• FTSE 100 pushes towards session highs
• US markets are expected to open higher
• UK quarter two GDP seen down 0.2%
FTSE 100 pushed back towards session highs in early afternoon trading buoyed by gains in the heavyweight oil, mining and banking sectors after better than expected economic data in the US and China.
By 2pm the lead index was trading 51.13 points higher at 7,490.87 with the broader FTSE 250 up 74.96 points at 20,126.44.
Oil majors, BP PLC (LSE:LON:BP.) and Shell (LON:RDSa) PLC (LSE:SHEL, NYSE:SHEL) both gained around 0.5% as crude oil prices bounced following Friday’s strong US jobs report and better than expected export figures from China.
Sentiment was further boosted by hopes of a positive restart on Wall Street this afternoon.
12.35pm: UK quarter two GDP seen falling by 0.2%
he UK economy probably shrank between April and June, according to a poll of economists who are bracing for the cost-of-living crisis to become a broader economic downturn.
The UK’s gross domestic product for the second quarter probably shrank 0.2%, according to a survey of economists published on Monday by Bloomberg News. The Office for National Statistics plans to publish its first estimate of second-quarter economic activity on Friday.
It will be the first insight into the UK economy since the Bank of England last week warned of a coming recession that will last from the final three months of this year until the end of 2023.
The data are likely to show that the extra holidays for the Queen’s jubilee in June slowed growth compared to last year, but economic activity is faltering as inflation surges. The Bank has forecast it will reach 13% by the end of the year.
12.00pm: FTSE remains positive with US seen opening higher
FTSE 100 remained firmer at midday on hopes for a strong restart on Wall Street on Monday.
At 12.00pm the blue chip index was trading 38.30 points to the good at 7478.19 while the FTSE 250 was 43.91 points higher at 20,095.28.
US stocks were expected to open higher on Monday, recovering after Friday's mixed reaction to a blow-out US non-farm payrolls figure for July with investors assessing the implications for further interest rate hikes as more corporate earnings roll-in.
Futures for the Dow Jones Industrial Average were trading up 0.2% pre-market on Monday, while those for the broader S&P 500 index were also 0.2% higher, and contracts for the tech-laden Nasdaq-100 added 0.4%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "The US economy added 528,000 new non-farm jobs in July, significantly higher than 250,000 expected by analysts. Last month’s data was revised up to 400,000. The unemployment rate fell to 3.5%, the lowest level since late 1960s. Wages grew 5.2% vs 4.9% expected by analysts."
She added: "Strong US jobs data revived the Federal Reserve (Fed) hawks on Friday. The US 10-year yield jumped, and the US dollar gained. Gold gave back a part of gains, and was offered into to the $1,800 mark, as the higher yields increased the opportunity cost of holding the non-interest-bearing gold. US stocks closed in the negative, although the three major US indices closed the first week of August in the positive."
However, Ozkardeskaya noted: "Stocks don’t need good data, they need softer yields, as softer yields push their valuations higher. Since the beginning of July, the S&P 500 recovered more than 10%, while Nasdaq bounced around 17% higher. This was partly due to the better-than-feared earnings reports, but mostly due to the easing US yields on the back of growing recession expectations.
"As such, the market rhetoric went from ‘the Fed is hiking interest rates to fight inflation and that’s bad for the stocks’, to ‘higher rates will push the US economy into recession and get the Fed to slowdown, and maybe to reverse its rate hiking policy’. This shift in expectations had a cooling effect on the US yields, and the softer yields pushed stock prices higher, as lower rates automatically push the stock valuations higher."
On the earnings front, Palantir Technologies (NYSE:PLTR), Dominion Energy and Tyson Foods (NYSE:TSN) are among the companies due to post results before Wall Street opens on Monday.
Meanwhile, shares of clean-energy companies are primed to benefit from a bill passed Sunday that would funnel hundreds of billions of dollars to climate and healthcare programs. The Senate package still needs to clear the narrowly Democratic House, in a vote scheduled for Friday.
No US data is due on Monday, but investors will be focused on Wednesday's consumer-price index for July which is estimated to show that price pressures have eased on a monthly and annual basis.
11.10am: Hargreaves Lansdown (LON:HRGV) boosted by positive comments by Barclays (LON:BARC)
Shares in Hargreaves Lansdown extended Friday’s gains and topped the FTSE 100 risers (up 8.53% to 962.30p) as commentators warmed to their full year results announced on Friday.
Analysts at Barclays increased their price target for the financial services company to 1,225p and lifted EPS forecasts by around 15% in a note following the results..
The upgrades came following results which were better than expected with pre-tax profits 5% above expectations reflecting better revenues and lower than expected costs.
Barclays has an overweight rating on the stock.
10.00am: FTSE remains higher mid-morning
FTSE 100 was comfortably higher in mid-morning trading supported by better than expected Chinese trade data on Friday which followed Friday’s strong US jobs number.
Early expectations are that US markets will open higher later today providing further support to trading in London.
By 10.00am, the blue-chip index was trading 31.01 points higher at 7,470.75 with the broader FTSE 250 up 20.15 points at 20,071.63.
Danni Hewson, financial analyst at AJ Bell, commented: ““The summer is supposed to be a quiet time for markets as many people are sitting on the beach, rather than glued to a screen trading stocks and shares.”
“So far, this summer is proving to be a decent session, and one that will provide a nice surprise when people get back to their desks after a bit of sun, sand and sea” she added
“The FTSE 100 managed to press ahead by a further 0.2% at the start of the new trading week, meaning it has been on a positive run since mid-July.”
“The 6% gain for the current rally to date means the UK blue chip index is less than 1% away from hitting breakeven for the year so far. “
“That’s considerably better than the S&P 500 index in the US which is down nearly 14% year to date” Hewson noted.
9.00am: FTSE positive but off early highs
FTSE 100 started the week in positive territory, although it retreated from early highs, supported by strength in oil, mining and banking sectors as economic data in the US and China eased fears about a global recession.
By 9.00am the lead index was trading 25.03 points higher at 7,464.77 with the broader FTSE 250 up 56.15 points to 20,107.63.
Friday’s strong US jobs report was followed by better than expected Chinese trade data over the weekend with exports rising stronger than expected.
Oil majors and index heavyweights, BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL), both rose in early trading providing support to the Footsie.
Analysts at Daiwa Europe also noted the latest Chinese trade figures released over the weekend were more encouraging with the value of exports rising a stronger than expected 18% year on year.
Shares in retailer Joules PLC soared 24.85% after it confirmed that it was in talks which could see Next PLC (LSE:NXT) take a minority stake in the group.
Joules said the potential equity investment would raise proceeds of around £15mln.
Clarkson PLC (LSE:CKN) saw its shares dip 2.8% despite reporting 53.5% growth in underlying pre-tax profits to £42.2mln from £27.5mln reflecting a particularly strong performance in the broking segment.
Andi Case, Chief Executive Officer, commented: "The outlook for the business remains strong due to the structural supply shortage in the global shipping fleet and we continue to benefit from our international footprint, leading market position, diverse offering and a deep understanding of the energy transition."
Broker Liberum remained positive on the group reiterating a buy rating with a 4,750p price target.
It noted “All divisions delivered strong profit growth, but the performance was led by the Broking division.”
But shares in international recruiter, PageGroup PLC (LSE:PAGE), slumped 6% despite the group reporting strong growth in profits and announcing a special dividend.
The company remained confident about prospects for the full year but cautioned that in July it noted a “slight slowing in time to hire in some markets.”
8.30am: FTSE in bullish mood as trading opens
FTSE 100 made a strong start to trading on Monday taking heart from Friday’s blistering US jobs data which lessened fears that the slow down in the US economy was feeding through to the jobs market.
At 8.20am the blue chip index was trading 44.77 points higher at 7,484.51 with the broader FTSE 250 index 40.30 points to the good at 20,091.78.
Oil majors and index heavyweights, BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL), both rose in early trading providing support to the Footsie.
Analysts at Daiwa Europe also noted the latest Chinese trade figures released over the weekend were more encouraging with the value of exports rising a stronger than expected 18% year on year.
This pushed the trade surplus in July to $101.3bn, the highest since the series began in 1987.
Shares in retailer Next were up 0.62% after Joules confirmed the two groups were in talks regarding Next taking a minoirty stake in the group.
Sophie Lund-Yates, Lead Equity Analyst, at Hargreaves Lansdown said: "Joules has strong brand power and a recognisable style, which, on paper, makes it a reasonably sensible addition. At the same time, the higher price points of Joules’ clothing could make it more challenging to sell in the current inflationary environment."
Shares in international recruiter, PageGroup PLC (LSE:PAGE), fell 1.24% despite the group reporting strong growth in profits and announcing a special dividend.
The company remained confident about prospects for the full year but cautioned that in July it noted a “slight slowing in time to hire in some markets.”
The group rewarded shareholders with a special dividend of 26.71p and saw revenue jump by 27.5% to £977.3mln and profit before tax by 79.8% to £114.5mln.
7.35am: FTSE seen making a bright start
TSE 100 is seen opening higher on Monday, despite a mixed showing on Wall Street on Friday, and as the latest July trade data for China pointed to weak domestic demand.
Spread betting companies are calling the blue chip index around 27 points higher.
Michael Hewson Chief Market Analyst at CMC Markets UK said: “The latest China trade numbers would appear to in some part support concerns about the economic outlook.”
“While exports have continued to recover, jumping to 18% in July, and beating expectations after a weak Q2, pushing the trade surplus ever higher, imports are still struggling.”
“These rose by 2.3%, up from 1% in June, and below expectations of a 4% rise.”
“This lack of impetus is being held by a lack of confidence on the part of Chinese consumers, as well as a slowdown in the property sector.”
“With little sign that Chinese authorities are prepared to ease up on their zero-covid approach in the second half of this year, it's highly likely that domestic demand will probably remain weak.”
Investors in London will be also be looking ahead to the first reading on quarter two GDP in the UK later this week after last week’s bleak assessment by the Bank of England to see if the economy did contract in the quarter.
International recruiter, PageGroup PLC (LSE:PAGE), rewarded shareholders with a special dividend of 26.71p per share as it reported strong growth in revenues and profits in the six months to June 30th.
Revenue jumped by 27.5% to £977.3mln and profit before tax by 79.8% to £114.5mln.
Commenting, Steve Ingham, Chief Executive Officer, said: “The Group continued to benefit from favourable trading conditions, including wage inflation and increased fee rates resulting from the high demand and short supply of candidates, in addition to a shorter time to hire facilitated by video interviewing and investments in new systems.”
He reiterated that expectations for 2022 full year operating profit remain in line with the consensus of £206mln.
7.00am: FTSE 100 seen open higher
FTSE 100 is expected to start the week in positive fashion after gains on the Dow Jones on Friday.
Spread betting companies are calling the blue chip index up by around 26 points in early trading.
It should be a quieter start to the week from a corporate news point of view with results from Clarkson and PageGroup today.
The Dow closed Friday up 75 points, 0.2%, at 32,802, while the Nasdaq Composite dipped 63 points, 0.5%, to 12,658 and the S&P 500 ticked 7 points lower, 0.2%, to 4,145.
The benchmarks all ended higher on the week though, despite the Nasdaq Composite and S&P ending the day in negative territory.
The week ended with a volatile day of trading in response to the July jobs report.
The US added 528,000 jobs last month, well ahead of a Dow Jones estimate of 258,000.
The unemployment rate dropped to 3.5%, compared to a 3.6% estimate.
Meanwhile, wage growth increased 0.5% from June and came in 5.2% higher than a year ago.