- FTSE 100 falls 5points to 8142
- House prices unmoved by snap election call
- Miners a drag after China property and industrial data
4.09pm: Markets without a catalyst
The FTSE 100 down almost five points and the FTSE 250 is up 58 or 0.3%.
Markets have been in search of a catalyst today, says market analystChris Beauchamp at IG.
"European markets have risen off the lows of last week but there’s little enthusiasm among investors for the region given the prevailing political uncertainty.
"Dip buyers, particularly in French stocks, may well opt to wait until after the election.
"While the UK is free of such uncertainty, for now it has been lumped into the same pile, an early rally for the FTSE 100 rapidly fizzling out this morning."
Looking across the Atlantic, Beauchamp said it is "not likely that the Nasdaq 100 can go up indefinitely while other indices slip back", but traders are continuing to chase momentum in the likes of Nvidia.
Small caps continue to be the worst affected in the US, he notes, with the Russell 2000 down 0.55% to scrape a new six-week low today.
3.49pm: Bank profitscould get big boost from 'unwind' of rates hedge
Of the FTSE 100 banks, domestic lenders are preferred to their Asia-focused peers, says analyst Jonathan Pierce at Deutsche Numis Research, withLloyds Banking Group PLC (LSE:LLOY)his top pick in the sector.
Notwithstanding the exposure that Lloyds has to the FCA motor market review, the black horse lender is his preference, expressed with a 'buy' rating and a 3p hike in the share price target to 64p.
In a note to clients today, Pierce says: "The outlook for bank earnings, capital generation and book value, particularly in thecontext of future reductions in short rates, is a critical part of any investment thesisright now."
Profits at the trio of domestic banks, Lloyds, NatWest and Barclays, aredepressed by 60% by the so-called 'structural hedge', a risk management tool used by banks to manage and reduce their exposure to changes in interest rates in order tostabilise earnings, compared to 25% for HSBC and 15% for Standard Chartered.
"All banks will benefit from the unwind of these costs. But the aggregate tailwind from hedge repricing at the domestic banks could lift profit by 80% over time versus 15% at HSBC and 9% at Standard," said Pierce.
3.27pm: Lower energy prices to come
Electricity prices are forecast to drop 20% between now and 2028 due to lower gas and carbon prices, according to new research.
Aurora Energy Research has cut its forecasts today, saying the main reason will be a retreat in gas prices back to levels seen before Russia's invasion of Ukraine.
It forecasts gas will cost 69.7p per therm on average until 2027, down from 81.5p today, down 22% from the previous prediction from Aurora as gas demand has been lower, with gas storage levels also increasing across Europe.
3pm: UK missing out on nuclear reboot, warns Rolls boss
The UK is at risk of getting left behind in the mini-nuclear reactor industry if the government does not approve the first projects before the end of the year, according toRolls-Royce boss Tufan Erginbilgic.
Rolls's mini-nuclear plans suffered a setback earlier this year as they were overlooked in the first private UK project in favour of reactors built by US-based Westinghouse.
Erginbilgic urged whoever wins next month's general election to actfastso the required parts can be made on home soil.
He said: “The UK has missed the opportunity to develop the offshore wind supply chain…This will be in that category.”
2.51pm: US stocks open lower
The main US stock indices have all opened in the red, with many tech stocks trading lower.
With semiconductor giant AMD down 2.1%, Adobe dropping 2% and Meta Platforms falling 1.5%, the Nasdaq is down 0.27%, while the Dow Jones and S&P 500 are both 0.16% lower.
Small caps on the Russell 2000 are down 0.32%.
Nvidia started higher but is now in the red.
This morning, theUSSupreme Courtagreed to hear the chipmaker's appeal to block a securities fraud lawsuit from investors who have accused the company and CEO Jensen Huang of misleading investors about how much of its sales came from cryptocurrency miners.
The suit is led by the Sweden-based investment management firmÖhman Fonder.
Meanwhile, back in the UK, the FTSE is continuing to dip in and out and back into the red, with miners doing most of the dirty work.
The top of the leaderboard is all financials,St James's Place PLC,Beazley PLC,Hargreaves Lansdown PLC andLegal & General Group PLC.
2.27pm: Reform manifesto launched
In the general election campaigning, Nigel Farage's Reform UK have launched their manifesto - or contract as they're branding it.
Unsurprisingly it includes a freeze on net migration and an abandonment of net zero policies, among other things.
At the launch event, Farage says he wants to use the election to establish Reform as the main, rightwing opposition to Labour at the time of the next election instead of the Tories.
Reform UK manifesto - they call it a contract - has some striking costs and policy pledges. They say they can save £150bn with measures cutting Government waste & benefits, taxing renewable energy sources & businesses who employ immigrants pic.twitter.com/L6nEVwvjwU
— Paul Kelso (@pkelso) June 17, 2024
2pm: Downbeat US open expected
Traders are a bit doubtful of Wall Street's big tech stocks continuing their winning streak into this week, withUS stock futures in red ahead of the open.
The Dow Jones is down 0.26%, the S&P 500 down 0.1% and Russell 2000 also modestly lower, with the tech-laden Nasdaq 100 flat.
This echoed the tone from Friday’s close with the Nasdaqthe only major index to end in positive territory closing out a winning streak of five days.
"The general market tone remains bullish, with tech stocks in the vanguard, especially any with direct connections to generative AI," saysmarket analyst David Morrison at Trade Nation.
NVIDIA shares are up 1.2% premarket, though other tech maga-caps like Microsoft, Amazon and Meta are slightly in the red.
Looking ahead, US retail and industrial data is due tomorrow, with Wednesday the Juneteenth holiday, and Friday "triple witching hour", when markets can be shaken by the extra volatility from the simultaneous expiry of stock options, stock index futures and stock index options.
The volatility is especially increased as this marks the half-year point, as well as a quarterly expiry.
1.11pm: Pub closures, but Euros boost
Pub closures increased by a third in the first quarter of 2024 as spending remained subdued and the effects of higher costs kicked in, with239 pubs either demolished or repurposed, according to government figures.
On average, it means 80 pubs shut for good every month, marking a 56% increase compared to the 51 a month that was lost in 2023.
With the Euros kicking off over the weekend, it "should be good for pubs", says leisure Langton Capital analyst Mark Brumby.
He notes industry research that found 40% of those surveyed planned to watch matches in pubs and bars, with the tournament "likely to bring a surge in footfall for pubs and barsscreening the matches".
More than three quarters of consumers (79%) expect to go out to pubs and bars more often while it’s on and just over two thirds (70%) saying that going out to see games is better than staying at home.
Brumby also notes separate research from Oxford Partnership that found the last Euros delivered a 9.4% uplift in beer & cider draught volume across the period of the tournament., worth an extra £4,970 per outlet.
The researchsuggests that the uplift could be greater this time around as the pandemic had limited capacity in 2021.
Before the England victory yesterday, UK Hospitalitypredicted pubs and bars "could be set for an almost billion pound boost, if the Three Lions are victorious this summer".
Analysis by the trade body suggests that the group stage alone will generate an additional £340 million in sales for hospitality venues across the UK, rising to £800 million if England win the tournament.
Last week theBritish Beer and Pub Association calculated total sales over the four weeks would top £1.4 billion, with some 20 million extra pints set to be poured over the tournament.
12.51pm: Adidas investigates corruption
Adidas shares are down 4% afterthe German sportswear group said it was investigating allegations of corruption in China after receiving an anonymous letter.
The anonymous whistleblowerletter, which briefly appeared on a Chinese social media platform, the Financial Times reported at the weekend, claims to have been written by “employees from Adidas China”.
It named several Chinese employees, including a senior manager involved with Adidas’s marketing budget in the country.
The world’s second-largest sportswear brand's senior staff were accused in the missive of embezzling “millions of euros”, according to the FT's sources.
12.03pm: FTSE wipes out losses
The FTSE 100, which was down almost 25points a short while ago, but has now climbed above the flat-line again.
Meanwhile, UK Finance, the body representing the finance industry, has released its first-quarter review.
Highlights include gross lending increasing again, up 15% on the prior quarter to just over £4 billion, up 8% year on year to the highest level since the end of 2022, with most regions seeing growth in gross lending
The number of finance approvals rose by over a quarter in the first quarter, with the value of loans up by 10%.
Overdraft utilisation rose to a post-pandemic high, while SMEs continue to run down deposits and at a faster pace than the previous quarter.
"It is encouraging to see further signs that SME demand for finance is returning. As the economic outlook for SMEs improves, the financial services sector is helping businesses across the UK," said David Raw, managing director of commercial finance.
11.24am: IPO from ex-Melrose director
Some London IPO news, as one of the founders of asset stripper/successful investment group Melrose Industries PLC (LSE:MRO, OTC:MLSPF)is coming back to the market with a new vehicle.
Simon Peckham, one of the three original founders of Melrose, which has since become a specialist aerospace company, is behindRosebank Industries, which is looking to raise £40 million and float on AIM.
Rosebank, saysSky News, will hunt for new takeover targets with the same 'buy, improve, sell' model as Melrose, with the initial public offer due to take place after next month's general election.
Like Melrose, the new vehicle will also seek to buy mid-sized industrial and manufacturing companies in the UK, Europe or North America.
10.56am: Financial sector leading FTSE
After a difficult last week, the FTSE 100 started Monday on the front foot but the momentum has already drifted away.
"Early gains are fading in Europe, with French political uncertainty adding to a somewhat shaky environment for stocks globally," says market analyst Joshua Mahony at Scope Markets.
With France's CAC having lost over 5% last week, traders are "split between those spotting an opportunity to buy the dip, and those aware of the risk posed to French stocks should support for Macron wane further".
"With the initial pop already starting to fade, it is worthwhile noting that any gains seen in French stocks will likely remain under the microscope for as long as this political uncertainty remains."
As for the FTSE he says it has been "somewhat indecisive" that he says highlights "the uncertainty over quite what stance the Bank of England will take when Andrew Bailey steps up on Thursday".
With inflation expected to fall back below the 2% target ahead of the Bank of England meeting, Mahony said many investors "will question whether this could pave the way for a surprise rate cut at Threadneedle Street", but with core inflation expected to remain elevated and some political uncertainty remaining ahead of the UK election, "it looks more likely that Bailey will hold off for the time being".
10.30am: Market round-up
London's leading index given a modest lift by financial stocks, says analyst Russ Mould at AJ Bell.
St James's Place, Legal & General, Intermediate Capital, Admiral, Pershing Square, HSBC are among the top 20 risers.
Mould noted the mixed performance of Asian indices after weak figures from the Chinese property market, which showed "an acceleration in what is already an alarming slump.
"This is likely to put pressure on the Chinese central bank to cut rates when it meets later this week."
With the euro and French stocks rebounding after last week's falls, when worries about a far-right government put pressure on the euro and created a concern that France could move away from planned budget cuts and thereby add to its budget deficit.
"How long this new-found momentum lasts will depend on any further political developments across the Channel ahead of the election results in July."
Today's house price data suggested limited worries about the snap election, with Mould saying this week's Bank of England meeting and reading of inflation mid-week will have a greater influence.
"The focus will be on the commentary which accompanies another anticipated hold on rates and there will be hopes the rate of growth in prices might retreat to the magic 2% to warrant rate cuts soon."
10.05am: Poor show from petrol station owners
Drivers in England, Scotland and Wales are getting an "extremely poor deal" at thepump as petrol station operators are setting prices well above wholesale costs, the RAC has found.
The general election is proving a distraction, the drivers' association says.
Despite a fall in wholesale costs since the end of April, fuel prices at the pumps remain significantly elevated, the new data shows.
On average, petrol in the UK costs 146.3p per litre, which is "5p higher than it should be", the automotive services group added.
Similarly, diesel prices in Britain average 151.5p per litre, making it the most expensive in Europe.
9.57am: France worries overblown?
France's CAC 40 is up 0.5% today after falling around 5% last week following President Macron's surprise election call a week.
"How worried should we be about France?" ponders Liberum strategistJoachim Klement in a note this morning.
"In short: not very much," he says. "We think that concerns about a right-wing Prime Minister in France are overblown and expect markets to calm down after the election."
There are sixreasons cited by Klememt, starting with polling showing that far-rightNational Rally (RN)party "probably won’t" win an overall majority and may have to rely on coalition partners, and that Macron "has successfully worked with Prime Ministers of the other side of the aisle in the past".
As for the impact on stock markts, Klement notes that split governments in France "have not led to any problems for the French economy or French stocks" and that since the European debt crisis in the early 2010s, the safeguards for the Eurozone have been strengthened significantly, including the issuance of true Eurobonds, with the ECB "no doubt" standing ready to buy unlimited quantities of government bonds to prevent another debt crisis.
Finally, Klement points to a new stability and growth pact in place since May that will force France to reduce its deficit and debt over the next four to seven years.
9.31am: China weighing
Asian shares and mining stocks in London are mostly softer as "mixed Chinese economic data underlined the country's bumpy recovery," says the strategy team at Saxo.
Chinese industrial output lagged expectations and a slowdown in the property sector showed no signs of easing despite supportive policies from Beijing in recent months.
Prices for new homes in China fell 0.7% month-on-month, the sharpest drop in nearly ten years, driven byoversupply, while house prices for existing homes fell 1%, the biggest drop since 2011.On a yearly basis, new home prices were down 4.3% and existing homes 7.5%.
"Japanese stocks were the hardest hit overnight as investors offloaded risks assets with US exporters leading the declines amid signs of a slowdown in the US economy after consumer sentiment unexpectedly dropped to a seven-month low," they added.
Also coming out of China this morning is news of an anti-dumping review of pork products imported from the EU.
The China Commerce Ministry said an investigation has been launched today and "should normally end by June 17 next year and can be extended by another six months under special conditions".
9.12am: Labour promises
Market analysts are tracking electioneering in the UK.
Comments by shadow chancellor Rachel Reeves will "buoy hopes that there could be slightly closer trade ties between the UK and the EU under a Labour administration and less of a focus on regulatory divergence", saysSusannah Streeter atHargreaves Lansdown.
"Such an approach could benefit certain sectors, particularly the chemicals industry while a plan to seek mutual recognition of professional qualifications may help companies in the services sectors like auditors and architectural firms.
"Labour says it’s focused on stimulating long-term growth to revive the sluggish economy. To facilitate that, Rachel Reeves has left the door open to tinkering with the fiscal rules, the Labour party has said it will adhere to, which will see debt falling as a percentage of economic output in five years."
Reeves has suggested that borrowing rules should distinguish between day-to-day spending and investment, which Streeter says potentially loosens the purse strings to further support and partnerships with the private sector, above and beyond the current manifesto commitments.
"So far, pledges and promises made in manifestos do not seem to have perturbed the debt markets, with the yield on 10-year and 30-year UK gilts falling back over the past week."
Mark Lynch, partner at corporate finance house Oghma Partners, notesthat Labour has listened to the food industry on re-joining the EU veterinary and phytosanitary regime.
"Tucked away towards the back of the Labour Party manifesto there is a commitment to ‘seek to negotiate a veterinary agreement to prevent unnecessary border checks and help tackle the cost of food’ - this is great news for the food industry and consumers, particularly for the smaller food exporters who have been particularly hard hit by Brexit related issues."
He adds: "It’s a shame that Labour haven't followed the Liberal Democrats further and committed to re-joining the single market as a longer-term goal. If we are to deliver the best chance of accelerating GDP growth in the UK, rejoining the single market would be a helpful step forward in my view. Let's hope the next government’s more sensible approach to trade, in relation to the food industry at least, is implemented quickly."
9.05am: FTSE gains trimmed
The FTSE 100 climbed to a 40 point gain half an hour after the open but this has been cut back to just over 10 points now, up 0.15%.
Half of the top 20 companies in the index are in red, with Rio Tinto the biggest faller in the top 10, down 1.2%. HSBC and Rolls are the top risers among the big names, up either side of 1%.
The FTSE 250 is up 70 points or 0.35% at20,190, with WAG Payment or Eurowag the top riser, up 5%,followed by Ascential.
Bottom of the mid-caps is SSP Group, the trains and airports food shack operator, down 3.4%.
8.55am: Another London company mulls going private
Another London-listed company could begoing private, it seems, after Global Ports Holding PLC (LSE:GPH), theworld’s largest independent cruise port operator, confirmed an offer by its parent company to take the business private and delist from the LSE.
In a statement, Global Ports, which owns Liverpool's cruise port, said it would consider the approach, which is non-binding, and make a statement. For now, it says it sees merit in moving the business into private ownership.
Parent company Global Yatırımhas until 12 July to make a formal offer.
In addition, GIH said it is considering a possible cash offer of US$3.00 (237p) per share for the outstanding shares it does not own alongside the delisting.
8.44am: Oil industry lobbying Labour
Oil and gas executives have expressed concern over Labour’s manifesto pledge to remove North Sea tax allowances, warning that it could significantly impact investments in the region.
No new wells have been drilled this year as companies await the outcome of the July 4 election and the potential changes to the tax regime.
Labour has announced plans to increase the windfall tax on North Sea oil and gas profits to 78% and eliminate the investment allowances that companies currently use to reduce their tax burden.
These changes are expected to raise billions over five years if fully implemented.
The top risers on AIM this morning areSound Energy PLC andLongboat Energy PLC.
The latter hasreached an agreement to sell its 50.1% holding inLongboat Japex Norge AS toitsjoint venture partnerJAPEX for$2.5 million cash plus Longboat's share of drawn debt, currently $8.5 million net.
JAPEX will also assume all future financial obligations of the joint venture.
8.37am: Rentokil boosted by positive broker view
Rentokil was the top blue-chip riser in early trading, up 1.8%, which seems to be on the back of a positive note from RBC Capital Markets.
Rentokil has been a "very volatile stock", analysts at the London arm of the Canadian bank say this morning in a note where they update 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 investment by Nelson Peltz's Trian is noted by the analysts but they say they "believe it changes little" as "key for the share price is delivery on NA organic growth and the TMX integration".
"We continue to see significant upside, although clearly there is still lots to do, with peak branch integration still 12 months away."
8.29am: Euro's winners
Looking across to Europe and stock markets are generally outperforming the Londonbenchmark.
Germany's DAX is feeling the afterglow of dienationalmannschaft's 5-1 win over Scotland in the Euro 24 opener on Friday night, up 0.59%.
In Spain the IBEX is up 0.39%, no doubt benefitting from the football team's 3-0 win over Croatia, while Italy is celebrating their comeback over Albania with a 0.77% jump for the FTSE MIB this morning.
In France, where Les Bleusopen their Euro account against Austria tonight, theCAC 40is up 0.55%.
The wider EuroStoxx 600 has risen 0.35% so far.
8.15am: FTSE starts higher
The FTSE 100 has started the week on the front foot, like England against Serbia last night, though that could mean a nervy second half of today's session.
In the first quarter of an hour the blue-chip index is up 18 points or 0.23% at8165.
Miners are holding the index back, with Riot Tinto PLC, Anglo American PLC (LSE:AAL) and Glencore PLC (LSE:GLEN) among the bigger fallers.
Top of the leaderboard is Rentokil Initial PLC (LSE:RTO), up 1.7%, followed by Ladbrokes owner Entain PLC (LSE:ENT), up 1.4% and HSBC Holdings PLC (LSE:HSBA), up 1.35%.
7.54am: WH Smith caught up in another E Coli recall
WH Smith PLC (LSE:SMWH)has been forced to pull some food products from its shelves as another food manufacturer recalled products overE. colifears.
The manufacturer, a plant-based food producer called THIS!, recalled its plant-based 'chicken and bacon' wrap, according to the Food Standards Agency (FSA), which is only sold at Smiths stores.
Removal of the product by the producerwas a "precautionary step...because of possible contamination with E. coli", the FSA said in a news alert, adding that E. coli "has not been detected in the product but it is being recalled as a precaution".
Last week two other suppliers, FTSE 250-listedGreencore Group PLC (LSE:GNC)and Yorkshire-based Samworth Brothers Manton Wood, recalled dozens of other sandwiches, wraps and salads sold in various supermarket chains.
Salad leaves were seen as the E Coli risk in those recalls, with over200 people across the UK reported to have been affected by E. coli in recent weeks, with four out of 10 admitted to hospital.
E. coli can cause symptoms including severe diarrhoea, abdominal pain, and sometimes a serious condition that can lead to kidney failure, which can be fatal.
Greencore Group has recalled 45 different products so far sold at Aldi, Asda, Boots, Co-op, Morrisons, and Sainsbury's.
7.38am: Housing market not unsettled by election call
House prices in the UK have remained roughly flat this month after hitting a record high in May, according to Rightmove data released overnight, though average prices are up 0.6% compared to a year ago.
The snap election call by Rishi Sunak has only had a small effect, the report says, with most buyers and sellers not changing their plans in light of the potential change in government.
A small fall in the number of new sellers was noted, especially at the top-end of the market, with this higher end being seen as "typically more discretionary", with a 3% drop in the number of 'top end sellers' coming to market in the past two weeks, compared to 11% higher in the previous two weeks.
The number of sales in the past four weeks remained 6% higher than a year ago, as in May, while buyer demand was also reported to have remained stable, 5% higher than last year.
More than nine in 10people (95%)said the election will not affect their plans, a poll of over 14,000 people by Rightmove found.
7.15am: FTSE 100 rebound expected
The FTSE 100 has been called higher at the start of the week, along with other European stocks, possibly boosted by some early Euro 24 fever.
After ending last week on a downbeat note and losing almost a hundred points over the past five days to close at just under 8147, London’s blue-chip index is predicted to rise 31 points on Monday.
European markets are also seen heading higher, with Eurostoxx 50 futures up 0.54% and DAX futures up 0.33%.
Asian stocks are mixed with India’s Sensex up 0.24% and the Hang Seng up 0.1% in Hong Kong, but Tokyo’s Nikkei down 1.8% and the Shanghai Composite down 0.55%.
Looking to the week ahead, we have the Bank of England policy decision on Thursday and before that Wednesday’s inflation numbers, plus a sprinkling of corporate updates from the likes of Whitbread, Berkeley, Ashtead, DS Smith and Young’s.
Summing up the market situation, Swissquote Bank analyst Ipek Ozkardeskaya says: “Last week was brilliant for the major US indices but gloomy elsewhere… The AI rally was fruitful.”
Beyond the US, she says market sentiment is “gloomy”, with Chinese stocks extending losses to more than 5% since the May peak, with home price date being the latest banana skin and a People’s Bank of China meeting this week that could see interest rates trimmed.
TheReserve Bank of Australia (RBA) will also give its latest policy verdict tomorrow and is expected to maintain the rates unchanged.
“Japanese stocks took a dive this morning to lowest levels in more than two weeks; even the Bank of Japan’s (BoJ) accommodative stance couldn’t cheer up investors on Friday,” Ozkardeskaya notes.
"Stocks in Europe lost 3% during the course of last week as the French election jitters ended in tears for the French CAC 40 which tumbled more than 6% compared to the previous Friday’s close."
