Lucy Harley-McKeown
European markets down, US tepid as traders look to Powell speech
How major markets are performing on Tuesday
In this article:
The FTSE 100 and European indexes were mixed on Tuesday, following a buoyant session in the US. Fresh inflation data from the Eurozone and planned central bank speeches later in the week are key events guiding sentiment.
The FTSE 100 (^FTSE) was 1% lower, dragged down in part by falling BT Group (BT-A.L) stock. BT shares fell about 6.6% by the afternoon. Shares of oil majors were also lower amid continued tensions in the Middle East.
Germany's DAX (^GDAXI) fell 0.3% and the CAC (^FCHI) in Paris was down 0.1%.
The pan-European STXE 600 (^STOXX) also fell 0.4% as fresh data on consumer price rises for the eurozone showed inflation at 2.6% in July, up from 2.5% in June. Economists had expected to see inflation at 2.4%.
Core inflation, which strips out volatile measures like energy costs, sat at 2.9% in July — well above the target rate of 2%.
In the US, the S&P 500 (^GSPC) headed lower, coming off an eight-strong run of daily wins for the benchmark index — its longest since November. The Dow Jones Industrial Average (^DJI) also traded down 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) dropped about 0.4%.
Traders are looking ahead to news of movement for US interest rates. Federal Reserve chair Jerome Powell will speak on Friday at Jackson Hole.
"The speech's content will provide many answers for traders and investors looking for a much deeper rate cut for the US economy, as some believe that the Fed is now behind the curve given the latest inflation print and overall economic data in the country," said Naeem Aslam, chief investment officer at Zaye Capital Markets.
"Money markets are pricing in more than 75% chances of a rate cut of 25 basis points in September, while speculators have their eyes on the Fed's 50 basis point rate cut," Aslam added.
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Gold price reaches new highs
Axel Rudolph, senior technical analyst at online trading platform IG, said:
"The gold price hit a new record high above the $2,520 per ounce mark with the silver price also trading higher, albeit only at a one-month high. After two straight days of falling oil prices on demand concerns and hopes of an Israel-Hamas ceasefire agreement, buyers have crept back into the market around the June low amid growing uncertainty regarding that deal."
BHS directors ordered to cough up ￡110m in bankruptcy postmortem
Two directors of collapsed high street chain BHS have been told to pay ￡110m to its creditors in relation to breaching their corporate duties.
Former CEO Dominic Chappell and colleague Lennart Henningson were ordered to pay up years after the department store's demise, for continuing to trade rather than putting the store into an insolvency process when they had the option to.
A judge in bankruptcy court said there was “no real prospect of defending any of the claims against him”.
The question remains of how much creditors can really expect to recoup from the pair.
How US stocks are faring at the opening bell
Stocks to watch ahead of the open: Paramount
Media executive Edgar Bronfman Jr on Monday submitted a $4.3bn bid for acquiring National Amusements, the company that holds a controlling interest in entertainment giant Paramount Global, according to the Wall Street Journal.
Bronfman's offer includes $2.4bn in debt and equity for National Amusements. He also would contribute $1.5bn to Paramount's balance sheet, which could be used to pay down.
His bid comes over a month after Redstone entered a deal with David Ellison’s Skydance Global, which will merge Paramount with Skydance and create a new company with Ellison at the helm.
That agreement contained a 45-day "go-shop period" that allowed Paramount to solicit and evaluate other offers. That period ends on 21 August, but can be extended.
Bronfman’s offer potentially complicates Paramount’s fate, especially as the Skydance merger was reached after years of negotiations with different parties. The bid adds $400m to cover a breakup fee to end a rival deal.
A special committee of Paramount's board is expected to meet Wednesday to determine whether Bronfman's offer has a reasonable probability of succeeding.
BT shares in doldrums
BT Group (BT-A.L) shares are now down 6.9%, reacting to news that rival Cityfibre has struck a deal with Sky. The broadcaster is expected to use Cityfibre's network from 2025, the pair said on Tuesday.
BT's OpenReach network currently hosts Sky's 5.7m customers on its network.
Cityfibre's customer base currently stands at 3.8m, and the company has laid out plans to increase that to 8m by the end of next year.
Stocks to watch: Antofagasta
Yahoo Finance UK reporter Pedro Goncalves has the latest:
Antofagasta’s pretax profit declined in line with market expectations in the first six months of the year, when strong commodity prices offset lower sales volumes.
The Chilean copper miner said its pretax profit fell 7% to $712.6m in the half-year from $764.5m in the same period last year. This is still above the consensus forecast of $710.6m.
Earnings before interest, tax, depreciation and amortisation (Ebitda) for the first six months of the year rose to $1.39bn from $1.33bn last year.
The company saw increased depreciation and amortisation, mainly due to the start of depreciating the assets at the Los Pelambres Phase 1 Expansion project, which is now in operation.
Looking ahead, the miner reaffirmed full-year production guidance for output to be at the lower end of the 670,000-710,000 tonne range.
Two more missing people named following Sicily yacht disaster
News broke yesterday that Mike Lynch, considered a titan of British business, is missing following the sinking of a yacht off the coast of Sicily. New details have emerged about who was on the $18m boat.
Of the 22 people on board six are still unaccounted for — including Lynch, his lawyer Chris Morvillo and Morgan Stanley International and Hiscox chairman Jonathan Bloomer.
King Charles pounds enter circulation
As of this week, the general public could get their hands on a newly minted pound coin with King Charles III's face on it.
Nearly 3m of the coins will enter circulation via post offices and banks across the country. The flip side of the coin will feature a pair of bees — a nod to the King's love of the natural world.
Design of King Charles III by Glynn Davies & reverse design by Glynn Davies (Yorkshire Pics) Tuesday trade in Asia
Asian stocks were mixed in Tuesday's session as traders look to moves by central banks for signals. The Hang Seng (^HSI) fell 0.5% un the session and the SSE Composite Index (000001.SS) was 0.93% lower.
The moves came as the PBOC kept Chinese prime rates at 3.35% for the one-year loan prime rate (LPR), and the five-year LPR also remained the same at 3.85%. While this was expected, investors are still looking to signs of support for the real estate market.
Over in Japan the Nikkei (^N225) rose 1.8%, buoyed by the positive sentiment in the US.
How US stocks are faring in premarket trade
Overnight in the US
From our US team:
US stocks closed at session highs on Monday after posting their best week in a year as the markets continued to rally in a sharp turnaround from their early August sell-off.
The S&P 500 (^GSPC) rose nearly 1%. The Dow Jones Industrial Average (^DJI) also gained 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) increased roughly more than 1.4%.
Technology and Consumer Discretionary stocks led the gains, as the S&P 500 stretched its daily wins to eight, its longest streak since November of last year, according to Bespoke Investment data. The Nasdaq also logged its an eighth consecutive session win as shares of chip heavyweight Nvidia (NVDA) and Tesla (TSLA) rallied.
Stocks rose following last week's strong gains as a measure of calm returns to a market previously whipsawed by worries about a potential recession. Last week's rally recouped the losses stacked up in an early August sell-off as Wall Street fretted about cracks in the economy — concerns that have since been eased by encouraging inflation and consumer spending data.
Good morning!
Hello from London. Lucy Harley-McKeown here gearing up for another day of market moving news.
This morning we have the HICP European inflation data, which will give a better indication of consumer costs on the continent.
Traders are also still preoccupied by what Jerome Powell will say at Jackson Hole later in the week.
Let's get to it.