FTSE 100 LIVE: Europe up, London hits all-time high as traders prices in summer interest rate cut
04/23/2024 15:38
The FTSE was up as analysts look to August for the Bank of England's first interest rate cut.
The FTSE 100 and European stocks tracked higher in early trade in London, as markets digest fresh data on UK public borrowing and look to manufacturing data later on. The FTSE was trading at record levels —as high as 8,076 points on Tuesday morning — heading past its previous high of 8,047 in February 2023.
The FTSE 100 (^FTSE) was up 0.6% in early trade — touching all-time highs as markets opened in London. The DAX (^GDAXI) in Germany rose 0.8% and the CAC (^FCHI) in Paris was 0.4% higher.
The positive sentiment came as analysts look to August for the Bank of England's first interest rate cut. Markets are now pricing in two base rate cuts by the end of the year.
The moves higher also came following fresh data from the Office for National Statistics, that show borrowing hit around £121bn in the financial year just ended — a decrease of £8bn on the previous year. Borrowing tracked £6.6bn higher than forecast by the Office for Budget Responsibility.
Spending rose about £58bn due to the bill for public services and benefits outstripping large reductions in interest payable and energy support scheme costs.
An increase in public debt could make it more difficult for the government to promise tax cuts as it heads into an election.
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FTSE strength down to currency weakness?
Here's Neil Wilson from Finalto's take on the index's ascent:
The usual caveats apply – do you really need to read them all again? In dollar terms it’s still a way off. And the ‘record’ high in sterling terms doesn’t mask the longer-term structural weaknesses. But it does seem things may be improving for the UK – inflation is down, growth picking up, real wages seem set to rise for a year or two without leading to a wage-price-spiral, rates coming down and mortgage shock behind us….maybe there are reasons to be cheerful? We will look at this in an upcoming episode.
Recent strength in the equity index may have something to do with sterling weakness – GBPUSD touched the big Fib level at 1.23 and found support but it’s at 5-month lows.
US on the path to gains in premarket
Eurozone PMI shows activity at 11-month high
Here are the top lines:
Business activity in the euro area grew at the fastest rate for nearly a year in April, according to provisional PMI survey data. The improvement indicates that the region continues to pull out of the recent downturn, albeit growing only modestly amid divergent sector performances. Increasingly robust service sector growth was nevertheless accompanied by signs of a further moderation of the manufacturing downturn.
Jobs growth also accelerated as business confidence remained elevated by recent standards. Especially solid growth outside of France and Germany was again reported, but Germany also returned to growth in April and France came close to stabilising.
Despite the good news, price pressures also picked up across the eurozone alongside the improvement in output and hiring, often linked to higher wage bills. Input costs and average selling prices both rose at faster rates, reflecting stubbornly elevated price pressures in the service sector.
UK government borrowing ticks up above forecasts
The key figure here is the difference between spending and tax income, which hit £120.7bn in the year to March, according to the ONS.
That's £6.6bn more than forecast.
A Treasury spokesperson said:
“Debt increased in recent years because we rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine sent bills skyrocketing.
“We can’t leave future generations to pick up the tab, so we must stick to the plan to get debt falling. And with inflation falling and wages rising – we have been able to cut National Insurance by a third, which shows our determination to end the double taxation of work”.
Overnight in Asia
Stocks across Asia were mixed overnight with gains in Hong Kong and Japan and a day in negative territory for Korea's major index.
Hong Kong's Hang Seng (^HSI) rose by 290 points, or 1.8%, as investors watched big corporate earnings, PMIs for the region and easing macroeconomic tensions.
The Nikkei in Japan (^N225) meanwhile rose 0.3%. New data showed that Japanese manufacturing numbers were still in contraction in April while growth in the services sector improved. Its PMI read 49.9 in April, compared to expectations of 48 and 48.2 in March. Japan's manufacturing sector hasn't recorded growth since June 2023.
Overnight in the US
US stocks rebounded on Monday, with the S&P 500 snapping a six-day losing streak as investors braced for a rush of Big Tech earnings.
The S&P 500 (^GSPC) rose 0.9% to climb back above 5,000 after closing below the key level on Friday for the first time since February. The Dow Jones Industrial Average (^DJI) added 0.7%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) also gained 1.1% as AI darling Nvidia (NVDA) rebounded by adding than 4%.
Hopes are now resting on Big Tech earnings this week to reassure and reignite the market. On deck are quarterly reports from Meta (META), Microsoft (MSFT), and Alphabet (GOOG).
Good morning!
Hello from another cold day in London! This morning we've already had government borrowing stats. Later the market will look to PMIs in the UK and Europe.
We also have corporate updates from:
Novartis, Kering, Deutsche Boerse, ASM International, Renault, Akzo Nobel, Randstad and Temenos in Europe.
Tesla, GM, Visa, PepsiCo, Danaher, GE Aerospace, Texas Instruments, Philip Morris, UPS, Lockheed Martin, Freeport-McMoRan, Spotify, General Motors, Kimberly-Clark, Halliburton, Baker Hughes, Seagate and Mattel in the US.
Let's get to it.
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