- Wall Street rebounds as buyers emerge.
- Asian markets rise, as futures signal a return to volatility.
- Diageo sales flag in US/China.
- Sainsbury tills ring loud.
- Market waits on the Bank of England.
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“Markets were strong overnight as buyers poured onto Wall Street to ‘buy the dip’ after the correction in AI stocks seen at the beginning of the week. The tech-heavy NASDAQ index gained 0.65%, ahead of the 0.37% gain of the broader S&P500 index. Nvidia was a notable party-pooper however, declining by almost 2%. Bullish sentiment carried through to Asia with solid gains of as much as 2% seen in markets from Tokyo to Shanghai. The Chinese market was boosted by news that more of its stocks were joining the MSCI Global index, suggesting that a wave of new money from passive funds will need to buy into the Shanghai market.
It’s not all sweetness and roses though, despite the buoyancy of cash equities, futures markets are downbeat, with S&P futures currently suggesting a reversal when Wall Street reopens later today. Meanwhile, the dollar is slipping across the board as the market digests reports that the US Supreme Court is underwhelmed at the legality of President Trump’s tariff regime.
Diageo has issued a trading statement which reveals that spirits markets in both the US and China are struggling, offsetting gains elsewhere. Full year guidance is trimmed slightly as a result. The news was not totally unexpected, and the shares have dipped by less than 3% as a result. Curiously, interim Chief Executive, Nick Janghianii remains the interim CEO. He was bumped up from the CFO position earlier this year after his predecessor Deborah Crew left hurriedly when the FT revealed that her position was under question. Diageo’s board it appears are still mulling over the future leadership of the group.
It seems Sainsbury’s tills have been ringing away. The group’s half year report shows the group delivering 5.2% sales growth, driven by the core supermarkets business, with Argos up by just under half that amount and fuel sales slipping 11% with lower petrol prices. The group announced a £250 million special dividend reflecting the successful sale of Sainsbury’s Bank, accompanied by additional share repurchases, this year and next.
Markets are off to a modest start this morning, with the FTSE 100 just a few points lower in early trading. Auto Trader and IMI are leading the FTSE100 after both issued well received trading updates. At the other end of the board though, both Hikma Pharmaceuticals and Smith & Nephew are around 10% weaker after revealing below par sales growth in their own updates. Really though, the market is waiting on the Bank of England, which is due to announce its latest interest rate decision at midday. Most economists are predicting no change to rates this month with the Bank still feeling that its hands are tied by stubborn inflationary pressures, especially in the service sectors of the economy.”
