Josh White Sharecast News

06 Aug, 2024 17:46 06 Aug, 2024 16:50

London close: Stocks make small rebound from Monday's losses

dl city of london square mile financial district generic 01 — Sharecast / helloiamtugce via Pexels

London stocks ended Tuesday on a positive note, with key indices recouping some losses from the previous session’s sharp selloff.

Real Estate Investment & Services

2,322.87

16:59 08/11/24

-0.64%

-15.03

Travel & Leisure

8,555.56

16:59 08/11/24

1.99%

167.27

The FTSE 100 index rose by 0.23% to close at 8,026.69 points, while the FTSE 250 gained 0.65%, finishing at 20,367.70 points.

In currency markets, sterling was last down 0.55% on the dollar, trading at $1.2706, as it declined 0.35% against the euro, changing hands at €1.1626.

“The FTSE 100 index saw an increase after seeing its largest decline in over a year on Monday,” said TickMill market analyst Patrick Munnelly.

“In the previous session, it reached its lowest point in more than three months.

“Investors flocked to safe-haven assets during a sell-off that rocked markets throughout the world as weaker US statistics over the past week heightened fears of a recession in the largest economy in the world.”

Munnelly noted that data released on Monday indicated that US service sector activity increased in July, rebounding from four-year lows.

“Additionally, remarks made by Fed governors helped calm markets and reduce some losses.”

UK retail sales rebound in July, construction growth hastens

In economic news, UK retail sales rebounded in July after a slight decline in June, supported by increased food purchases and favourable weather conditions.

The latest BRC-KPMG retail sales monitor showed a 0.5% year-on-year rise in total retail sales last month.

That contrasted with a 0.2% drop in June and came against a strong 1.5% increase in July 2023.

Food sales were the primary driver, climbing 2.6% in the three months to July, which helped offset a 1.7% decline in non-food retail over the same period.

“The late arrival of British sunshine led to a better month for summer clothing and health and beauty products as shoppers prepared for days out with friends and holidays away,” said the BRC's chief executive Helen DIckinson.

“However, as consumers spent on holidays and entertainment, sales of indoor goods, such as furniture and household appliances, were squeezed out.

“This left non-food once again in negative growth, particularly for in-store sales.”

Meanwhile, the UK construction sector experienced its fastest growth in over two years in July.

The S&P Global UK construction purchasing managers’ index surged to 55.3 from 52.2 in June, marking the most significant expansion since May 2022.

All construction categories saw increased activity, with civil engineering leading the way, recording its sharpest growth in nearly two and a half years.

“The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July,” said Andrew Harker, economics director at S&P Global Market Intelligence.

“Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence.

“The strength of demand moved the sector closer to capacity, bringing a recent period of improving supplier performance to an end.”

On the continent, retail sales in the eurozone slipped slightly more than expected in June.

Eurostat reported a 0.3% month-on-month decline in sales volumes, with food, drinks, and tobacco sales down by 0.7%, and non-food sales edging lower by 0.1%.

Additionally, the construction sector's downturn deepened in July, with the HCOB purchasing managers' index falling to 41.4 from 41.8 in June, marking the fastest contraction in six months due to a significant drop in new business.

Germany meanwhile saw a surprising surge in factory orders for June, with a 3.9% increase, far surpassing the 0.8% forecast by economists.

That marked the first rise in orders since December 2023, providing a positive signal after several months of decline.

Across the Atlantic, the US trade deficit narrowed in June but remained higher than expected.

The Bureau of Economic Analysis reported a trade balance of -$73.1bn, down from May's revised -$75bn but still above the consensus estimate of -$72.4bn.

That reduction pulled back from the highest deficit level seen in 20 months.

Earlier in the global day, the Reserve Bank of Australia held interest rates steady at 4.35%, in line with expectations, but maintained a hawkish outlook.

Policymakers emphasised that underlying inflation remains elevated and suggested it would take time before it reaches the target range, signalling the potential for future rate hikes.

Keller Group surges, Domino’s Pizza Group slides

On London’s equity markets, Keller Group surged 11.61% after it reported that its full-year performance was expected to be “materially ahead” of current market expectations after a robust first half, driving investor confidence.

Melrose Industries also saw significant gains, rising 8.17%, as it recouped some of the losses it sustained on Monday.

Similarly, Scottish Mortgage Investment Trust rebounded by 4.95%, also recovering from sharp declines earlier in the week.

InterContinental Hotels Group managed a modest gain of 0.76% despite reporting a 10% decline in its bottom line for the first half of the year.

The company attributed that to the planned reduction of its System Fund surplus.

However, underlying profits improved by 12%, supported by better margins and accelerated revenue per available room (RevPAR) growth in the second quarter.

Operating profit from reportable segments rose to $535m from $479m the previous year.

Rolls-Royce Holdings climbed 1.74% after JPMorgan Cazenove raised its price target on the stock to 535p from 475p, citing strong results that bolstered the company's outlook.

International Workplace Group (IWG) saw its shares rise by 5.41% as the flexible workspace provider reported record first-half revenue, signalling strong operational performance.

On the downside, Domino’s Pizza Group fell by 6.41%.

The company warned that its full-year profit would likely be at the lower end of market expectations following a slower start to the first half, which disappointed investors.

Rightmove also faced a decline, with its shares down 4.78%.

The property website operator announced that its contract with OpenRent would end on 1 September, though it reiterated its revenue and margin guidance for the full year, failing to alleviate investor concerns.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,026.69 0.23%
FTSE 250 (MCX) 20,367.70 0.65%
techMARK (TASX) 4,703.91 0.14%

FTSE 100 - Risers

Melrose Industries (MRO) 483.00p 6.64%
Rolls-Royce Holdings (RR.) 468.50p 5.57%
Scottish Mortgage Inv Trust (SMT) 806.00p 4.95%
JD Sports Fashion (JD.) 123.40p 2.83%
Smith (DS) (SMDS) 445.40p 2.63%
Intermediate Capital Group (ICG) 1,968.00p 2.29%
Mondi (MNDI) 1,421.00p 2.17%
3i Group (III) 2,940.00p 2.14%
Centrica (CNA) 123.35p 1.73%
Coca-Cola HBC AG (CDI) (CCH) 2,740.00p 1.71%