Proactive Investors -
- FTSE 100 falls 57 points to 8,307
- UK retail sales growth improved last month, led by food and clothing
- Ashtead (LON:AHT) impresses with quarterly trading update
- Wall Street reopens after long weekend
US stocks open lower
US stocks have fallen at the open, led by a 1.3% decline for the tech-heavy Nasdaq.
The S&P 500 has dropped 1% and the Dow Jones by 0.8%, while the small and mid-caps of the Russell 2000 are up 0.7%.
Back in Blighty, the Footsie is down 0.6% and the FTSE 250 is down 0.6%.
Chelsea owner's latest signing
Chelsea co-owner Clearlake Capital has agreed to acquire a private credit business from France's Natixis.
This is from the FT, which reports that the US investment group is looking to expand in a fast-growing $1.7 trillion market with the purchase of MV Credit for "several hundred million" dollars.
It will expand assets under management by Clearklake to over $90 billion, up from $2 billion a decade ago.
A sea of red
The FTSE 100 is down over 50 points or 0.6% just ahead of the Wall Street opening bell.
A 3.5% fall in oil prices and declines for mining and banking giants are why.
US futures are still in the red, with Nasdaq futures down 0.75% and those for the S&P 500 down 0.6%.
Fractional trading U-turn
HMRC is set to allow ISA accounts to be used for fractional trading, where investors can hold smaller portions of expensively priced shares.
Many trading apps, which are often used by younger investors, already allow fractional trading but HMRC said last year that they did not qualify for tax-free accounts.
The tax authority has reversed its position, the FT is reporting, ahead of an expected change to the law by the UK government later this year, with the move also expected to provide an overall boost in demand for shares (though US stocks tend to be those that are individually priced in the hundreds).
In a statement, HMRC said: “The government has committed to changing the Isa rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
Oil slides further
Oil prices are sliding ever lower as we enter the second half of the European session.
Brent crude is down 2.4% to $75.64 a barrel, close to year-to-date lows.
Latest sector news today includes Russian crude shipments edging down to their lowest in a month, according to Bloomberg.
Sluggish economic growth in major importer China have offset the impact of Libya halting production and exports.
Eyes on the US
Some comments from market analysts ahead of the US open.
The spike seen on Friday on Wall Street, where stocks barreled higher and the S&P 500 rose over 1% to kiss the old high, was boosted by "window dressing", says Kenny Polcari at Slatestone Wealth, who also provides a bucatini felice recipe at the end of his email to clients.
Anyway, Friday was the end of the month so the window dressing by money managers was seen in the final 10 minutes of trading, pushing stocks up to make it seem like "the angst seen at the beginning of the month is all but a distant memory".
The VIX volatility index is not far above the 15.0 trendline around which it has trundled for most of the past year (apart from the massive spike in early August) which "suggests complacency", Polcari says, with the August to October period tending to be a seasonally weak time of year for stocks.
"There is a lot more that is about to happen," he adds, depending on Friday’s jobs report, which if it comes in as expected, "the algo’s will love it" as it would seal it for a September Fed rate cut them – "and easier monetary policy would go a long way to extending the economic expansion – and that bodes well for earnings growth and that bodes well for the ongoing rotation into value…..think Financials, Basic Materials and Industrials – all strong last week."
Scope Markets analyst Joshua Mahony says the jittery trading in Europe is due to traders continuing to "move with caution in anticipation of the key economic data due in the days ahead", including the US manufacturing data today.
"Elsewhere, this week looks to gradually build towards Friday’s jobs report, with traders on the lookout for additional signs of a potential impending recession.
"Coming off the back of a surprise jump in unemployment that saw the key metric rise to the highest rate since October 2021, the trajectory of unemployment will be crucial in determining the market expectations for the Fed going forward."
VW factory closures
Volkswagen (ETR:VOWG_p) is mulling whether to close two factories in Germany as it looks to cut costs while also managing the shift from petrol to electric-powered cars.
The German giant has informed its works council that it may shut down a major vehicle manufacturing plant and a component factory to achieve cost savings.
The potential closures, which would be VW's first in Germany, come as European manufacturers feel increasing competition from Chinese electric vehicle makers, which benefit from lower costs and higher profit margins.