Yahoo Finance FTSE 100 Live 6 August: 'Hunt for bargains': Index holds 8,000, US stocks rise, Nikkei rebounds
A rebound by the Nikkei 225 today set the tone for a calmer session in European markets.
Japan’s leading benchmark jumped 10% following Monday’s worst session since 1987.
London traders turned their focus back to corporate earnings, including figures by Travis Perkins.
FTSE 100 Live
Markets steady after Monday rout
Nikkei 225 rebounds 10%
Travis Perkins profit down 65%
FTSE finishes flat, holds 8,000
16:43 , Simon Hunt
At the end of the day’s trading session in London, the FTSE 100 has held its ground, hovering around the 8,000 mark to close at 8,026.
Richard Hunter, Head of Markets at interactive investor, said: “After a decline of 2% yesterday, the FTSE100 nudged ahead.
“Well received numbers from InterContinental Hotels provided another boost, while the very nature of the index, being awash with stable and established companies, may well have attracted some overseas buying interest by way of defensive positioning.
“Having recovered some of its poise, the premier index remains ahead by 4% so far this year, although the end to the volatile state of global markets cannot be called just yet.”
Is the markets storm over?
16:13 , Simon Hunt
David Morrison, Senior Market Analyst at Trade Nation, said: “Already, some commentators are insisting that the worst is over.
“Fears of a US recession are overdone, the Fed will soon be cutting interest rates (probably quite aggressively), a lot of the froth has been blown off the tech sector and investors have all unwound their yen-based carry trades painlessly. Panic over. Let’s get back to buying equities. And the likelihood is that the bounce-back which began yesterday continues for a while.
“But what began last week, and what happened yesterday, should be considered a warning shot across the bows for all investors. The probability is that this isn’t over. For a start, we have no idea how far through the carry-trade unwind we are. Then, we don’t yet know how much damage that has done to the hedge funds at the forefront of that trade.
“We will have to wait until September for a Fed rate cut. If they announce an emergency move before then, investors really will panic. And while fears of an imminent recession are overdone, it’s an absolute certainty that one is on its way. But as for when, who knows?”
Stocks edge higher on Wall Street in partial recovery
14:50
US stocks made gains in the opening minutes of trade on Wall Street, in a partial reversal of yesterday’s downturn as investors were on the lookout for potential bargains.
The S&P 500 opened higher by 17.73 points, or 0.34%, at 5,204.06, while the Nasdaq Composite was up 63.7 points, or 0.39%.
It was still a mixed bag for tech stocks however. Nvidia, Microsoft and Meta all made gains of between 1-2%, but Amazon declined by another 1% and is now down as much as a fifth in the past month, while Apple dropped another 3% and has sunk nearly 10% in the past week. However, all of these stocks are still in positive territory compared to the beginning of the year.
US stocks seen higher after tumble
13:57 , Simon Hunt
US stocks look set to recover some of the dramatic losses they made across the last two days’ trading sessions with Wall Street futures edging up.
At 06:45 a.m. ET, S&P 500 E-minis were up 40 points, or 0.77% and Nasdaq 100 E-minis were up 135.5 points, or 0.75%.Chipmaker Nvidia looks set to rise more than 2%, while Palantir futures are up after the Peter Thiel-backed tech business upgraded its full-year profit and sales forecast.
Even beleaguered cybersecurity stock CrowdStrike, which has seen its share sink as much as 40% over the past month, looks poised for a slight recovery today after a brokerage upgrade.
City Comment
12:43 , Jonathan Prynn
The line up of potential culprits for this week’s markets squall is a long one: sticky interest rates, the weakening US economy, the AI tech boom, the yen carry trade, the beaches that have kept older wiser desk heads away from their screens.
As so often it was probably a self-reinforcing combination of these and many other factors that set off the stampede rather than a single trigger.
Today is quieter but, once out of the bottle, that gnawing feeling of near panic is difficult to contain. I would expect markets to remain jittery over the coming months with events in the Middle-East capable of ratcheting up the volatility index to new heights.
It is, of course, pure coincidence that the Bank of England produced its latest report on so called “resolvability” in the very week when the markets demonstrated how fine the margin can be between apparent stability and uncontrolled financial fission.
It seems the Bank has been learning the lessons of the fallout from last year’s scare involving institutions as diverse as Silicon Valley Bank, Credit Suisse, and First Republic. How close that cluster came to another run on the entire system we may never know. Fortunately, the reaction from authorities and the industry was quick and decisive enough to put out all the fires.
But it was a warning, perhaps the last one we will get before the next “big one.” The Old Lady was right today to step up the pressure on the banks it regulates to have all their systems and plans in place for when it hits. We learned last year that when a bank starts bleeding out there is now very little time to prevent catastrophic consequences, certainly far less than in previous events.
With luck markets will settle down again this week. But yesterday’s rout is a salutary reminder of how those animal spirits can very quickly bring disorder to what appear to be the calmest of markets.
11:07 , Simon Hunt
Five of Britain’s biggest banks were today instructed to improve their readiness for failure after the sudden demise of major financial institutions last year highlighted the speed with which they can collapse.
The Bank of England today named Barclays, HSBC and Lloyds among firms that needed to strengthen their preparedness for failure, warning they must be “sufficiently flexible and able to produce timely and robust estimations of their liquidity needs in a resolution, given the speed at which events can evolve, for example due to rapid deposit outflows.”
The scale of the risks latent within the banking sector were unsurfaced last year by the rapid collapse of Credit Suisse and Silicon Valley Bank (SVB), which sent shockwaves through financial markets. Within a day of SVB’s warning that it needed a capital raise, the firm’s share price sunk 60% and as much as $40 billion or nearly a third of its deposits had been withdrawn, with a further $100 billion on course to leave. The UK arm of SVB was acquired shortly thereafter in a last-minute rescue deal by HSBC, while Credit Suisse was merged with UBS.
FTSE 100 recovery fades, AIM-listed YouGov and Ramsdens higher
10:27 , Graeme Evans
The FTSE 100 index stood 25.61 points higher at 8033.84, a rise of 0.3% that failed to make much of a dent in the 2% lost yesterday.
Buyers focused on Melrose Industries and Rolls-Royce as their shares put back 4% or 17.3p to 469.2p and 15.8p to 459.6p respectively.
Struggling stocks included Burberry, which fell another 9.6p to 704.2p and Rio Tinto after a decline of 46p to 4890.5p.
GSK shares also continued their lacklustre run by falling 14.5p to 1532.5p, even though an Illinois jury found in its favour in the latest US court case involving heartburn drug Zantac.
Buying interest was stronger in the FTSE 250 index, which improved 0.6% or 129.66 points to 20,366.40.
Keller jumped 8% or 115.3p to 1493.3p after the ground engineer reported a material increase in full-year expectations, underpinned by a record order book of £1.6 billion.
The upgrade came alongside half-year results showing revenues up 2% to £1.5 billion and operating profit 68% higher to £113.2 million.
On AIM, YouGov shares rebounded by a fifth or 89p to 528p after the market research firm said it now expects a 2024 performance better than at the time of June’s profit warning.
The group also announced the acquisition of Yabble, a New Zealand based company pioneering the use of generative AI to deliver audience insights.
And Ramsdens Holdings rose 6% or 12.5p to 205p after it said profits for the September financial year will be at least £11 million. This compares with last year’s £10.1 million and City forecasts near to £10.5 million.
The Middlesbrough-based firm’s operations span foreign currency exchange, pawnbroking loans, precious metals buying and selling and retailing of second hand and new jewellery.
Blue-chips recover after global rout, FTSE 250 up 1.2%
08:13 , Graeme Evans
The FTSE 100 index is 0.5% or 39.41 points higher at 8047.64, having fallen 2% in yesterday’s global stock market rout.
Stronger stocks included Rolls-Royce, which put back 2% or 10.6p to 454.4p, and GKN Aerospace owner Melrose Industries after a gain of 16.5p to 468.4p.
The FTSE 250 index improved 1.2% or 248.66 points to 20,485.40.
Market slump looks like “overreaction”
08:00
IG chief market analyst Chris Beauchamp said the Nikkei 225 has gone from its biggest loss since 1987 to recording, at one point, its biggest-ever intraday surge.
He added: "Yesterday's slump certainly seemed like an overreaction, particularly in Japanese markets.
“The VIX's huge one day spike was on a par with 2008 and 2020, but those were global crises, whereas Monday was the unwinding of the yen carry trade and a growth panic in US markets.
“The Federal Reserve has been right to avoid any silly talk of an emergency rate cut, and the selloff in tech stocks has helped to trim some of the exuberance that we saw back in June and early July."
Abrdn fund outflows of £1 billion hit operating revenue
07:55 , Michael Hunter
Fund outflows of £1 billion at City money manager Abrdn led to a drop in half year revenue at the FTSE 250 firm.
Net operating revenue fell 7% to £667 million. Net outflows were £1 billion, down from £6.5 billion in the same period a year ago. Outflows from equities and multi-asset funds and from its “insurance partners” business were offset by inflows “in liquidity, fixed income and quantitatives”.
The firm is in the process of a £150 cost-cutting plan, which involves around 500 job cuts.
Jason Windsor, interim chief executive officer, said:
"In the first half of the year we have made an encouraging start as we become more efficient, and we enhance our propositions to lay the foundations for growth.”
Nikkei 225 rebuilds after worst session since 1987
07:43 , Graeme Evans
Japan’s Nikkei 225 has rebounded to close 10.2% higher at 34,675, having lost more than 12% in Monday’s session.
Yesterday’s biggest decline since 1987, which came after traders were caught out by a sharp rise in the yen, fuelled a day of heavy selling across global markets.
The Nikkei hit a record of 42,224 in mid-July and is now 4% higher over the year-to-date.
Other Asia markets have been calmer, with the Hang Seng index and Shanghai Composite little changed today.
Futures trading currently shows the FTSE 100 index more than 1% higher at 8101.
Travis Perkins says 'weak demand' continues as operating profit tumbles 65%
07:32 , Michael Hunter
The builders merchant Travis Perkins has said demand remains “weak” as it reported a 65% drop in half-year operating profit of £38 million.
Revenue fell 4.4% to £2.4 billion in what it called “a continuation of trends” in the second half of last year, “with weak demand across the group’s end markets”.
Its outgoing chief executive, Nick Roberts, said:
“Trading conditions have remained challenging through the first half of the year and we have continued to prioritise delivering for our customers whilst also recognising that a persistently lower volume environment means that we have to deliver a simpler, more efficient business.”
Its new CEO, Pete Redfern and a new chair, Geoff Drabble, are joining the £1.9 billion firm in September and October respectively.
Travis, which also runs the Toolstation brand, has been hot by the slowdown in housing markets and the knock-on effect for demand.
It said today that it had cut overheads by £19 million and was on track to exit its Toolstation France business by the end of the year.
Thames Water fined £104 million
07:29 , Jonathan Prynn
Thames Water has been fined £104 million for failures in its management of waterwater plants and storm overflows in one of the biggest ever penalities imposed by Ofwat.
The regulator said London’s water supplier had “failed to ensure that discharges of untreated wastewater from storm overflows occur only in exceptional circumstances which has resulted in harm to the environment and their customers.”
Two other companies were also fined, Yorkshire Water, which faced a £47 million sanction, and Northumbrian Water, which was given a £17 million penalty.
Ofwat’s Chief Executive David Black said: “Ofwat has uncovered a catalogue of failure by Thames Water, Yorkshire Water and Northumbrian Water in how they ran their sewage works and this resulted in excessive spills from storm overflows. Our investigation has shown how they routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends.
“The level of penalties we intend to impose signals both the severity of the failings and our determination to take action to ensure water companies do more to deliver cleaner rivers and seas.”
Fear index falls back after Monday's surge, Nvidia shares down 6%
07:18 , Graeme Evans
The Vix fear index has fallen back to 38.57, which compares with 65.73 after a jump of 42.34 points or 181% at one stage in yesterday’s stock market rout.
Deutsche Bank pointed out this morning that the largest full day move since the index was first calculated in 1990 was the 21.57 point increase around the initial Covid wave in March 2020.
Even during the global financial crisis, the biggest increase was 15.18 points at 38.57. The bank said the savageness of the intraday movement showed how much short dated options trading has exploded over recent years.
On US markets, the S&P 500 opened around more than 4% lower and the Nasdaq down by 6%. The declines reduced to about 3% by Wall Street’s closing bell, but with Nvidia shares still down 6% and Apple 5% lower.
FTSE 100 seen higher as Nikkei 225 rebounds
07:03 , Graeme Evans
The FTSE 100 index is seen opening 1% higher after yesterday’s global stock market rout caused London’s top flight benchmark to fall by 2%.
Today’s expected improvement comes after the Nikkei 225 followed Monday’s worst session since 1987 with a jump of more than 10%.
On Wall Street, the S&P 500 index and Nasdaq both fell 3% last night but futures trading is pointing to a recovery session later today.
Recap: Recession fears made for horrid trading session
06:46 , Simon Hunt
Good morning from the Standard City desk.
The FTSE 100 suffered its worst session of the year so far after a global sell-off was sparked by concerns over a potential US recession. Japan’s Nikkei 225 index suffered its worst day since 1987 on Monday after investors were spooked by disappointing American jobs data last week.
London’s main financial markets followed suit to open firmly lower and stayed in the red throughout the day as multinational firms were particularly weak.
London’s top index finished 166.48 points, or 2.04%, lower to end the day at 8,008.23. It marked the lowest close price since April.
Recession fears were fuelled on Friday after US payroll growth of 114,000 came in short of Wall Street’s 175,000 forecast and June figures were revised lower.
The unemployment rate also hit a three-year peak of 4.3%, above the 4.1% expected although the figure may have been distorted by hurricane disruption.
The figures prompted a sharp surge in bets on Federal Reserve interest rate cuts, with markets now seeing a 200 basis points reduction over the next 12 months.
Deutsche Bank strategist Jim Reid said: "Markets were on edge before Friday but a weak payrolls figure has really escalated a profound move across the globe.”
