|
London’s FTSE 100 retreated from earlier highs on Thursday, as strong earnings failed to sustain momentum after a hotter-than-expected US inflation reading dampened investor sentiment. The FTSE 100 index closed down 4.13 points at 9,132.81. It had earlier traded as high as 9,190.73, a new all-time peak. The FTSE 250 closed 186.25 points higher, 0.9%, at 21,962.83, and the AIM All-Share closed down 1.22 points, 0.2%, at 761.50. The Cboe UK 100 ended down slightly at 912.08, the Cboe UK 250 rose 1.0% to 19,287.49, and the Cboe Small Companies closed down 0.2% at 17,398.70. In Europe on Thursday, the CAC 40 in Paris fell 1.1%, while the DAX 40 in Frankfurt slid 0.8%. In New York on Thursday, the Dow Jones Industrial Average was down 0.1%, the S&P 500 was 0.4% higher, and the Nasdaq Composite rose 0.7%. Stocks in London had opened brightly after strong earnings in London and from two of the Magnificent Seven on Wall Street. ‘Stellar results from Microsoft and Meta have fired up investors, quickly shifting the focus from US interest rates potentially staying higher for longer, to an environment where big tech is ruling the roost again,’ said Russ Mould, investment director at AJ Bell. ‘The probability of a US rate cut in September has fallen since the Fed‘s rate decision on Wednesday with the market now pricing in a 57% chance of rates staying level versus 35% a day ago. Normally, such a shift would be negative for investors who typically prefer rates to be trending lower. However, the big tech reporting season has got everyone excited about mega profits and tremendous earnings growth.’ The Federal Reserve left interest rates unchanged on Wednesday in a split vote, although markets detected a hawkish tone from Chair Jerome Powell. ‘As expected, the FOMC kept policy rates unchanged amid two dissents. Powell appeared unfazed by the strong pressures to cut rates immediately, delivered hawkish comments and offered no new guidance about the future path of rates. We retain our call for one 25bp cut this year, in December,’ said Marc Giannoni at Barclays. The Fed call was soon overtaken by blow-out results from Microsoft and Meta Platforms, benefiting from the growth of artificial intelligence. Software and technology firm Microsoft jumped 4.5%, taking its market value above $4 trillion, after a strong fourth quarter and guidance, which Dan Ives at Wedbush said reflected ‘eye-popping cloud and AI strength.’ Ives said it was a ‘watershed’ moment for Microsoft, with AI already changing the growth trajectory of the firm’s cloud growth story. Facebook owner Meta Platforms soared 12% after its blow-out second quarter results and better-than-expected guidance. JPMorgan’s Doug Anmuth said Meta’s outsized revenue growth continues to support outsized infrastructure investments, with the sales increase largely due to AI-driven engagement increases and advertising improvements. ‘Meta continues to earn the right to spend more on capex with strong core advertising performance. While the high end of Meta’s 2025 capex is unchanged at $72 billion, the company indicated that it is likely to spend around $100 billion on capex in 2026 as it pursues its vision to bring superintelligence to everyone.’ But the mood was dampened a touch by worries of a pickup in the Fed’s preferred inflation gauge. Annual core PCE inflation index stood at 2.8% in June, the same rate as in May, which was, however, upwardly revised from 2.7%. The FXStreet-cited consensus had been for a rate of 2.7% for June. Analysts at TD Economics said an uptick in inflation was visible in the month-over-month and 3-month annualised figures. ‘With inflationary pressures likely to heat-up further in the coming months alongside some easing in the labor market, we anticipate that consumer spending will see some additional easing in the third quarter,’ the broker added. Earnings also provided a spur in London with Rentokil, Rolls-Royce and Shell among those in the green. Pest control specialist Rentokil leapt 9.5% as it said sales and marketing initiatives in North America are starting to have an impact, with organic revenue growth of 1.4% in the second quarter up from 0.7% in the first quarter. Rolls-Royce gained 7.1%, hitting an all-time high, as it raised its outlook for all of 2025, saying a strong first half showed ‘our multi-year transformation continues to deliver’. Shares in the jet engine and power turbine maker have soared by 80% in 2025 so far. Charles Armitage at Citi said results were ‘very strong’, driven by Civil and Power Systems Shell rose 1.2% as it maintained the pace of its share buyback and raised its dividend, as second-quarter profit fell but still topped expectations. The London-based oil major said adjusted earnings fell 32% to $4.26 billion in the second quarter of 2025 from $6.29 billion a year prior, ahead of Vara consensus of $3.74 billion. Results reflected lower trading and optimisation margins and lower realised liquids and gas prices, partly offset by higher Marketing margins and lower operating expenses, Shell said. But Mondi fell 12% as the packaging firm warned of tariff risks in the second half of 2025. For the six months that ended June 30, the Weybridge, England-based company posted pretax profit of €247 million, down 17% from €296 million a year earlier. But revenue rose 4.5% to €3.91 billion from €3.74 billion. While only 2% to 3% of its revenue is generated from exports into the US, the group warned that it remains ‘mindful of the second-order impacts affecting trade flows, consumer confidence and supply chains’. On the FTSE 250, Just Group soared 67% after it accepted a £2.4 billion takeover from Bermuda-based wealth management firm, Brookfield Wealth Solutions. Under the proposal, shareholders in the London-based provider of retirement income products will receive 220 pence cash for each share held. Just Group Chair John Hastings-Bass said the offer ‘delivers certain value for shareholders at an attractive cash premium.’ Meanwhile, JTC surged 14% as it agreed a deal to buy an estate planning firm and said net organic revenue growth was above 10% in the first half of the year. The Jersey-based professional services company said it delivered a ‘resilient and sector-leading performance’ in the first half of 2025. The pound eased to $1.3230 late on Thursday afternoon in London, compared to $1.3285 at the equities close on Wednesday. The euro traded at $1.1442, lower against $1.1479. Against the yen, the dollar was trading higher at JP¥150.48 compared to JP¥148.94. The yield on the US 10-year Treasury was at 4.34%, trimmed from 4.37%. The yield on the US 30-year Treasury was at 4.87%, narrowed from 4.91%. Brent oil was quoted lower at $71.11 a barrel in London on Thursday, down from $72.99 late Wednesday. Gold was flat at $3,292.45 an ounce against $3,292.75. The biggest risers on the FTSE 100 were St James’s Place, up 139.00 pence at 1,308.50p, Rentokil Initial, up 32.90p at 379.50p, Rolls-Royce, up 84.00p at 1,072.00p, Rightmove, up 22.20p at 818.60p and Prudential, up 25.60p at 963.80p. The biggest fallers on the FTSE 100 were Mondi, down 141.00p at 1,027.50p, London Stock Exchange, down 795.00p at 9,260.00p, Antofagasta, down 117.50p at 1,877.00p, Diageo, down 86.50p at 1,853.00p and Anglo American, down 83.00p at 2,148.00p. Friday’s local corporate calendar has half-year results from IMI. The global economic calendar on Friday has nonfarm payrolls in the US. Copyright 2025 Alliance News Ltd. All Rights Reserved.
|
