Proactive Investors -
- FTSE 100 climbs 34 points to 8181
- Haleon job cuts
- US markets seen opening lower
The Footsie has retreated some way from its record intraday high of 8,199.95 earlier, which is now almost 20 points away.
Similar to yesterday, the retreat began as dawn approached in the US where Wall Street is heading for a negative open.
London is a rare island of green pleasantness in a sea of European red after lunch, with Spain leading the declines and Italy having given up earlier positive start.
Asian stocks were mixed, pointed out market analyst David Morrison at Trade Nation, with Japan’s Nikkei up 1.2% as it played catch-up after a holiday on Monday, beating modest gains for other markets.
An exception was the Shanghai Composite, which lost around 0.3% as Chinese data overnight showed a mixed picture, as official manufacturing and non-manufacturing PMIs were down from the previous month, although both remain above 50 and therefore just in expansionary territory.
Looking at US stocks, after all the major indices ended higher yesterday, today sees a switch back into red, "which is more in keeping with the tone of April as a whole," said Morrison.
"This is the last trading session in what has been a difficult month. All the major indices are on course to post their first monthly losses since this rally began last October.
"It certainly feels quite different from the first quarter of this year which saw fresh highs being hit regularly by the Dow, S&P 500 and NASDAQ.
"Back then, nothing could dissuade investors from loading up on stocks. Good news was good, and bad news was good too. Now it feels quite different. Now investors tend to sell first and ask questions later. That’s not to say there’s any panic or even mild feverishness out there. Just that there’s a noise coming from the attic, and no one wants to climb up and take a peek."
He said the reason for this shift in sentiment is that early-year conviction the Fed Funds rate would have fallen from the current 5.5% to 4.0% or lower by Christmas.
"But a series of disappointing inflation numbers have sliced into those expectations. Now the consensus is for a single 25 basis point cut in 2024, with some suggesting, like the Fed’s Neel Kashkari, that a rate hike may be required if inflation continues to push higher."
Look ahead to the Fed
It's a peculiar meeting of the US Federal Reserve that begins today and concludes tomorrow, with the Federal Open Market Committee decision not expected to contain any interest rate moves, but the markets still fixated on the timing and amount of potential policy loosening.
Jerome Powell and other FOMC speakers have made it clear in recent weeks that they are not planning to cut rates soon.
As a result, markets are pricing no chance of any cut this month nor in June or July, based on the CME’s FedWatch Tool, with September's chances still seen at 50% for no move.
Investors will be seeking guidance on the Fed’s latest views on the recent inflation disappointments, said strategists at UBS.
"The tone of comments from policymakers – both in the Fed statement following the decision and in chair Powell’s subsequent press conference – will help determine if investors continue to expect rates to start coming down at the September meeting."
Bank of America (NYSE:BAC) thinks the "planets keep aligning" to the high-for-longer rates narrative "as the path of least resistance", which markets are gradually accepting.
"However, US elections remains a key risk to the outlook."
Haleon job cuts
Nevermind the personal pain for workers, stocks markets love jobs cuts.
See Whitbread (LON:WTB)'s shares lifted almost 4% on news that it plans to axe 1,500 staff in its restaurants and pubs arm.
News that Sensoyde toothpaste maker Haleon PLC (LON:HLN) could cut around 435 jobs as part of the shuttering of an oral products manufacturing site has lifted the shares 1.5%.
The FTSE 100 group, which was spun out of GSK (LON:GSK) two years ago, is planning to close a site in Maidenhead as a strategic review determined it is "no longer a viable option for the manufacture of our products".
Results from the group earlier this month showed it grew revenues to £11.3 billion last year and made operating profits of almost £2 billion, which it celebrated by promising to reward shareholders by splashing £500 million on a share buyback.
Rolls-Royce strikes
Rolls-Royce Holdings PLC (LON:RR) is facing a month of strikes at its nuclear submarine division over a pay dispute.
“In a year when company profits have skyrocketed, all workers are asking for is a fair day’s pay,” GMB union organiser Mick Coppin said.
Union members are set to abide to strict working limits under the month-long action, GMB said, with this starting on Monday.
FTSE 100-listed Rolls builds power units for the UK’s nuclear submarine fleet and has recently laid out plans to expand the size of the division to meet plans for cooperation between the UK, US and Australia (AUKUS) on similar vessels.
Rolls most results showed profit more than doubled to £1.6 billion last year.
US markets seen opening lower
US stock markets are being called lower by futures traders as the two-day Federal Reserve meeting begins and
The tech titans of the Nasdaq are expected to lead the slight declines, with futures down 0.14% currently, while the Dow Jones and S&P 500 are both currently trading less than 0.1% lower.
It's a busy earnings day today, with lots of well-known names including many consumer-facing groups, though results from McDonald's Corp (NYSE:MCD), The Coca-Cola Company (NYSE:KO) and Molson Coors Beverage Co have barely moved the dial, despite the latter's profits fizzing nearly three times higher to beat Wall Street forecasts.
Bigger moves were seen in tech and pharma.
PayPal Holdings Inc (NASDAQ:PYPL) was up 6% as the digital payment group lifted its full-year outlook after quarterly earnings and revenue beat forecasts.
Eli Lilly and Co (NYSE:LLY) traded 7% higher pre-market after first-quarter earnings beat expectations thanks to strong sales of its diabetes and weightloss drug, which is the same drug but marketed separately as Mounjaro and Zepbound.
Although the higher sales are likely to lead to shortages over the coming months, it led the drug giant to hike its full-year guidance.
Amazon (NASDAQ:AMZN), AMD (NASDAQ:AMD) and Super Micro Computers report after the close tonight.