon gained 2% after reporting that profits had more than tripled in the first quarter, principally driven by its cloud computing unit, with profits and revenues beating forecasts.
Shares in chipmaker maker Advanced Micro Devices dropped 9% despite delivering in-line revenue guidance for its current trading quarter – though the stock had gained nearly 70% over the past year as of Tuesday’s close.
Pfizer put in decent gains after beating revenue estimates and lifting full-year profit guidance as the drugmaker benefitted from cost-cutting efforts and strong sales within its non-Covid segments.
Elsewhere, Starbucks tanked 16% after slashing its outlook following disappointing same-store sales; while CVS Health sunk 17% after reporting disappointing earnings and lowering profit guidance.
Thursday newspaper round-up: Online gamblers, PwC, London taxi drivers
Online gamblers who lose £500 or more a month are to face extra checks from August, the regulator has confirmed, as part of a large package of measures aimed at protecting the most vulnerable customers. The extra checks come in from 30 August, and the threshold for qualifying will fall to £150 of online betting losses a month from 28 February next year, the Gambling Commission said. – Guardian
Labour is facing criticism over plans for a loophole that would allow employees to work under zero-hours contracts, despite the party having pledged to ban them entirely. Keir Starmer’s party is preparing to announce details of its promise to overhaul workers’ rights if it gets into power – a centrepiece of its early plans for government, but subject to fierce lobbying from businesses. – Guardian
PwC is facing a backlash from its own staff amid allegations that Middle Eastern partners prevented the appointment of a woman as the firm’s new boss. Senior partners in London are understood to believe that voters at the firm’s offices in Saudi Arabia, the United Arab Emirates and other parts of the Middle East played a decisive role in the victory of Marco Amitrano over his two female rivals. – Telegraph
Thousands of London taxi drivers have launched a £250m lawsuit against Uber, claiming the minicab app illegally obtained a licence to operate in London. More than 10,000 cabbies have signed up to the lawsuit, which lawyers claim could result in compensation of £25,000 per driver. The High Court claim comes just weeks after Uber sought to bury a long-running battle with black cab drivers by allowing them to accept rides through its app. – Telegraph
A row over a plan by the City regulator to “name and shame” companies under investigation has intensified after Lord Tyrie, a City grandee, defended the watchdog in the face of criticism from the chancellor. The Financial Conduct Authority has been under intense pressure over the proposal, which would mark a significant departure from its current approach of almost always keeping investigations secret. – The Times
