- FTSE 100 opens lower
- BT trades lower on reports Sky will bring on a new wholesale partner
- S&P 500 rises for the eighth consecutive day
- Gold up 21% year to date and hovers around record levels
- Oil dips as hopes for a Middle East ceasefire gain traction
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Early trading sees UK markets give back some of yesterday’s gains, failing to take cues from the US and Asia. It’s a pretty quiet day from a company news standpoint. Pharma giants GSK and AstraZeneca delivered positive drug approval updates, which should give a small tailwind to sector sentiment. Copper miner Antofagasta reported first-half profit a little below the number analysts had pencilled in. There wasn’t anything here to really move the dial, full-year production guidance remains, and the longer-term copper story is the attraction, with Antofagasta expecting demand to rise 2-3% for the rest of this decade.
BT shares opened lower on rumours that Sky may be partnering with CityFibre starting next year. The BT impact is through its Openreach business, which has Sky as its biggest external partner. There are genuine concerns about its reliance on a single customer, but a deal with CityFibre is unlikely to have a major impact on the current relationship. CityFibre is a struggling business, desperate to show its lenders that it has something tangible in the works, it’s also more focused on rural areas where the likes of Openreach aren’t building out fibre networks – so there’s likely limited cannibalisation of Openreach’s existing business with Sky.
US markets continue to show signs of strength in the latest proof point that time in the market, rather than timing the market, is key for most investors. The S&P 500’s eighth consecutive day of gains was led by the semiconductor sector as AMD agreed to buy server maker ZT Systems, and NVIDIA continued its march back into the limelight as investors gear up for results next week. Second-quarter revenue expectations from the Data Center division haven’t moved much in recent months, hovering around the $25bn mark, but markets are certainly gearing up for another knockout set of results. With all the major US AI players talking about increasing their capex plans, and a lot of the demand going straight to NVIDIA, it’s easy to see why investors expect something big.
Gold is hovering around record levels at a touch above the $2,500 mark after a 21% surge over the year. The recent demand boom can be put down to growing expectations that the US Fed is set to cut interest rates in the coming months. Add in central bank buying, demand for portfolio hedges, and global uncertainty; it’s been a recipe for strong demand over the year.
Brent Crude continues to trade lower as reports from the Middle East suggest there could be progress on a ceasefire, easing some supply fears that have been propping up oil prices. Demand weakness on the other side of the equation isn’t helping either, especially from China, where recent economic data has been disappointing, and interest rates have been held at record lows to try and get things moving again.”
