Proactive Investors -
- FTSE 100 well above day's low of 7,662.40
- Wall Street seen opening strongly after, as expected, Fed hike
- Barclays (LON:BARC), Shell PLC (LON:SHEL) lower after earnings, Centrica (LON:CNA) powers ahead
Data quartet assessed
The day’s batch of US economic data proved stronger than expected.
The Department of Commerce said US gross domestic product grew at an annualised rate of 2.4% in seasonally adjusted terms in the second quarter of 2023, above forecasts for growth of 2.0%.
Meanwhile, US durable goods orders jumped higher in June, up a seasonally adjusted 4.7% at a month-on-month, well above forecasts for a rise of 1.5%, driven by orders for civilian airplanes.
Excluding the transportation sector, however, durable orders were only up by 0.6% on the month. Transportation orders climbed by 12.1% to 115.3bn, driven by a 69.4% rise in those for civilian aircraft. Capital goods orders excluding defence and aircraft were up by 0.2%.
Meanwhile, the previous month's increase in total durable goods orders was revised up by 0.2% to 2.0%.
And the US trade in goods deficit with the rest of the world narrowed by slightly more than expected last month, down a seasonally adjusted 4.4% month-on-month to reach $87.8bn versus an anticipated reading of $91.5bn. Exports rose by 0.2% versus May to reach $162.5bn, while imports fell by 1.4% to $250.3bn.
Finally, US initial unemployment claims slipped by 7,000 over the week ending on 22 July 2023, to reach 221,000, below forecasts for a reading of 235,000. Meanwhile, the four-week moving average, which aims to smooth out the fluctuations in the weekly data, dropped by 3,750 to 233,750.
ECB hikes
As expected, the European Central Bank (ECB) has followed in the Federal Reserve's footsteps and raised interest rates by 25 basis points.
Alex Livingstone, head of Trading – FX & ETFs, Titan Asset Management, commented: “The ECB decided to follow in the Fed’s footsteps today hiking rates by 25bps to 4.25%.
"However, the language in the statement struck a more dovish tone than markets anticipated as the ECB gestured to clearer signs of inflation easing and admission of tightening financial conditions weighing on demand. This is a clear nod to economic growth becoming a more important topic of focus down the line as inflation dissipates.”
Naeem Aslam, chief investment officer at Zaye Capital Markets said: "We expect interest rates to rise by another 75–100 basis points before the ECB reaches the pinnacle of its cycle, so the real fireworks will be in the speech where the ECB leaves the door wide open for additional rises.
"The largest difficulty, though, is how the European Central Bank (ECB) will manage the slowdown in Eurozone economy as interest rates rise."
A quick look at some of today’s movers
Risers
ITV (LON:ITV) - up 5% to 72.9p: Shares in ITV rose almost 3% as investors decided to jump onto the positives from a mixed set of interims from the broadcaster. For while earnings for the first six months of 2023 dropped 52% to £152mln, followers of the stock seemed more interested in the outlook. CEO Carolyn McCall predicted a more upbeat future as advertisers gear up for large streaming and linear audiences, attracted by significant events such as the Women's World Cup, the Rugby World Cup and the much-awaited return of Big Brother.
Mitchells & Butlers PLC (LON:MAB) - up 6% 229.5p: Shares frothed up 7% to a year's high of 230p after the pub group reported improving sales growth and said cost inflation is "starting to abate". Like-for-like sales were up 8.9% for the year to date, having improved to 9.7% in the third quarter from 8.5% in the first half.
Inchcape PLC (LON:INCH) - up 10% to 864p: Inchcape was the star of the show in the FTSE 250 with shares up 13.4% to 884p. The company predicted full-year results would be towards the top end of the range of published market consensus after unveiling a 45% jump in revenue up 45% to £5.6bn in the first half of the year, supported by contribution from Derco and 13% organic revenue growth.
Litigation Capital Management (LON:LITL) - up 15% to 87p: Litigation Capital hit a rally on Thursday following a Supreme Court ruling on the legal status of litigation funding, which forms the basis of LCM’s revenues. The tribunal ruled that litigation funding agreements do not constitute damages-based agreements and thus may not be enforceable.
Fallers
Amigo Holdings PLC (LON:AMGO) - down 20% to 0.65p: Amigo Holdings evidently finds itself friendless as last-ditch attempts to raise rescue funds look set to fail, and, the lender said it is now advancing the process to wind down its operations. Any investors still holding Amigo counted the day’s 25% drop in the London listed share price.
Empresaria Group (LON:EMPR)- down 29% to 37p: The staffing company tanked 29% on the junior AIM market today after today’s interim trading update dropped. Net fee income was down 9% year on year to £29.7mln, with net debt increasing. Full-year adjusted profit before tax is expected to be “materially lower” than market expectations.
Safestyle UK (LON:SFES) - down 40% to 10.7p: Safestyle warned that profits for the current year are set to come in well below analysts' forecasts, as the market for its PVCu doors and windows takes a severe hit from falling household incomes, which have been impacted by stubbornly high inflation and rising interest rates.