Latest market news

LONDON MARKET CLOSE: Blue-chips add 100 points in solid start to week

London’s FTSE 100 registered a bullish start to the holiday shortened week on Tuesday, with US interest rate optimism sending equities into the green.

Financial markets in London were closed on Monday for the May Day bank holiday.

Missing out on the confident trade were budget carriers, as the likes of easyJet and Wizz Air fell after a summer pricing warning from peer Ryanair.

The FTSE 100 index closed up 100.18 points, 1.2%, at 8,313.67. The FTSE 250 ended up 248.54 points, 1.2%, at 20,413.08, and the AIM All-Share closed up 4.89 points, 0.6%, at 776.42.

The Cboe UK 100 surged 1.3% to 830.26, the Cboe UK 250 added 1.0% at 17,661.69 and the Cboe Small Companies climbed 0.6% to 15,880.63.

In European equities on Tuesday, the CAC 40 in Paris added 1.0% and the DAX 40 in Frankfurt jumped 1.4%.

‘The FTSE 100 may feel friendless, given the ongoing concerns about firms delisting from the UK to join other exchanges, the lack of new flotations and cries for fresh initiatives to boost interest. But the UK equity market’s premier index is setting new all-time highs all the same, perhaps to adage that, ’you can have good news and cheap stocks, just not both at the same time’,’ AJ Bell analyst Russ Mould commented.

‘Investors now have to decide whether the UK is cheap because it deserves to be cheap, or whether the times really are changing, because if they are then further welcome gains could be on the cards.’

Supporting the FTSE 100 on Tuesday, was the interest rate-sensitive housebuilding sector. Persimmon rose 3.5%, while Barratt Developments added 3.0%.

Friday’s US data took some sting out of US rate expectations, with a similar ‘knock-on’ to UK rate forecasts.

Analysts at Lloyds Bank commented: ‘Global markets have continued to react with some relief after Federal Reserve Chair Powell last week doused fears that the US policy interest rates may have further to rise. He acknowledged recent upside data surprises, including inflation, but indicated that the Fed in response would delay the start of rate cuts and keep them at current restrictive levels for a while longer. That sentiment continued last Friday with the latest jobs data showing signs that the US labour market slowed at the start of Q2.

‘Unsurprisingly, shifting expectations around the US interest rate outlook have also had a knock-on effect to UK interest rate expectations.’

The pace of hiring in the US slowed more than expected in April, and the unemployment rate rose, figures on Friday had showed.

According to the Bureau of Labor Statistics, non-farm payroll employment rose by 175,000 in April. This was below a FXStreet consensus of 243,000 and lower than the average monthly gain of 242,000 over the prior 12 months. The February total was revised down by 34,000, to 236,000 from 270,000.

The Bank of England’s announces its latest interest rate decision on Thursday. A press conference with Governor Andrew Bailey follows.

ING analyst Chris Turner commented: ‘Were it not for the comments of Bank of England Chief Economist, Huw Pill, markets would be a lot more excited about a doveish shift in communication at Thursday’s BoE policy meeting. As it is, our core view is that it will still be a little early for the BoE to shift its cautionary position and signal a June rate cut. The preference of our UK economist, James Smith, remains that the BoE cuts in August rather than June.

‘However, a June BoE rate cut is only 30% priced by the market and we doubt sterling has to rally too hard if the BoE’s language on Thursday is unchanged.’

Sterling was quoted at $1.2542 late Tuesday, lower than $1.2549 at the London equities close on Friday. The euro traded at $1.0774, higher than $1.0769. Against the yen, the dollar was quoted higher at JP¥154.49 from JP¥152.89.

Back in London, easyJet fell 5.8%, while Wizz Air lost 7.1%. In Dublin, Ryanair gave back 6.2%.

Budget carriers struggled after Ryanair boss Michael O’Leary cautioned that ticket prices for the summer will likely be weaker than expected.

‘Looking at summer... We thought pricing would be up 5-10%. We’re heading to flat to 5% up,’ O’Leary told reporters in Brussels, according to Reuters.

Elsewhere in London, Macfarlane fell 9.9% after it reported a ‘challenging’ start to the year.

‘As anticipated, the start of 2024 has been challenging, with first quarter sales and profits below the same period in 2023,’ Macfarlane said in a trading update ahead of Tuesday’s annual general meeting.

However, despite the slow start to the year, expectations for the full year are unchanged, it added.

Macfarlane said first quarter sales fell 9.5% from a year prior, with continued weak customer demand and price deflation.

In New York, the Dow Jones Industrial Average was up 0.2%, the S&P 500 added 0.3%, while the Nasdaq Composite was up 0.1%.

Disney slumped 9.8%, despite raising its annual guidance, and predicting its video streaming business will be profitable in the final-quarter of its financial year.

XTB analyst Kathleen Brooks said Tuesday’s earnings were ‘no fairytale’ for the House of Mouse.

‘Disney reported a decent earnings report for last quarter on Tuesday, however, it fell short of high expectations,’ Brooks said.

‘The market may also be spooked by Disney’s comments about the current quarter’s entertainment results, which they expect to be softer than previously expected. The company has said that it expects its combined streaming business to be profitable in its Q4, however, this is not soon enough for the market, even if Disney+ subscribers rose by six million in the previous quarter.’

In Disney’s financial second quarter, which ended March 30, revenue rose 1.2% to $22.08 billion from $21.82 billion a year earlier.

Net income, however, dropped by 85% to $216 million from $1.49 billion, due to $2.05 billion worth of restructuring and impairment charges, largely related to Star India. Disney in February struck a deal with Reliance Industries to merge their Indian operations, creating an $8.5 billion media powerhouse.

Disney’s entertainment direct-to-consumer business, which includes the Disney+ and Hulu streaming operations, generated operating income of $47 million, swinging from a loss of $587 million.

The direct-to-consumer business as a whole, so including the sports-focused ESPN+ service, generated an operating loss of $18 million, narrowing markedly from $659 million.

Chief Executive Officer Robert Iger added: ‘Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4.

‘Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we set in motion last year have continued to yield positive results. We have a number of highly anticipated theatrical releases arriving over the next few months; our television shows are resonating with audiences and critics alike; ESPN continues to break ratings records as we further its evolution into the pre-eminent digital sports platform; and we are turbocharging growth in our Experiences business with a number of near- and long-term strategic investments.’

Brent oil was trading at $82.90 a barrel at the time of the London equities close on Tuesday, lower than $82.91 late Friday. Gold was quoted at $2,315.72 an ounce, higher than $2,301.11.

Wednesday’s economic calendar has a German industrial production reading at 0700 BST.

Wednesday’s local corporate calendar has annual results from fast fashion firm boohoo, and a trading statement from pub company JD Wetherspoon.

Copyright 2024 Alliance News Ltd. All Rights Reserved.