Proactive Investors -
- FTSE 100 stabilises at lower levels, down 54 points
- Bank of England hikes rates by 25bps to 5.25%
- UK service sector at six-month low in July
US weekly jobless claims in line with forecast
Initial claims for unemployment insurance in the US were higher week-on-week, but came in line with market forecasts, according to figures from the US Department of Labor.
Initial jobless claim in the week that ended July 22 totalled 227,000, up 6,000 from the previous week's unrevised level of 221,000, in line with the FXStreet-cited market consensus.
The four-week moving average was 228,250, a decrease of 5,500 from the previous week's unrevised average of 233,750.
The figures follow JOLTS job vacancy ADP private payrolls figures earlier in the week and provide the backdrop to Friday's non-farm payrolls.
Peak interest rates seen lower after latest increase
The expected peak in UK interest rates has fallen in the wake of the Bank of England's interest rate rise.
Sky's Ed Conway pointed out yesterday charts were pricing in a peak in rates of 5.8% or so. Now down to 5.65% or so…
Markets are now trimming back their expectations for the likely peak in UK interest rates, following today’s @bankofengland announcements.Yesterday these charts were pricing in a peak of 5.8% or so. Now down to 5.65% or so… pic.twitter.com/zNPV0inaI0
— Ed Conway (@EdConwaySky) August 3, 2023
Panmure Gordon's chief economist Simon French explained this was even more marked given markets had been pricing in a peak of 6.51% in early July.
Also worth noting that peak UK bank rate is seen at 5.67% after this report, having been at 6.51% in early July. That's a big move in prospective financial conditions. https://t.co/ABCVaRxVGD— Simon French (@shjfrench) August 3, 2023
He described the BoE's move as a "relatively dovish 25bp hike."
ING Economic reckons the Bank of England is keeping all its options open on future rate hikes, although another rise in September seems highly likely.
"Whether that's repeated in November is a more open question, particularly if services inflation starts to fall more noticeably between now and then," it said.
Samuel Tombs at Pantheon Macroeconomics continues to "think that the MPC will raise Bank Rate by just 25bp in September, and that this will be the last increase in this tightening cycle."
To recap, here are some of today’s share price movements
Kodal Minerals PLC (LON:KOD) shares jumped as a US$3.5 million payment from China came through as part of the funding package for the Bougouni lithium project.
Hainan Mining stumped up the money, which is repayable or convertible into Kodal shares should a funding package not be agreed.
Serco also ticked higher as booming demand for its immigration services prompted the outsourcer to raise some of its forecasts for the rest of the year.
Demand from the UK government for more staff to process asylum seekers and other migrants will mean a £280 million boost to revenue, it said.
Lastly, Shares in Devolver Digital Inc (LON:DEVO) tumbled in early trade as the company announced delays to several new game releases, a reduction in revenue from subscription deals, and a softer performance in back-catalogue sales.
The digital publisher and developer of indie video games, known for its award-winning titles, revealed in its trading update for the first half of 2023 that these challenges would impact its performance for the current financial year.
Modest losses seen on Wall Street
US stocks are expected to nurse modest losses at the open ahead of another bumper day of earnings with tech heavyweights Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) reporting after the closing bell.
Futures for the Dow Jones Industrial Average are down 54.00 points, or 0.15%, for the S&P 500 by 12 points, or 0.3%, and for the Nasdaq Composite by 66 points, or 0.4%.
Wednesday’s session saw the Nasdaq suffer its heaviest loss since February, while the S&P and DJIA also fell following the surprise Fitch credit rating downgrade.
The tech sector will remain in focus today with Apple and Amazon’s numbers. Investors will looking for guidance on Apple's artificial intelligence plans after it was forced to make drastic cuts to production forecasts for its mixed-reality Vision Pro headset.
Elsewhere, figures are due from ConocoPhillips (NYSE:COP), Kellogg, Expedia, Hasbro (NASDAQ:HAS), Airbnb and Coinbase (NASDAQ:COIN).
In economic news, economists anticipate initial US state unemployment claims to have ticked up to 226,000 last week after falling to a five-month low of 221,000 last week. Separately, prices paid by businesses for services are expected to have fallen, with economists forecasting the July ISM services purchasing managers’ index reading at 53, down from 53.9 in June.
Qualcomm (NASDAQ:QCOM) stock dipped 8.3% in extended trading after the company’s third-quarter results disappointed in terms of sales and guidance.
The company reported adjusted earnings of $1.87 per share, above Street expectations of $1.81 but drastically short of the $3.29 per share it reported a year earlier. Revenue was $8.44 billion, short of the $8.5 billion street consensus.
But Moderna (NASDAQ:MRNA) Therapeutics Inc stock is pointing higher in pre-market, up 1.6%, as it reported better than feared second quarter earnings.
The mNRA vaccine maker reported a net loss of $1.4 billion on $300 million of revenue in its second quarter, representing a $3.62 loss per share - versus market expectations of $3.84 per share.
Warner Bros Discovery Inc was another stock heading upwards, rising 3.0% in pre-market, as it reported narrowed second quarter losses following a bump in revenue.