Proactive Investors -
- FTSE 100 up 17 points at 8264
- Nvidia (NASDAQ:NVDA) last night topped $3trn to overtake Apple (NASDAQ:AAPL) in terms of size
- ECB meeting today expected to deliver rate cut
UK shares tick higher
Momentum is positive in the FTSE 100 index, with all but three of the top 20 largest stocks in green this morning.
But with ex-divs holding the index back a little, the gain is small, up 0.2% so far, while the FTSE 250 is up 0.4%.
A Nvidia-led storming run for the Nasdaq last night and the prospect of interest rate cuts in Europe today "have all combined to put investors in a good mood," says Russ Mould, investment director at AJ Bell, saying we're now "beginning the next phase in the cycle".
"The ECB is expected to follow the likes of Canada, Sweden and Switzerland by cutting rates later today, bringing the long-awaited pivot in monetary policy and signalling the start of a new era.
"After a long period of rock-bottom rates, the subsequent period shocked markets to the core as interest rates soared amid high levels of inflation.
"We’re now beginning the next phase in the cycle where inflationary pressures ease and central banks move to a new playbook to help prop up a flagging economy and make life easier for consumers and businesses who have had to stomach sky-high borrowing costs."
The Bank of England and Federal Reserve meetings come next week, and while they might have given the impression they aren’t swayed by what the ECB and other countries do, "the greater the number of central banks cutting, the more pressure they will be under to do the same", says Mould.
On the FTSE's top riser, Antofagasta (LON:ANTO) and its deal to improve the water supply at a copper project in Chile, Mould says: "Mining is a risky industry and anything a company can do to lower the risks is a positive for investors. Ensuring a smooth supply of water is important, particularly when a mine is in a remote or difficult to access location."
Construction survey beats consensus
A couple of bits of macro data have just come out.
The UK construction PMI for May came in stronger than forecast at 54.7, up from 53.0 a month earlier and beating the 52.5 consensus estimate.
The Bank of England's monthly decision maker panel (DMP) survey for May finds UK businesses see year-ahead CPI at 2.9%, flat from the last count.
They also see output price inflation easing to 3.9% from 4.0% while businesses see year-ahead output wage growth easing to 4.5% from 4.8%.
The DMP survey gathers views from chief financial officers from large, medium and small businesses, which the BoE says it uses to monitor developments in the economy and to track businesses’ views.
9.09am: Big UK automotive order for US autonomous vehicles
Shares in Strip Tinning (AIM:STG), a maker of automotive components, had revved up more than 60% earlier after a large German auto group selected it for a "major high volume strategic nomination" for autonomous vehicles being developed by a huge US company.
It described the client as a "leading German automotive motion technology Tier 1 manufacturer", while the contract nomination is for the supply of cell contact systems for the battery pack modules.
The vehicle manufacturer is said by the AIM-listed company to be "owned by one of the world's largest corporations and is currently running trials on public roads in three US cities".
This seems to point to Waymo, owned by Alphabet (NASDAQ:GOOGL), Google's parent company.
N Brown back in the black
It's a pretty quiet day in terms of blue-chip corporate results, but there's some mid-cap numbers out, including from Jacamo and SimplyBe owner N Brown Group PLC (AIM:BWNG), where the shares are up 20%.
The finals results from the struggling home shopping group N Brown are "nothing to shout about", says independent retail analyst Nick Bubb, with total revenue down 10%.
But adjusted EBITDA, while nearly 13% down, are above market expectations and that the company has returned to statutory profits.
CEO Steve Johnson trumpets that "we have delivered against our strategic and financial objectives this year”, while also saying that in current trading, the rate product revenue decline "has moderated", with Q1 declining by 6% and "this improvement is expected to continue as the year progresses".
European markets up ahead of ECB decision
Ahead of the ECB meeting later, the FTSE's small gain is being eclipsed by those on the European mainland, with the ex-dividend stocks weighing on the UK market.
The FTSE 250 is up 66 points at 20,730.
In Europe, the DAX is leading with a 0.81% rise, France's CAC 40 up 0.40%, Spain's Ibex 0.37% and Italy's FTSE MIB ahead 0.24%. The wider Stoxx 600 has risen 0.58%.
Can anything stop Nvidia?
A stunning fact is that, in just two years, Nvidia's market cap has increased more than 600%, with the chipmaker’s valuation rocket past Netflix (NASDAQ:NFLX), past Tesla, past Google, Broadcom (NASDAQ:AVGO), Amazon (NASDAQ:AMZN) and Meta, to also overtake Apple in the past 24 hours.
As of this moment, Nvidia is valued at $3.01 trillion versus Apple’s measly $3 trillion.
The gap is expected to widen even further when US markets open today, with pre-market trades pointing to a 0.95% gain on Nvidia stock and a 0.17% loss on Apple stock, writes my colleague Billy Farrington as he takes a look at the meteoric rise of the semiconductor innovator.
Modestly positive market sentiment
Positive stock market sentiment has been rekindled after an erratic May, says Richard Hunter, head of markets at Interactive Investor.
Investors will remain on "high alert" for further economic developments unfolding, he adds.
In the year to date, the FTSE 100 is up 6.7%, Nasdaq is ahead by 14.5% and the S&P 500 by 12.2%, Germany's Dax has risen around 11.6% and Japan's Nikkei jumped 16.3%.
Focusing on this morning, Hunter says: "The London market edged higher at the open, with tentative buying interest in the mining sector offsetting some of the more recent weakness across oil and commodity prices in general.
"Such weakness has tempered gains in the FTSE 100 after a record-breaking level was reached in May ... and despite the uncertainty of an imminent general election, the more domestically focused FTSE 250 has reversed early year losses to stand up by 5.3% in the year to date, latterly propelled by a UK economy which is seeing some benefit from easing inflation and the possibility of lower interest rates, in addition to recently having left a short and shallow technical recession."
He says the appetite for tech stocks is also driving many global indices higher.
"The likelihood of an interest rate cut later today from the ECB also boosted sentiment, potentially signalling a new era of easier monetary conditions across the globe," Hunter adds.
FTSE reshuffle confirmed
In the UK, the FTSE index reshuffle was confirmed last night, involving three demotions from the blue-chip index, with LondonMetric (LON:LMPL) Property, Vistry Group (LON:VTYV) and Darktrace (LON:DARK) (temporarily as it is being taken over) replacing Ocado (LON:OCDO), RS Group (LON:RS1R) and St James's Place.
Dropping out of the FTSE 250 into the small caps will be Ferrexpo (LON:FXPO), Mobico Group ( National Express (LON:MCG)) and Octopus Renewables Infrastructure Trust, replaced by Alpha Group International, Renewi and XPS Pensions Group.