The FTSE 100 was egged on a bit more today, rising another 0.4 per cent early doors after it put in a strong shift on Wednesday. Gains for BP and Shell on oil’s advance helped lift the index this morning, while as European indices trade broadly risk-on. Yesterday, there were broad-based gains for London’s large-cap names to take it back close to a record high. Housebuilders and Howden Joinery rallied – think a sense of front-running a major effort by the government on homebuilding as part of the Budget.
Oil shot higher as the US slapped sanctions on Russian oil majors Rosneft and Lukoil, marking a strategic shift that underlines Washington’s increasing frustration at Moscow. There was also a 19th round of EU sanctions on Russia. Brent (continuous contract) pushed up aggressively to retake the 20-day simple moving average at $65.
On Wall Street yesterday, the major indices fell as tech took a hit on the trade war news, while the unwinding of some hot momentum stocks such as Beyond Meat hit sentiment. The Dow Jones retreated 0.7 per cent from its record highs, while the Nasdaq slipped 0.93 per cent and the S&P 500 was 0.53 per cent lower. The small-cap Russell 2,000 fell 1.45 per cent. Disappointing earnings from Texas Instruments and Netflix weighed, while Tesla is weighing a bit on futures this morning.
Lloyds shares are flat after reporting a 36 per cent decline in quarterly profits as the motor finance compensation fiasco ate into earnings. Still, that is in the past (unless some more nasties are lurking in the closet), and the bank raised its outlook for net interest income.
A slew of updates on the FTSE 100 – Unilever looks positive with FY outlook unchanged and Rentokil jumped 9 per cent on a 3.4 per cent rise in organic revenue, easily ahead of forecasts as US growth topped expectations. More on that here
Gold was more than 8 per cent off its recent high yesterday, but the rally off the key $4,000 level held, and we see price action bumping around the $4,100 level this morning. Look for a retrace of the downshift to about $4,200 to signal technical consolidation rather than liquidation. Read more on the gold price here
Tesla shares fell after-hours as the company’s bumper revenues failed to cover up some nasties under the bonnet. Kicking the tyres on this one is not hard – margins halved to 5.8 per cent from 10.8 per cent a year ago, so a 12 per cent rise in revenues was wasted. Profits fell 29 per cent year-on-year to $1.8bn, below expectations. Deliveries were up to a record last quarter, but Tesla is not a car company anymore. Hefty investment in robotics and AI needs to prove itself sooner rather than later.
Elsewhere, US President Donald Trump is also considering restricting exports to China of items using US software, such as laptops and jet engines, due to Beijing’s rare earth export curbs, Reuters reports. This proposal matches Trump’s 10 October threat of 100 per cent tariffs and controls on “critical software.”
By Neil Wilson, investor strategist at Saxo UK