UK stocks stalled on the first day back after the August bank holiday weekend in thin trading.
The FTSE 100 was lower by less than 0.1%. Industrials were top gainers following well-received results from packaging company Bunzl (LON:BNZL) whilst Basic Material stocks were the biggest drag as copper prices came close to two-month lows. The FTSE 250 was equally lacklustre. Shares of Petrofac (LON:PFC) were slightly lower after returning a first half profit.
The distribution business and cleaning products supplier is more flush than flash, but Bunzl's steady returns have made it a defensive favourite and shares have struck another record high following well-received first-half results.
Investors on the continent were more upbeat, with shares on the German DAX and French CAC both higher ahead of Eurozone consumer confidence and German inflation data.
Oil prices ticked slightly higher. A report from consultants Wood Mackenzie has indicated oil discoveries have hit a 70-year low. The market’s focus is on the supply/demand imbalance in the next six months where US shale and full-tilt OPEC output outweighs the cut-down exploration. Long term, the lower exploration necessarily means lower production and is bullish for oil prices so long as demand hold up.
US stocks look set for a lower open. Shares of Apple (NASDAQ:AAPL) will be in focus as the world’s biggest company by market capitalisation prepares to get stung with what could be a multi-billion euro penalty for tax avoidance. Apple’s special tax deal with Ireland, where it has been paying very low corporation tax, has been deemed illegal state-aid by the European Commission. Ireland will be forced to recoup back-taxes retroactively.
Nobody would dispute that corporations need to pay their fair share of tax, but a retroactive cash-grab creates uncertainty and could impact investment in Europe. Apple’s troubled tax situation will cast a long shadow over the revenue-boosting hopes of new product launch on September 7.
Shares of US chocolate-maker Hershey (NYSE:HSY) are expected to drop by double digits after Mondelez (NASDAQ:MDLZ), which owns Cadbury’s, announced it is abandoning its takeover bid. Mondelez could have ‘sweetened’ its offer but management wasn't willing to match the $125 per share reportedly asked for by majority-shareholder, The Hershey Trust.
USA pre-opening levels
S&P 500: 1 point lower at 2,179
Dow Jones: 10 points lower at 18,492
Nasdaq 100: 2 points lower at 4,789
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