London close: Stocks finish 'indecisive' session mixed

(Sharecast News) - London stocks finished in a mixed state on Thursday after some fresh economic data, as investors looked towards a speech by Federal Reserve chair Jerome Powell at the Jackson Hole symposium.

The FTSE 100 ended the session up 0.11% at 7,479.74, while the FTSE 250 was down 0.25% at 19,257.87.

Sterling was in positive territory, meanwhile, last trading up 0.03% on the dollar at $1.1802, and strengthening 0.15% against the euro to €1.1855.

"Stocks are ticking higher after a largely indecisive day that has seen European indices tread water while US tech giants provide a positive influence on the other side of the pond," said IG senior market analyst Joshua Mahony.

"Between Fed members Bostic and Harker, we have seen a very clear degree of indecision over whether the next move will be 50 or 75 basis points."

Mahony noted that such an outlook was being echoed by markets, with the CME's FedWatch pricing a 44% chance of a 50-basis point move, and 56% chance of an oversized 75-basis point hike.

"Ultimately, markets await the views of one man, with Jerome Powell due to appear in Wyoming tomorrow to bring clarity over how he sees the Fed policy reacting to the economic crisis.

"Crucially, there is a risk that markets have already priced in any hawkish tilt, with a dovish stance likely to move markets to a greater extent should Powell lean in that direction."

In economic news, UK retail sales unexpectedly rose in the year to August, although retailers remained pessimistic according to the latest distributive trades survey from the Confederation of British Industry.

The CBI's reported sales balance jumped to +37 from -4 in July, coming in well ahead of consensus expectations for a decline to -8.

Sentiment remained gloomy, however, with firms feeling the most pessimistic about the business situation over the next three months since the early phase of the pandemic in May 2020.

The survey also showed that average selling price inflation sped up to its fastest pace since 1985, rising to +87 +77 in May.

"While retail sales returned to solid growth in the year to August, firms remain pessimistic about their business situation over the next three months - to the greatest extent since the first Covid-19 lockdown in 2020," said Martin Sartorius, principal economist at the CBI.

"This gloom is reflected in retailers' investment intentions, which continue to be resolutely negative."

Sartorius said firms now needed support from the government in order to encourage investment and create sustainable growth.

"Crucially, business rates reform and a more flexible apprenticeship levy will help with dwindling business confidence."

Elsewhere, UK car manufacturing output rose 8.6% in July, making for the third consecutive month of growth, while commercial vehicle production was ahead 43.9% in that sector's best July since 2016.

According to fresh data from the Society of Motor Manufacturers and Traders, car production rose for the third month in a row to 58,043 units.

It did, however, caution that the July 2021 comparator was the worst July since 1956, as car makers faced a number of issues including the global shortage of semiconductors and pandemic-fuelled staff absences.

Output still remained 46.4% below pre-pandemic levels as well, illustrating that full recovery was some way off.

"A third consecutive month of growth for UK car production is, of course, welcome and gives some hope that the supply chain issues blighting the sector may finally be starting to ease," said SMMT chief executive Mike Hawes.

"But other challenges remain, not least energy costs which are increasing at alarming rates."

At the same time, UK commercial vehicle production grew 43.9% year-on-year in July, with 8,097 units of vans, buses, trucks, coaches and taxis rolling off British factory lines.

The SMMT said output in July was the highest for the month since 2016, rounding off the "best performing first seven months to a year" in a decade, with 58,693 commercial vehicles built in Britain so far in 2022.

On the continent, the German economy grew a touch in the second quarter of the year, beating expectations for nil growth.

In the three months to June, Destatis said GDP ticked up 0.1% following a 0.8% increase in the first quarter.

That was better than the initial estimate for no growth, and was supported mostly by government spending.

"Looking ahead, we think German GDP will fall this quarter, and also in the next, such that it will suffer a shallow technical recession by the end of the year," said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

"Surveys and near-real time data, such as the truck toll index MAUT, suggest industry is about to hit the skids, and this is before any real energy rationing is enforced.

"We doubt the country will avoid rationing, as Russian gas flows dwindle further; we think flows will hit zero before the end of the year."

Across the pond, the US economy shrank by less than previously estimated over the three months to June, with the Department of Commerce reporting that gross domestic product narrowed at a quarterly annualised pace of -0.6% in the second quarter, compared to initial estimates for a 0.9% drop.

An upwards revision to growth in household consumption to 1.5% from 1.0% drove Thursday's revisions.

The gap between GDP and GDI growth continued to widen, however with GDP standing 2.6% above its pre-Covid-19 level and GDI ahead by 6.4%.

"The gap between the two has never been wider," said Michael Pearce, senior US economist at Capital Economics.

"With the benchmark revision pointing to an upward revision in payroll employment up to the first quarter, it seems more likely that GDP will be revised substantially higher rather than the GDI figures being revised down.

"But we will have to wait until the annual benchmark revision to the GDP figures, released on 29 September, to find out."

Finally on data, jobless claims in the US receded by more than expected once more last week.

According to the US Department of Labor, the number of initial unemployment claims dipped by a seasonally-adjusted 2,000 over the week ended 13 August, to reach 245,000.

Economists had pencilled in a print of 255,000.

On London's equity markets, Harbour Energy jumped 10.01% after the oil and gas producer lifted its share buyback programme by $100m, and said pre-tax profits for the six months to 30 June surged to $1.5bn from $120m.

Building products maker CRH rallied 3.37% after it said it expected full-year core earnings to rise slightly to $5.5bn "against a continually challenging cost environment", after posting an increase in interim profits.

Recruiter Hays rose 1.66% after it reported an increase in full-year profit thanks to an "excellent" fee performance across all regions amid a recovery from the pandemic.

Oil giants Shell and BP gushed higher as oil prices rose, adding a respective 1.22% and 1.44%.

Shell was also in focus after Ofgem fined the company for overcharging more than 11,000 customers paying its default tariffs.

AstraZeneca was ahead 0.63% after three of its drugs - Ultomiris, Tagrisso and Lynparza - were approved for use in Japan.

On the downside, building materials distributor and DIY retailer Grafton Group fell 2.54% after it posted a jump in first-half revenues but a decline in profits, as activity levels normalised following the pandemic boost.

Elsewhere, Phoenix Group slipped 0.17%, NatWest Group lost 0.16%, RHI Magnesita slid 4.5%, FDM Group was off 0.26%, and Drax was 1.86% lower, as they all traded without entitlement to the dividend.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,479.74 0.11% FTSE 250 (MCX) 19,257.87 -0.25% techMARK (TASX) 4,297.00 -0.07%

FTSE 100 - Risers

Harbour Energy (HBR) 473.60p 10.01% CRH (CDI) (CRH) 3,236.50p 3.37% Pershing Square Holdings Ltd NPV (PSH) 2,810.00p 2.18% Rentokil Initial (RTO) 546.20p 2.17% Antofagasta (ANTO) 1,167.00p 1.74% Informa (INF) 560.00p 1.71% Glencore (GLEN) 505.00p 1.47% BP (BP.) 459.45p 1.44% Anglo American (AAL) 2,919.50p 1.41% RS Group (RS1) 1,129.00p 1.26%

FTSE 100 - Fallers

Phoenix Group Holdings (PHNX) 602.60p -4.11% Coca-Cola HBC AG (CDI) (CCH) 1,975.50p -3.92% Persimmon (PSN) 1,485.00p -3.82% Mondi (MNDI) 1,454.50p -3.77% B&M European Value Retail S.A. (DI) (BME) 375.30p -3.60% Ocado Group (OCDO) 764.40p -2.85% JD Sports Fashion (JD.) 113.90p -2.36% Hargreaves Lansdown (HL.) 870.00p -1.94% Haleon (HLN) 263.60p -1.93% United Utilities Group (UU.) 1,091.00p -1.76%

FTSE 250 - Risers

Ibstock (IBST) 199.90p 4.60% Carnival (CCL) 768.80p 3.22% Abrdn Private Equity Opportunities Trust (APEO) 423.00p 3.12% BlackRock World Mining Trust (BRWM) 637.00p 3.07% Baltic Classifieds Group (BCG) 142.80p 2.89% HGCapital Trust (HGT) 374.00p 2.48% BH Macro Ltd. GBP Shares (BHMG) 4,640.00p 2.43% Watches of Switzerland Group (WOSG) 824.50p 2.42% Bridgepoint Group (Reg S) (BPT) 249.80p 2.13% Fidelity China Special Situations (FCSS) 244.00p 2.09%

FTSE 250 - Fallers

Polymetal International (POLY) 200.00p -6.54% Wood Group (John) (WG.) 135.25p -5.52% RHI Magnesita N.V. (DI) (RHIM) 1,802.00p -4.50% Marks & Spencer Group (MKS) 121.45p -4.44% 888 Holdings (DI) (888) 132.70p -4.39% Britvic (BVIC) 789.50p -3.95% CMC Markets (CMCX) 236.50p -3.86% Currys (CURY) 58.90p -3.36% National Express Group (NEX) 172.90p -3.25% Mitchells & Butlers (MAB) 160.40p -3.20%