- FTSE 100 opens marginally higher, helped by the tailwinds of a strong session in Asia and on Wall Street, but held back by global growth concerns.
- The Caixin China Manufacturing PMI fell to 50.5 in June, from 50.9 in May, but the reading still registers expansion.
- Tesla’s cut price gamble appears to be paying off, with record sales in the second quarter, delivering 466,140 cars worldwide.
- Brent crude hovers around $75 a barrel as traders eye a key OPEC event in Vienna this week.
- Consumers should brace for higher energy bills this winter according to the IEA.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’The first tentative steps into the second half of the year have been cautious on the London market. China’s factories eked out growth in June, with the latest manufacturing snapshot showing activity coming in a notch above expectations, but it still paints a picture of an economy losing steam. The FTSE 100 opened marginally higher, helped by the tailwinds of a strong session in Asia and on Wall Street on Friday. But it’s still struggling to find significant momentum, dragged down by concerns about growth in China and the wider global economy. Regaining its form and heading back to the heights of above 8,000 reached at the start of the year, still looks decidedly challenging.
After recording the best first half of the year in four decades, the Nasdaq is poised to take a breath, with investors assessing how the land lies for big tech going forward. Powered by the AI frenzy of enthusiasm, a handful of technology firms have become money magnets, deflecting any concerns about the impact of high interest rates and banking turmoil. The second half of the year is still set to be dominated by speculation over just how high interest rates will go and how long they will stay there. Investors will be assessing the latest US manufacturing data later, for any further clues about the underlying strength of the US economy. Although inflation is heading in the right direction and consumer spending is slowing, core prices remain stubbornly high.
Tesla’s cut price gamble appears to be paying off handsomely as it makes deeper inroads into the Chinese market. The firm delivered a record number of vehicles in the three months to the end of June, helped by surging sales in China where the competition from home grown EV manufacturers is fierce. Offering more affordable price tags has been a shrewd move in other markets too, where consumers have been grappling with the cost-of-living crisis but are still eager to join the electric vehicle revolution. The question is whether Tesla can continue to drive high volumes, as it becomes much busier on the EV highway ahead, with more big players accelerating their manufacturing efforts. Tesla shares have surged by 142% since the start of the year, as investors have shown approval for the affordability at scale strategy, but they are still down 35% from the peak in November 2021. Concerns about CEO Elon Musk stretching himself too thinly across his business empire are still causing some headwinds.
Brent crude is hovering around $75 a barrel, off June lows of $71 but it’s still struggling to regain momentum as traders assess China’s slowdown and the impact of higher interest rates in other major economies on demand. The effects of the recent production cut by Saudi Arabia have largely fizzled away, but an extension looks increasingly likely, given the oil-rich Kingdom wants to keep prices elevated to help pay for ambitious national projects. OPEC’s international seminar held in Vienna on Wednesday and Thursday this week will be closely watched, particularly for any hints on policy from Saudi Energy Minister Prince Abdulaziz bin Salman, who has been keeping traders on their toes with his often cryptic comments about his country’s oil strategy.
Just when households thought they might spy relief from punishing energy costs on the horizon, they are now bracing for possible further price rises this winter. The warning from the head of the International Energy Agency that higher gas prices can’t be ruled out during the cold months will be a gut punch for those hoping for respite from the bill nightmare. However, this is not a time to panic about another looming crisis as the warning comes with caveats. It would require a combination of a sharp rebound in China’s growth, and a significant freezing snap neither of which are certain.’’
