- FTSE 100 expected to open up
- Strong jobs data sees S&P 500 reach new record
- Micron guidance sparks semiconductor rally
- Best week for Chinese stocks since 2008
- EU data focus today – multiple confidence reads and CPI
- US Core PCE – consensus: up 0.1-0.2% month on month
- Strong first half momentum for Ceres Power but questions remain
- Brent Crude slips again to $71.4 per barrel
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE is expected to open up a touch this morning following a session of broad-based gains on Wall Street, which saw the S&P 500 touch a fresh high. It was the turn of US economic data to take centre stage again. A better than expected read out for weekly jobless claims helped allay fears of cracks in the labour market. There was also some relief that the final print for second quarter GDP growth was held firm at 3%.
Semiconductor stocks also rallied led by memory chip maker Micron’s surge of 14.7%. after it released revenue guidance above market forecasts. This saw the optimism spread eastwards with Korean rivals Samsung and SK Hynix also seeing strong gains, topping off a strong week for Asian equities where a stimulus blitz unveiled by China’s government and central bank has seen Chinese equities enjoy their best week in over 15 years. It’s been quite the come back with September almost completely reversing the double-digit losses endured over the previous 12 months. Only time will tell if this monetary experiment will see China return to its long-term growth trajectory.
Meanwhile in Japan, it’s been confirmed that Shigeru Ishiba will become the next prime minister after a nail-biting contest for the leadership of the ruling Liberal Democratic Party. Market confidence is no bad omen for the new man at the helm with the Nikkei gaining 2.57% to hit a new one-month high.
There’s a swathe of further economic touch points to digest later today both in Europe and the US. Growth in the EU has been much harder to come by with many pointing to structural deficits in terms of innovation and productivity. First up today will be German unemployment figures followed by multiple sentiment and confidence indicators for the wider Eurozone. There’s also Consumer Price Index (CPI) figures to help take the lates pulse on inflation so overall expect a clearer picture of whether a soft landing remains in site.
US inflation figures will also be closely scrutinised. Core Personal Consumption Expenditure (PCE) is expected to have risen between 0.1% and 0.2% last month. Any significant rise above that range could dampen the prospects of further rate cuts by the Fed whose current forecast suggests another half point reduction by the end of 2024.
Clean energy tech champion Ceres Power has more than doubled revenue in the first half, but at £28.5mn is still somewhat subscale. However, the record order intake is encouraging. Its solid oxide technology can be used to produce both electricity when configured as a fuel cell, and in reverse can generate hydrogen from electricity. Losses have narrowed sharply, but its still to prove the viability of its business model as investors nurse losses of over 80% during the last four years.
Brent Crude is down again trading at about $71.4 per barrel, a slide of nearly $4 over the week, as rumours that Saudi Arabia had abandoned its $100 price target continue to reverberate around the market ahead of planned production increases later in the year.”
