FTSE 100 little changed; US stocks set for mixed start
It has been a lacklustre day in London so far and things don’t look like they will be much more exciting in the US
- FTSE 100 rises 6 points
- US indices to open mixed
- All eyes on US inflation numbers
US indices are set for a mixed start ahead of US inflation data today.
Spread betting quotes point to the S&P 500 opening barely a point higher at 4,386 and the tech-heavy Nasdaq 100 starting 51 points to the good at 14,929 but the Dow Jones 30-share is seen drooping 25 points to 34,971.
The Nasdaq is probably outperforming because of a reporting from Associated Press that the European Union has put on hold its plans to introduce a digital tax on tax-dodging multinational companies operating in the ethersphere.
All eyes will be on the US consumer price index (CPI) due out at 1.30pm London time.
“Analyst expectations are centred around 4.9% on the headline CPI, which would be a touch weaker than 5.0% from the previous month. In terms of core CPI, they expect a 4.0% reading – if correct this, would be up from 3.8% previously and the highest reading since 1991. On a month-on-month basis, CPI is seen rising 0.5% and 0.4% for the core print,” said Fawad Razaqzada at ThinkMarkets.
“Expect the dollar and buck-denominated metals to move sharply on the back of today’s CPI data. If CPI is hotter than expected, it could revive taper talks again, sending the USD/JPY etc higher and potentially halting the Wall Street rally,” the analyst suggested.
Already release is the NFIB headline index of small business activity and sentiment, which rose to 102.5 in June from 99.6 in May, beating the consensus forecast of 99.5.
“The index was lifted by increases in most of the components, led by economic expectations, which jumped 14 points. This is the most volatile – by far – of the 10 equally-weighted headline components, and the June jump reverses the inexplicable plunge reported in May,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.
“Sales and earnings expectations also rose in June, along with inventory expectations, hiring plans and employee compensation. Note that the labour market numbers are not new today; they were released last week as part of the NFIB jobs report, as usual. Their message is clear; businesses can’t find all the people they want, and compensation costs are rising strongly,” he added.
In London, the FTSE 100 is up 6 points (0.1%) at 7,132.
11.20am: Miners wanted after Chinese exports surge
Footsie’s gains have almost dissipated as we enter the final hour of trading in the morning session.
The FTSE 100 was up 8 points (0.1%) at 7,133, largely on the strength of demand for miners, where () and () are the sector leaders; Fresnillo is 2.1% firmer at 807p and Anglo American is 1.2% heavier at 2,990.5p.
The mineral extractors are wanted after better-than-expected trade figures from China this morning.
China’s foreign #trade rose 27.1 percent year on year to 18.07 trillion yuan (about 2.79 trillion U.S. dollars) in the first half of the year, the best performance in history, official data showed Tuesday. https://t.co/gysCFUQvn5 pic.twitter.com/EDCGLC7k7X
— China SCIO (@chinascio) July 13, 2021
There is still little sign of retailers getting much of a bounce from ostensibly sparkling retail sales data from June.
Spring sees record growth for High Street retail sales https://t.co/jXMQOgkZwI
— Giddy Goat Toys (@GiddyGoatToys) July 13, 2021
“The UK retail sector hasn’t just got a spring in its step, but a post-lockdown swagger. Like-for-like retail sales increased 17% in June, compared to the same month in 2019, according to the BRC-KPMG Retail Sales Monitor. Taken over the three months from April to June, the bounce back in sales witnessed made it the best three month period for growth on record according to the British Retail Consortium,” reported Susannah Streeter at Hargreaves Lansdown.
“Other economic data released by the ONS in July showed although people have returned to stores, many are still shunning high streets and shopping centres and nipping to retail parks instead for a quick retail fix.
“In the week up to 3rd July overall footfall was 72% of the equivalent week in 2019, but high street footfall came in at 65% of 2019 levels and shopping centre footfall was even lower, at 67% of pre-pandemic rates. In contrast footfall in retail parks was much higher, reaching 91% of its level in the equivalent week of 2019. This trend has been reflected in an operational update from today, indicating that the outlook is much brighter for its retail park portfolio which is nudging the value of those asset values up,” she added.
Talking of PLC (), the property company’s shares are up 0.1% at 520.4p in line with the market, after its operational update in which it said sales are running at 94% of pre-pandemic levels across its retail portfolio.
10.40am: UK retail sales see record growth
Retail sales increased by 13.1% in June compared to (pre-pandemic) June 2019, the British Retail Consortium (BRC) reported.
The growth rate was above the three-month moving average growth rate of 10.4% – again, compared to the same months of 2019.
UK retail sales increased 17.0% on a like-for-like basis from June 2019, when they had decreased 1.6% from the preceding year, the BRC said, driven by online sales.
“The second quarter of 2021 saw exceptional growth as the gradual unlocking of the UK economy encouraged a release of pent-up demand built up over previous lockdowns. In June, while growth in food sales begun to slow, non-food sales were bolstered by growing consumer confidence and the continued unleashing of consumer demand. With many people taking staycations, or cheaper UK-based holidays, many have found they have a little extra to spend at the shops, with strong growth in-store in June. Fashion and footwear did well while the sun was out in the first half of June, while the start of Euro 2020 provided a boost for TVs, snack food and beer,” said Helen Dickinson, the chief executive of the BRC.
“Nonetheless, UK retail is still facing strong headwinds with many retailers still making up for ground lost during the previous lockdowns. City centre retailers continue to suffer low footfall and spending as commuters and international tourist numbers remained well below pre-pandemic levels. Consumer comfort with the next stage of the roadmap will be key to the ongoing success of retail. Many customers are looking forward to a return to a more normal shopping experience, while others may be discouraged by the change in face covering rules. The Government will need to reassure the public on safety, while pushing forward with its hugely successful vaccination programme. The public will also need to be understanding of one another during the easing of restrictions; there has been a big rise in violence and abuse against retail workers during the pandemic and colleagues cannot be put in the firing line because of this change in policy,” she added.
The FTSE 100 was up 10 points (0.2%) at 7,136. Ironically, () was one of the stocks failing to get with the programme, sliding 0.9% to 551.8p.
“With many people taking staycations, or cheaper UK-based holidays, many have found they have a little extra to spend at the shops, with strong growth in-store in June.”
BRC’s Helen Dickinson on the latest BRC-@kpmguk retail sales monitor. Read more ????https://t.co/Bt4nQkN62X
— The British Retail Consortium (@the_brc) July 13, 2021
Banks are leading the Footsie higher after the scrapped a ban on dividend payments introduced during the coronavirus pandemic.
The FTSE 100 was up 21 points (0.3%) at 7,146, with PLC () the best performer, up 1.8% at 210.5p. Holdings PLC (), up 1.5% at 419p , is the next best performer among FTSE 100 constituents with PLC (), up 1.4% at 47.83p, lurking just outside the “medal positions”.
July Financial Stability Report – BoE
— LiveSquawk (@LiveSquawk) July 13, 2021
“The has rolled with the good news first by applauding the banking sector’s resilience for steering the UK economy through the pandemic and for having the liquidity to withstand further punches,” said Susannah Streeter at Hargreaves Lansdown.
“Banks have clearly played a key role in helping businesses and consumers survive the financial crisis by extending loan terms, offering payment holidays and providing a bridge over troubles waters. Government loan schemes have also been a lifeline. Since March 2020, UK businesses have raised around £76 billion of net additional financing from UK banks and global financial markets. That has helped businesses’ cash balances increase by a quarter, around £132 billion since the end of 2019,” she observed.
Hospitality-focused stocks such as PLC () and () are failing to join the advance, which suggests excitement over so-called Freedom Day on 19 June is being tempered with a dose of pessimism/realism.
Contract caterer Compass and hotels group Whitbread are both down 1%.
8.45am: Cautious progress
The FTSE 100 made a quiet start to proceedings as traders kept their powder dry ahead of the onset of US earnings season.
The UK blue-chip index appears to be an island of apathy surrounded by a sea of positivity with Wall Street finishing Monday in record territory once more and Asia’s main markets also buoyant.
Domestic banks were well bid ahead of a raft of updates from their American cousins this week with () leading the Footsie with a 2.2% gain.
() was up 1% early on after Barclays Capital raised its recommendation on the oiler to ‘overweight’ from ‘equal-weight’.
The bank traversed the same path with mid-cap explorer and developer, EnQuest (), which advanced 5%.
On the FTSE 250, drug research and development group () was well bid early on with a rise of 7%.
6.50 am: Quiet start predicted
The FTSE 100 is set for a fairly flat start with a quiet day in the City diary leading investors to look Stateside to the start of earnings season and inflation data later.
London’s blue-chip index should rise around two points, according to traders in the City, a day after pulling a positive result out of the bag in a late rally which left it just over three points higher at 7,125.42.
Overnight, Wall Street was more sprightly, with all three major indices finishing at record highs.
Investors are looking forward to the start of second quarter earnings season, which starts today with the banking sector, as usual, and numbers from JPMorgan Chase and .
Market analyst Michael Hewson at CMC Markets said expectations have been tempered slightly by recent comments from JPMorgan CEO Jamie Dimon, who warned that this past quarter’s performance was unlikely to match that of the first.
“Trading revenue could well be lower than the consensus estimates of $6.5bn as lower yields and volatility impact turnover. Dimon also played down expectations over loan demand and income after a bumper Q1.”
With Q1 deposits for JPM rising 24% year on year to US$2.3trn, Hewson said having so much cash on its balance sheet is a nice problem to have but speaks to a difficult lending environment.
“It would appear that higher long-term rates are impacting on housing loan demand, a trend currently being reflected in the latest housing numbers, while small business lending was down 50% compared to the same quarter a year ago.
“This suggests that the banks’ guidance could well be a significant driver of where we head next after the gains of the last couple of days.”
Asian markets are all in green this morning latest China trade figures showed a slowdown in imports but an unexpected rise in exports.
Market analyst Jeffrey Halley at Oanda said: “The robust China data will be a shot in the arm for Asia… and a sense of relief across the region will be palpable.
“Ex-China, Asia and Australia are dealing with varying waves of Covid-19, which, given their stubborn refusal to go away, will inevitably lead to some mollifying of growth prospects for the rest of the year. The Bank of Indonesia head kicked that process of yesterday by downgrading the country’s 2021 growth forecast, suggesting short-term downward pressure on the Rupiah, and reaffirming the central bank’s dovish stance. He won’t be the last.”
Around the markets
- Pound – flat at US$1.3889
- Gold – flat at US$1,807.12 per oz
- Oil – Brent crude up 0.2% at US$75.28 per barrel
- Bitcoin – down 4% (24hrs) at US$32,816.26
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were higher on Tuesday as China’s exports surged 32.2% in June compared with a year earlier.
That was much higher than a forecast by analysts in a Reuters poll for a 23.1% rise in exports for June.
The Shanghai Composite in China gained 0.30% while Hong Kong’s Hang Seng index surged 1.70%
In Japan, the Nikkei 225 rose 0.56% and South Korea’s Kospi lifted 0.77%.
Shares in Australia gained, with the S&P/ASX 200 trading 0.20% higher.
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